Much like the parliamentary election in May, the long-awaited cabinet reshuffle that eventually followed in early September has proved to be a disappointment to those hopeful of any real political change in Algeria. The choice of the former water minister, Abdelmalek Sellal, as the new prime minister, suggests that the president, Abdelaziz Bouteflika, is looking for a stopgap cabinet chief ahead of the presidential election in 2014.
The removal of the previous prime minister, Ahmed Ouyahia, seems to be nothing more than a token step to take the much-criticised cabinet leader out of the limelight. For much of his tenure as prime minister, Mr Ouyahia has been an unpopular figure among Algerians. There has been a general sense of apathy and disenfranchisement from the political process for many years, but Mr Ouyahia bore the brunt of much of the frustration with a government infrastructure investment programme that has promised much but delivered little. In the months leading up to the parliamentary election there were concerted calls for his removal and the replacement of his cabinet with an interim, technocratic government tasked with overseeing the implementation of the government's political reform programme and the introduction of a new constitution. Mr Ouyahia also faced opposition within his own party, the Rassemblement national democratique (RND), in the months leading up to the election, culminating in the resignation of some 30 RND members ahead of the polls.
The reshuffle also completes the marginalisation from the government of Abdelaziz Belkhadem. When Mr Belkhadem, a former prime minister, was replaced by Mr Ouyahia in the last major cabinet reshuffle, rather than being given another ministerial portfolio he was instead given the job of personal representative to the president. This was a significant demotion for Mr Belkhadem, but nevertheless enabled Mr Bouteflika to keep his ally close. Mr Belkhadem's party, the Front de liberation nationale (FLN), increased its share of parliamentary seats in the recent election, but the leader has been embattled for several months. Prior to the election, a substantial opposition movement within the FLN called for the removal of the leader, claiming that he was not sufficiently competent for the role and was using his position to promote his own presidential ambitions.
Familiar faces
Beyond the sidelining of the two party leaders, the reshuffle offers little to those hoping for substantial change. The key positions of interior, defence and foreign affairs remain untouched. The changes are also notable for their failure to bring any of the moderate Islamist leaders who contested the recent parliamentary election into the fold. Prior to the election, the former public works minister, Amar Ghoul, was tipped as a possible candidate to head up the cabinet. Regime changes in Tunisia and Egypt in early 2011 were followed by elections that were dominated by Islamist parties, while the Parti de la justice et du developpement, a moderate Islamist party, is the largest party in Morocco's parliament. But the election in Algeria saw the established parties of the government alliance-the FLN and the RND-substantially increase their combined share of parliamentary seats, while the performance of moderate Islamist parties was abject. The results of the election were challenged by a number of moderate Islamists, including members of the Alliance verte d'Algerie, of which Mr Ghoul was a member, who claimed that the polls were tarnished by electoral fraud. Following the reshuffle, Ennahda, a moderate Islamist party, issued a statement saying that the cabinet changes were "disappointing" and would fail to "put right all the political, economic and social imbalances". The statement called for the creation of a government of national unity to implement the reform programme and introduce "real popular participation" in Algerian politics.
Following the reshuffle, this goal seems as far away as ever. Mr Sellal is an ally of Mr Bouteflika and was involved in his re-election campaigns in 2005 and 2009. He is a technocrat who has held a number of ministerial posts, including the transport and water portfolios. His performance has been unspectacular, and at the Ministry of Water Resources he presided over a ministry that was unable to resolve water shortages across the country. Since his appointment, Mr Sellal has pledged to "clean up" Algeria's political system and address the deficit in public services, but he has no credentials as a reformer.
Policy U-turn unlikely
There has been some speculation in the national press that Mr Sellal may reverse some of the measures introduced by Mr Ouyahia that have made the business environment tougher for international firms. But this remains unlikely. Cabinet ministers have consistently maintained in recent months that the most significant of these measures-a regulation introduced in 2008 that limits foreign companies to a 49% stake in local joint ventures-will not be overturned.
The impact of the cabinet changes on the presidential election in 2014 is unclear. We currently do not believe that Mr Bouteflika, who has been suffering health problems for several years, will stand for re-election for a third time. The current constitution-as amended prior to the presidential election of 2009-stipulates a three-term limit for presidential office, and this may revert to two in the new constitution, due to be drawn up in the coming months. There remain few obvious candidates for the position. An effort to promote Mr Bouteflika's brother, Said, fell flat, and it is unlikely that Mr Sellal would ever be considered a viable candidate for the presidency. Despite their removal from official roles, Mr Ouyahia and Mr Belkhadem remain the two most prominent candidates for the presidency. But although the replacement of Mr Ouyahia as prime minister may be considered a political necessity-not only because of the widespread frustration with his government, but also because of the established pattern of rotating the prime minister-Mr Belkhadem may face a tougher fight to re-establish his credentials. Both will need to face down opposition from within their respective parties before they can hope to build a platform for a presidential campaign in 2014.
