On Wednesday, the Board of Directors of the African Development Bank (AfDB) approved a $998.8 million loan to Algeria to finance the country’s Industrial and Energy Competitiveness Support Programme (PACIE).
“With declining oil revenues, Algeria’s overriding economic challenges call for a vigorous policy response built on fiscal consolidation through broadening and strengthening the revenue side, rationalising and reducing expenditures, enhancing the efficiency of capital expenditure to ensure long-term budget sustainability,” the Bank said in a statement.
In addition, impetus will be placed on structural transformation centered on diversification, away from hydrocarbon, and strengthened competitiveness and job creation.
AfDB aligns with priority pillars
The Bank explains that PACIE is in line with the New Economic Growth Model (NMCE) 2016-2030 adopted on 26 July 2016, and addresses Algeria’s need to enhance the resilience and competitiveness of its economy and, hence, lay a solid foundation for sustainable growth that creates jobs and wealth.
Adding that the programme is the first lending operation of the new strategic framework highlighting the cooperation between the Bank and Algeria for the period of 2016-2018.
The programme is aligned with two of the Bank’s top five institutional priorities (High 5s), namely ‘Industrialise Africa’ and ‘Light up and power Africa’.
"It will also have significant ripple effects on the ‘Feed Africa’ top priority by supporting the development of value chains in the country’s regions since agriculture is a strategic sector, as well as on the ‘Improve the quality of life for the people of Africa’ priority," the Bank highlighted.
Boosting socio-economic activity
The financial institution stresses that "PACIE will benefit the entire Algerian population through enhanced competitiveness, which will boost growth and job creation.
"In particular, it will benefit: (i) Algerian SMEs; (ii) investors; (iii) economic stakeholders mostly youth and women to take advantage of opportunities through self-employed status.
"The Board also approved an Interim Country Strategy Paper, which provides an operational framework for the Bank’s re-engagement to support the achievement of the objectives of the Government’s 2016-2018 'New Economic Growth Model,' built on two pillars – (i) industrialisation, competitiveness and development of value chains; and (ii) support for transformation of the energy sector."