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Algeria Macro Economic Variables Essay

1083 words - 5 pages


Algeria, officially the People's Democratic Republic of Algeria (also formally referred to as the Democratic and Popular Republic of Algeria), is a country in the Maghreb. In terms of land area, it is the largest country on the Mediterranean Sea, the largest in the Arab world and second-largest on the African continent after Sudan, and the 11th-largest country in the world. It will become the largest African country once the secession of Southern Sudan from Sudan takes place on 9 July 2011.
Algeria is bordered in the northeast by Tunisia, in the east by Libya, in the west by Morocco, in the southwest by Western Sahara, Mauritania, and Mali, in the southeast by Niger, and in the ...view middle of the document...

Algeria's financial and economic indicators improved during the mid-1990s, in part because of policy reforms supported by theInternational Monetary Fund (IMF) and debt rescheduling from the Paris Club. Algeria's finances in 2000 and 2001 benefited from an increase in oil prices and the government's tight fiscal policy, leading to a large increase in the trade surplus, record highs in foreign exchange reserves, and reduction in foreign debt.
The government's continued efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector have had little success in reducing high unemployment and improving living standards, however. In 2001, the government signed an Association Treaty with the European Union that will eventually lower tariffs and increase trade. In March 2006, Russia agreed to erase $4.74 billion of Algeria's Soviet-era debt during a visit by President Vladimir Putin to the country, the first by a Russian leader in half a century. In return, president Bouteflika agreed to buy $7.5 billion worth of combat planes, air-defense systems and other arms from Russia, according to the head of Russia's state arms exporter Rosoboronexport.
Algeria also decided in 2006 to pay off its full $8bn (£4.3bn) debt to the Paris Club group of rich creditor nations before schedule. This will reduce the Algerian foreign debt to less than $5bn in the end of 2006. The Paris Club said the move reflected Algeria's economic recovery in recent years.

Foreign direct investment –

Foreign direct investment are the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments.

Exports of goods and services –

Exports of goods and services represent the value of all goods and other market services provided to the rest of the world. They include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government...

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