September 12, 2012
Political outlook: Political forces at a glance
Present government: A military-backed, coalition government over which the president, Abdelaziz Bouteflika, wields considerable influence. Mr Bouteflika was re-elected for a third term in 2009. His powers were enhanced by constitutional amendments passed in November 2008, which also abolished the previous two-term limit on the presidency. The role of senior military officers in Algerian political life is no longer all-pervasive, but remains significant. The Front de libération nationale (FLN) dominates the cabinet and parliament. In May 2012, it won nearly 48% of the seats in parliament, significantly enhancing its presence in the legislature. The other main regime party, the Rassemblement national démocratique (RND), was created by the military in 1997 as an alternative to the FLN, but remains very much part of the establishment.
Parliamentary forces: The FLN won a considerable victory in the election in May 2012 for the Assemblée populaire nationale (Algeria's lower house of parliament), taking 221 of the 462 seats available. The RND won 70 seats, meaning that if the FLN and RND continue their pre-poll coalition they will hold a significant majority in parliament. The Mouvement de la société pour la paix, an Islamist party analogous to the Muslim Brotherhood in other Arab states, left the ruling coalition in January 2012 ostensibly over what it believed was the government's lack of commitment to reform. It formed an alliance with other Islamist groups but returned only 47 seats, less than it had received on its own in the 2007 poll. The May 2012 election was characterised by a range of new parties that had been constituted following the government's liberalisation of the political parties law. However, many of the new parties had little time to organise effectively or make the population aware of their positions, helping the establishment parties win a significant share of seats. The opposition parties in parliament reflect a variety of political beliefs, including socialists, Islamists and conservative nationalists. The government will probably be able to make short-term alliances with individual groups in parliament to pass legislation, but this will only be necessary to add a veneer of credibility as the FLN and RND together hold nearly 63% of seats in parliament.
| Algeria parliamentary election results | ||||
| Number of | % of ballots | Number of | ||
| Party | votes | cast | seats won | % of seats |
| Front de libération nationale | 1,324,363 | 14.18 | 221 | 47.84 |
| Rassemblement national démocratique | 524,057 | 5.61 | 70 | 15.15 |
| Alliance de Algérie verte
| 475,049 | 5.09 | 47 | 10.17 |
| Front des forces socialistes | 188,275 | 2.02 | 21 | 4.55 |
| Indépendants | 671,190 | 7.19 | 19 | 4.11 |
| Parti des travailleurs | 283,585 | 3.04 | 17 | 3.68 |
| Front national algérien | 198,544 | 2.13 | 9 | 1.95 |
| Front pour la justice et le développement | 232,676 | 2.49 | 7 | 1.52 |
| Mouvement populaire algérien | 165,600 | 1.77 | 6 | 1.30 |
| Parti el-Fedjr el-Jadid | 132,492 | 1.42 | 5 | 1.08 |
| Parti national pour la solidarité et le développement | 114,372 | 1.22 | 4 | 0.87 |
| Front du changement | 173,981 | 1.86 | 4 | 0.87 |
| AHD 54 | 120,201 | 1.29 | 3 | 0.65 |
| Alliance nationale républicaine | 109,331 | 1.17 | 3 | 0.65 |
| Front national pour la justice sociale | 140,223 | 1.50 | 3 | 0.65 |
| Union des forces démocratiques et sociales | 114,481 | 1.23 | 3 | 0.65 |
| Rassemblement algérien | 117,549 | 1.26 | 2 | 0.43 |
| Rassemblement patriotique républicain | 114,651 | 1.23 | 2 | 0.43 |
| Mouvement national d'espérance | 119,253 | 1.28 | 2 | 0.43 |
| Front el-Moustakbel | 174,708 | 1.87 | 2 | 0.43 |
| Parti el-Karama | 129,427 | 1.39 | 2 | 0.43 |
| Mouvement des citoyens libres | 115,631 | 1.24 | 2 | 0.43 |
| Parti des jeunes | 102,663 | 1.10 | 2 | 0.43 |
| Parti Ennour el-Djazairi | 48,943 | 0.52 | 2 | 0.43 |
| Parti du renouveau algérien | 111,218 | 1.19 | 1 | 0.22 |
| Front national démocratique | 101,643 | 1.09 | 1 | 0.22 |
| Front national des indépendants pour la concorde | 107,833 | 1.15 | 1 | 0.22 |
| Mouvement el-Infitah | 116,384 | 1.25 | 1 | 0.22 |
| Total | 6,328,323 | 67.76 | 462 | 100.00 |
| Total including votes for parties that did not return a candidate | 9,339,026 | 100.00 | 462 | 100.00 |
| Source: Conseil constitutionnel. | ||||
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Next elections: May 2017 (legislative); April 2014 (presidential).
