Algeria investment

By Edward Robinson, Culmer Raphael

Algeria is in a tight spot. Last year, a $5bn trade surplus turned into a $14bn deficit. Hydrocarbon revenues account for around 95 per cent of exports and the government needs an oil price of well over $100 to balance its current budget. Domestic consumption continues to rise, eating up around half of total production, and some economists have questioned whether domestic capital markets will be able to fund a budget deficit of the scale and duration predicted. The country faces a triple challenge: it needs to boost energy efficiency, speed-up infrastructure investment and diversify its economy.

That’s the bad news. The good news is that the government appears to be heeding Churchill’s advice never to let a good crisis go to waste. It is being candid with the public about the scale of the challenge and is coming forward with a range of measures, the sum of which could lead to a genuine improvement in the business climate, as even the IMF noted in a recent trip to Africa’s largest country (and Europe’s second-largest supplier of natural gas). Read more

By Edward Robinson, Culmer Raphael

Events in Algeria could be about to complicate the European Union’s response to Russia’s intervention in Ukraine.

As part of a second possible package of sanctions, the European Commission is drawing up options for “reducing energy dependence on Russia”, to be debated by EU heads of government at the June summit. The obvious options include substituting some Russian gas imports with supplies from Europe’s second and third largest gas suppliers: Norway and Algeria. The CEO of ENI crystallised it last week when he said that he expected a ‘gigantic’ effort to diversify gas imports in the absence of any agreement with Russia over Crimea. Read more

Algeria, with its population of 37m, its energy wealth and growing demand for modern infrastructure and consumer products, could have been a spectacular venue for foreign investment and a great economic player in the southern Mediterranean, writes Borzou Daragahi.

But because of its past and its location, Algeria is one of the toughest places to do business. Its tangled postcolonial history has enthroned a secretive leadership atop a Byzantine bureaucracy resistant to change. Read more