afrol News, 27 January - Algeria has avoided a rebellion like Tunisia and Egypt so far. But with youth unemployment exceeding 20 percent, government needs to differentiate its economy to avoid popular protest movement, IMF analysts indicate.
In an open-hearted interview, Joël Toujas-Bernaté, the mission chief of the International Monetary Fund (IMF) in Algeria, warns of "underlying tensions" that could lead to a similar development as in Tunisia - a popular uprising ousting the government.
Asked what impact the social unrest in neighbouring Tunisia could have on Algerians, Mr Toujas-Bernaté says "the two contexts are different from many standpoints - economically, politically, and socially."
"We saw unrest in Algeria earlier this month, triggered by significant price increases of basic food items - sugar and oil. But the authorities were able to take rapid measures to reduce these prices with the temporary elimination of custom duties and the value-added tax on those items," the IMF mission leader explains.
Nevertheless, Mr Toujas-Bernaté warns, "there are still some underlying tensions related to high unemployment among the youth. If there is the perception that the country's oil wealth is not benefiting all segments of the population, this could strain things further."
The IMF mission leader holds that Algeria must head towards economic reform and diversification to avoid further social unrest. "The Algerian economy is dominated by its oil and gas resources, which account for 98 percent of the country's exports. The hydrocarbon sector represents about 40–45 percent of total GDP and about two-thirds of budget revenues," he explains.
feature of the economy is the predominant role of the state. Ninety percent of the country's banks are public, the hydrocarbon company is state owned, and government spending represents two-thirds of non-hydrocarbon GDP," Mr Toujas-Bernaté adds.
He, in agreement with Algerian authorities, holds that the country's major challenge remains unemployment, which remains high, especially among the youth. "I should stress that Algeria has come a long way - a decade ago, youth unemployment exceeded 50 percent. Nevertheless, 21 percent unemployment among the young today remains very high."
Unemployment has been reduced through massive economic growth - mostly oil-driven - during the last decade. Demographic trends had "played an important role" in keeping the unemployment rate high. "The Algerian population is young and rapidly growing, so Algeria needs much higher growth to be able to absorb new entrants in the labour market," Mr Toujas-Bernaté holds.
"The labour force is growing between 2˝ to 3 percent per year. Just to stabilise unemployment and absorb all the new entrants, Algeria probably needs growth in the non-hydrocarbon sector of at least 5 percent," according to the IMF analyst's calculations.
Mr Toujas-Bernaté, in the interview conducted by 'IMF Survey', however emphasised that Algerian authorities were aware of and addressing the country's socio-economic problems, including seeking to diversify the economy.
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