Country profile Algeria

Following the April 2, 2019 resignation of President Abdelaziz Bouteflika, Algeria entered into a transition period headed by an interim president. In December 2019, new president Abdelmadjid Tebboune was sworn in after elections that were largely boycotted.

Algeria’s state enterprise-dominated economy has traditionally been a challenging market, though one that offers compelling opportunities.  Multiple sectors offer opportunities for long-term growth for foreign companies, with many having reported double-digit annual profits. Sectors primed for continued growth include agriculture, tourism, information and communications technology, manufacturing, energy (both fossil fuel and renewable), construction, and healthcare.  A 2016 investment law offers lucrative, long-term tax exemptions, along with other incentives. Rising oil prices in the latter half of 2018 helped reduce the trade deficit and restore some revenue to the government budget, though government spending is still higher than revenue.

The energy sector, dominated by state hydrocarbons company Sonatrach and its subsidiaries, forms the backbone of the Algerian economy, as oil and gas production and revenue have traditionally accounted for more than 95 percent of export revenues, 60 percent of the state budget, and 30 percent of GDP.  The Algerian government continues to pursue its goal of diversifying its economy, with an emphasis on attracting more foreign direct investment (FDI) to boost employment and offset imports via increased local production. Algeria has pursued a series of protectionist policies to encourage local industry growth.  In December 2017, the government scrapped a short-lived policy requiring importers of certain goods to obtain import licenses (the license requirement was subsequently retained only for automobiles and cosmetics), replacing it with a temporary ban on 851 products announced January 1, 2018. The government replaced that ban on January 29, 2019 with a set of tariffs between 30-200 percent on over 1,000 goods.  The import substitution policies have generated some regulatory uncertainty, supply shortages, and price increases.