Trouble is barely masked by Algeria's oil.

Algeria is a prime example of one of those markets where the macroeconomic statistics appear promising but the reality for its consumers is quite different.

The country, of course, is a major oil producing nation and it has what a September 17, 2006 report from the Standard Chartered Bank (SCB) (London) calls an "enviable external liquidity position," which recently allowed the country to pay off a large portion of its debt to Paris Club member states.

Algeria owed us$7.9 billion to the Paris Club of which 90 percent is now paid in full. At the end of 2005, Algeria owed us$16.4 billion to all of its foreign creditors. At the end of the first half 2006 total foreign debt was us$10-billion. The government says by the end of 2006 foreign debt will be only us$5-billion.

What has this got to do with Algeria's consumers? Very little in direct terms. In fact, on the surface it seems almost cynical considering unemployment is running 17.1 percent (a 2005 CIA estimate) and people below the poverty line are estimated at 25 percent (also a 2005 estimate). (Market: Africa Mid-East suspects both of those estimates are very conservative.)

The rationale is that if Algeria can reduce foreign debt the move will encourage foreign companies to invest in the country. This will in turn provide the desperately needed jobs and increase consumer spending.

In fact, the macroeconomic prognosis for Algeria is favorable. The International Monetary Fund (IMF) estimates that 2006 GDP will increase 4.9 percent, and that 2007 GDP will show a slight increase...

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