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June 27, 2012
Official name
People's Democratic Republic of Algeria
Legal system
Based on the constitution of 1976, revised in 1989 and 1997
Legislature
Bicameral: the lower house, the Assemblée populaire nationale, with 462 members, was first elected in June 1997; the upper house, the Conseil de la nation, which has 144 seats, was formed in December 1997, with two-thirds of its members elected through municipal polls and the remainder appointed by the president
National elections
May 10th 2012 (legislative); April 9th 2009 (presidential); November 27th 2007 (provincial and municipal councils); next presidential election due in April 2014
Head of state
President, currently Abdelaziz Bouteflika, elected for a third term on April 9th 2009; Mr Bouteflika is also defence minister
Executive
Council of Ministers presided over by the prime minister, who is appointed by the head of state. A new government was appointed in September 2012
Main political parties
Front de libération nationale (FLN), previously the sole legal party; Rassemblement national démocratique (RND); Front des forces socialistes (FFS); Rassemblement pour la culture et la démocratie (RCD); Mouvement de la réforme nationale (El Islah, Islamist); Mouvement de la société pour la paix (MSP; Islamist); Parti des travailleurs (Labour Party)
The government
Prime minister: Abdelmalek Sellal
Minister delegate at the Ministry of Defence: Abdelmalek Gueneiza
Key ministers
Agriculture: Rachid Benaissa
Defence: Abdelaziz Bouteflika
Energy & mining: Youcef Yousfi
Environment, territorial planning & towns: Amara Benyounes
Finance: Karim Djoudi
Foreign affairs (minister of state): Mourad Medelci
Health & population: Abdelaziz Ziari
Housing: Abdelmadjid Tebboune
Industry, small- & medium-sized enterprises & investment promotion: Cherif Rahmani
Interior & local government: Dahou Ould Kablia
Justice: Mohammed Charfi
Labour & social security: Tayeb Louh
National education: Abdelatif Baba Ahmed
National solidarity: Souad Bendjaballah
Parliamentary affairs: Mahmoud Khedri
Post & information & communications technology: Moussa Benhamadi
Prospective planning & statistics: Bachir Messaitfa
Public works: Amar Ghoul
Trade: Mustapha Benbada
Transport: Amar Tou
Water resources: Mohammed Necib
Central bank governor
Mohammed Laksaci
December 01, 2012
Outlook for 2013-17
Review
December 01, 2012
Fact sheet
| Annual data | 2011 | Historical averages (%) | 2007-11 |
| Population (m) | 36.3 | Population growth | 1.6 |
| GDP (US$ bn; market exchange rate) | 198.5 | Real GDP growth | 2.7 |
| GDP (US$ bn; purchasing power parity) | 306.5 | Real domestic demand growth | 5.9 |
| GDP per head (US$; market exchange rate) | 5,469 | Inflation | 4.9 |
| GDP per head (US$; purchasing power parity) | 8,443 | Current-account balance (% of GDP) | 14.2 |
| Exchange rate (av) AD:US$ | 72.9 | FDI inflows (% of GDP) | 1.5 |
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Background: Algeria gained independence from France in 1962 after one of Africa's bloodiest anti-colonial wars. The hydrocarbons industry was nationalised in 1971. In the late 1980s, after two decades of central planning, some economic and political liberalisation began to be introduced. For most of the 1990s the country suffered from intense violence and economic difficulties. Reforms advanced in the first presidential term of Abdelaziz Bouteflika, but the momentum slowed in his second and third terms. Limited liberalisation and economic reform may resume in the latter part of the forecast period.
Political structure: After independence, Algeria was a single-party socialist state, ruled by the Front de libération nationale. In the late 1980s a series of political and economic reforms began, creating the opportunity for the now banned Front islamique du salut to win control of the legislature in the December 1991 election. However, the army stepped in to annul the election, starting a decade of severe political and economic difficulties. By the end of the decade, the situation had begun to improve. The influence of the military over political affairs has declined as Mr Bouteflika, who became president in 1999, has increased the power of the presidency. Social unrest in 2011 led to a modest round of political liberalisation, including ending the state of emergency and approving a range of new political parties, including Islamist ones.
