The banking sector was a major facilitator of investment. The magnitude of the government's banking reforms can best be understood by comparing the current system with that of the French colonial era. Under the French, most of Algeria's banks were branches of French banks; after independence they sold out or were nationalized. The Central Bank of Algeria was established in January 1963, to replace the Colonial Bank of Algeria and act as the government's agent in financial transactions, currency issue, and other central bank functions. In 1971 the Central Bank assumed the role of supervising the country's three major commercial banks, the most important of which was the National Bank of Algeria (Banque Nationale d'Algérie), which served both the private and public sectors and held the bulk of total bank deposits. The other two, the Foreign Bank of Algeria (Banque Extérieure d'Algérie) and the Popular Credit of Algeria (Crédit Populaire d'Algérie) were more sector oriented, with the former handling energy and foreign trade and the latter financing smaller sectors.
The government's economic development and decentralization policies of the 1980s resulted in the establishment of more specialized financial institutions. The Agriculture and Rural Development Bank (Banque de l'Agriculture et du Développement Rural) provided loans to the farming and food processing industries. The National Fund for Provident Savings (Caisse Nationale d'Épargne et de Prévoyance) furnished savings and housing loans. The Bank of Manufacturing and Services (Banque des Industries de Transformation et des Services) dealt with the service sector and light industries. The Bank of Local Development (Banque de Développement Local) was formed in 1985 to finance communal development projects. The Algerian Development Bank (Banque Algérienne de Développement) was created in 1963 to provide long-term (ten- to twenty-year) loans.
Algeria PUBLIC FINANCES:
Algeria ranked in the upper range of medium-income countries in 1992, and the government had concentrated for some years on enlarging its industrial sector. The emphasis placed on manufacturing industries resulted in an average gross domestic product (GDP--see Glossary) increase of 18 percent over the decade from the mid-1970s to the mid-1980s. But accelerated industrialization was achieved at the expense of the agricultural sector, whose GDP share declined from 15 percent in 1965 to 9 percent in 1985 (see table 3, Appendix). The decline compelled the government to spend hard-earned foreign currency on food imports to meet serious food shortages facing a population that was growing at an average annual rate of about 3.2 percent in the late 1970s. Oil and gas revenues remained Algeria's largest single source of income, but the government in 1993 used up to 98 percent of its hydrocarbon export revenues to ensure its foreignexchange needs. The government in 1993 also revised its budget to reflect the fluctuating, i.e., decreasing, percentage of hydrocarbon earnings caused by oil price changes. As a result, the government has decided to diversify the hydrocarbon industry away from crude oil toward natural gas, condensates, refined products, and petrochemicals. The success of this policy notwithstanding, and in spite of enhanced revenues from other sectors, additional taxation, and customs duties, the government has been unwilling to cut public expenditures significantly, fearing an adverse socioeconomic impact. Whereas the government has committed itself to reducing its external debt in the 1990s, it seemingly cannot afford to abandon investing in critically needed social infrastructure plans.
The government eventually instituted some reforms in public finance management by shifting the responsibility for financing economic activity from the Ministry of Finance to financial institutions and by decentralizing the decision-making process. Begun in 1986, these reforms were designed to transfer economic financing to local governments and public enterprises, including state-owned banks. Financial institutions, which had been limited to acting as cashiers for the ministry, took over the function of financing public enterprises and investment. Ministry of Finance investment financing was limited to strategic projects. The financial system also absorbed most of the ministry's role in housing finance. The Law on Money and Credit, promulgated in 1990, formally transferred the role of financial management to the Central Bank and the Money and Credit Council (see Investments , this ch.).
More finance information from Algeria:
| Website-Titel |
Arab Banking Corporation - Algeria 2
Banque Al Baraka 7
Banque Commerciale & Industrielle 3
Banque de Developpement Local 2
BNP Paribas - Algerie 0
Caisse Nationale de Mutualite Agricole 3
Citibank - Algeria 2
CNEP Banque - Caisse Nationale d'Epargne et de Prevoyance
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