More opportunities are likely with economic liberalization - Algeria - World Trade Outlook

The Algerian government is moving ahead with plans to liberalize the economy-the October 1988 riots seem to have accelerated the pace of reform. In recent months banks have been granted autonomy in project financing for both the public and private sectors; regulations granting state enterprises monopoly over trade and production in most industries have been abolished; foreign firms are being allowed to set up local offices; tourism has been opened to fully private sector joint ventures; consumer subsidies have been reduced; and the dinar has been allowed to devalue slightly against major currencies. In addition, private firms will now receive a portion of the government-controlled import budget, to be distributed by the National Chamber of Commerce.

Holding companies have been set up to oversee management of state enterprises; the state firms and their holding companies will be evaluated according to their profitability. Firms which cannot stand on their own without govemment subsidies may be liquidated. Key exceptions will be hydrocarbon firms and the state-owned steel company. Further changes are expected under the new government of Prime Minister Kasdi Merbah, which was installed in early November 1988.

Import reductions, declining foreign currency reserves, and an austere govemment budget due to reduced hydrocarbon revenues, have crippled investment spending. Recently, investment spending has been focused on completion of existing projects, with most new projects deferred to later years. However, there are some exceptions; for example, the government is looking for financing for construction of a subway system in Algiers. By and large, however, new investment will not exceed 15 percent of the government's capital budget for the next several years.

Algeria's import market is divided between bulk commodities, and industrial components and spare parts. Onethird of Algerian industrial imports fall in the following six categories: construction equipment; plastics processing equipment, including machine tools and molds; vehicle spare parts, especially engines, tires and electrical components; mining machinery; electric power generation equipment; and computers and peripherals. U.S. firms are competitive in all these sectors.

Other product areas generating imports include industrial refrigeration and airconditioning, agricultural machinery, aircraft and spares, chemicals, food processing machinery, medical equipment and pharmaceuticals, oil and gas field technology, telecommunications equipment, and water resources technology.

The U.S. Department of Commerce is working with the U.S. Information Agency to promote U.S. products through Worldnet satellite television broadcasts; several are scheduled for 1989. In addition, the U.S. and Foreign Commercial Service office is sponsoring the U.S. Pavilion at the Algiers International Trade Fair in June 1989.

Further information on trade and investment opportunities is available from the Commerce Department desk officer for Algeria at (202) 377-4652.

COPYRIGHT 1989 U.S. Government Printing Office
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