Policy issues: The government will continue to use public investment to achieve its aims of creating jobs, improving the provision of housing and utilities and developing non-hydrocarbons industry and the services sector. Actual capital spending has increased significantly over the past few years, and the government plans to maintain this momentum through implementing a new five-year US$286bn development programme. The government believes it has sufficient funds saved from earlier large budget surpluses to sustain this expansionary medium-term fiscal policy, although the longevity of these funds will remain contingent on high oil and gas prices.
Taxation: The tax regime is gradually being reformed in a bid to increase flexibility and transparency and to simplify the system. Foreign investors benefit from tax incentives, including five-year tax relief for companies investing in new projects, but since the beginning of 2009 have had to reinvest these benefits and pay a 15% tax on repatriated profits.
Foreign trade: Sharp rises in crude oil prices have pushed up total export earnings in recent years. At an estimated US$77bn in 2012 they were 6% higher than in 2011. Algeria's exports are principally made up of oil to the US and gas to the EU, whereas most of its imports come from the EU, a pattern that will persist during the forecast period.
| Major exports 2011 | % of total | Major imports 2011 | % of total |
| Hydrocarbons | 98.3 | Capital goods | 33.8 |
| Semi-finished goods | 2.2 | Semi-finished goods | 22.6 |
| Raw materials | 0.2 | Food | 21.0 |
| Leading markets 2011 | % of total | Leading suppliers 2011 | % of total |
| US | 18.6 | France | 18.9 |
| Italy | 9.7 | China | 10.6 |
| Canada | 7.6 | Italy | 9.7 |
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December 01, 2012
Data and charts: Annual trends charts
December 01, 2012
Algeria: Country outlook
FROM THE ECONOMIST INTELLIGENCE UNIT
POLITICAL STABILITY: The Economist Intelligence Unit expects the political scene to remain relatively stable in 2013-17. A powerful security-military establishment, a recent history of brutal civil violence and some modest political liberalisation mean that Algeria will avoid the revolutionary upheavals seen in other Arab countries, despite simmering discontent over economic and political conditions. The president, Abdelaziz Bouteflika, has been in power since 1999, and his current, third mandate--secured after constitutional amendments lifted the two-term limit for presidents--runs until 2014. It is as yet unclear who will assume the leadership after Mr Bouteflika's current term expires or even whether the 75-year-old president will be healthy enough to complete his term. The absence of a successor to Mr Bouteflika will represent a considerable risk in the forecast period. However, it is unlikely that any successor would depart radically from Mr Bouteflika's policy of slow political and economic reform.
ELECTION WATCH: The Front de libération nationale (FLN) won the largest number of the seats in the parliamentary election held on May 10th 2012 and will control nearly half the seats in the Assemblée populaire nationale, Algeria's lower house of parliament, on its own. The performance of the FLN raised questions about the legitimacy of the poll, as many new parties (including Islamist ones) that had been created before the election were expected to do well. The parliament has little impact on policymaking, however, and it will continue to act as a body to approve presidential decrees and decisions by the executive.
INTERNATIONAL RELATIONS: Algeria will continue to be a regional ally of the West in the campaign against Islamist militancy and will be the main military force behind efforts to weaken al-Qaida in the Islamic Maghreb (AQIM) in the Sahara and Sahel regions. Maintaining a constructive relationship with the EU will be a priority as the region is a major consumer of Algerian gas exports, provided through long-term contracts. Algerian-US relations will continue to be focused on dealing with militant Islamism and on US interest in the oil sector.
POLICY TRENDS: Despite some consolidation of spending the government will continue to dominate the economy through investment and by maintaining high current spending on wages and subsidies in an attempt to prevent social unrest. Expanding the housing stock and creating jobs will be a priority for Abdelmalek Sellal's government. Restrictions on foreign investment, including a tough tax regime, a limit of 49% on foreign ownership and policies to reduce imports, will be used to protect Algeria's national economic interests and promote domestic industry, but these could be relaxed during the forecast period to encourage foreign businesses to set up locally, with their production replacing some imports.
