The International Monetary Fund (IMF) has called on Algeria to undertake fiscal consolidation and initiate some reforms in order to adequately respond to the magnitude and persistence of the oil price shock and address long standing vulnerabilities.
Algeria’s economy is facing a severe and likely long-lasting external shock, calling for a vigorous policy response built on fiscal consolidation and structural reforms.The impact of the oil price shock on growth has been limited, but fiscal and external balances have deteriorated significantly. IMF Mission Chief for Algeria, Jean-François Dauphin, said that if well managed, the current situation offers an opportunity to reshape the country’s growth model.
Growth in the north African country remained stable in 2015 at 3.9 percent, but the country is facing important challenges given the large decline in oil prices, IMF assesed.
Dauphin noted that the outlook in the country depends very much on the authorities policy response to the oil price shock.
He reiterated that the country can afford to adjust to the shock and implement reforms gradually. But it cannot afford to let this moment pass without taking action.
According to IMF monetary policy must adjust to a changing liquidity environment while guarding against potential inflationary pressures.