ECONOMIC GROWTH: Real GDP growth rates in Algeria will remain modest despite the country's large and easily accessibly hydrocarbons resources and the government's ample financing capabilities. The government will continue to account for a large share of the economy as it spends on infrastructure and skills in an effort to diversify away from a reliance on hydrocarbons (36.7% of GDP in 2011). The expansion of the civil service and increases in public-sector wages will provide a base for private consumption, but price pressures and restrictions on credit will limit their impact. Private investment growth will be constrained by a lack of financing (from either the banks or the capital markets) and ongoing uncertainty over whether Algeria will, like its regional peers, experience mass protests. Infrastructure projects (expanding the housing stock and road and rail construction) are under way but are often subject to delays, despite the availability of state funding. We have revised down our forecast of real GDP growth in 2013 to 3.8% (4.3% previously) as we expect the euro zone, Algeria's largest trading partner, to return to recession. The economy will grow by an annual average of 3.6% in 2014-17, supported by government investment and modest increases in hydrocarbons production.
INFLATION: We expect inflation to ease to an average of 4% in 2013 owing to a high base effect from 2012. We estimate that inflation will have averaged 8.5% in 2012 as internal bottlenecks exacerbated sharp rises in food prices. The government took measures to soak up excess liquidity and restrict lending (including by increasing reserve requirements), but we believe these had little effect on prices. Inflation will begin to creep up towards the end of the forecast period as global food prices increase and industrial material prices continue to rise. Algeria is a major importer of agricultural products, leaving it vulnerable to shifts in international prices. Moreover, the import sector is heavily restricted, which creates bottlenecks and can lead to price spikes. The government has also increased wages for public-sector workers in nearly all sectors to stem the rise of unrest in Algeria.
EXCHANGE RATES: Banque d'Algérie (BdA, the central bank) will manage the float of the Algerian dinar, with the aim of preserving exchange-rate stability, particularly against the US dollar, in which Algeria's main export, hydrocarbons, is denominated. The dinar will have depreciated to an estimated average of AD77.84:US$1 in 2012 as the government tried to limit import demands. As the government and private contractors will have to make use of foreign capital goods for state-led investment, the BdA may intervene to push up the value of the dinar to reduce the cost of imports later on in the forecast period. The central bank has large foreign-exchange reserves, estimated at around US$190bn at end-2012, which would enable it to counter any serious downward pressure on the dinar, should it occur.
EXTERNAL SECTOR: The current account will reflect movements in international oil prices. Hydrocarbons dominate the trade balance, accounting for over 95% of exports. This dependency on oil and gas leaves Algeria vulnerable to both price shifts and changing patterns of consumption. We have revised down our growth forecast for the euro zone in 2013 and now expect a contraction in GDP next year, which will dampen demand for Algerian hydrocarbons. Increasing use by the US of its domestic oil production is another long-term concern for Algeria's external account, and the government will support export-oriented diversification. We now expect Algeria to record trade surpluses averaging US$31bn in 2013-17. The government will prioritise the building of pipelines to the coast to ensure that Algeria is able to meet its export commitments. Additional liquefied natural gas trains are also set to come on line in 2013. Remittances will remain an important non-merchandise inflow but will be dwarfed by non-merchandise outflows. Profit repatriation, largely associated with the energy sector, will be the main debit on the income account, ensuring it remains in deficit despite earnings from Algeria's massive foreign assets (official and unofficial). In light of the expected weaker euro zone performance, we have lowered our forecast for Algeria's current-account surplus to 6.1% of GDP in 2013 (6.6% previously). It will average around 5% over the remainder of the forecast period.
December 01, 2012
Country forecast overview: Highlights
December 01, 2012
Land area
2,381,741 sq km
Population
36m (January 1st 2011; Office national des statistiques estimate)
Main towns
Population of main urban areas in '000s (mid-2006 Economist Intelligence Unit estimates)
Greater Algiers (incl capital): 4,825
Oran: 1,150
Constantine: 810
Annaba: 580
Climate
Temperate on the coast, hot and dry in the south
Weather in Algiers (altitude 59 metres)
Hottest month, August, 22-29°C; coldest month, January, 9-15°C (average daily minimum and maximum); driest month, July, 1 mm average rainfall; wettest month, December, 140 mm average rainfall
Language
Arabic (official); Berber language (Tamazight) and French are also used
Measures
Metric system
Currency
Algerian dinar (AD) = 100 centimes or 20 douros
Time
GMT in the winter months; GMT plus one hour in the summer
Public holidays
All Muslim holidays are observed in accordance with the lunar calendar, and the dates are therefore approximate: Prophet's birthday (February 4th 2012) Eid al-Fitr (August 19th); Eid al-Adha (November 6th); Islamic New Year (November 15th). Other public holidays: New Year's Day (January 1st); Labour Day (May 1st); Independence Day (July 5th); Anniversary of the Revolution (November 1st)
March 01, 2012