Algeria - Country assistance strategy : chairman's concluding remarks

ALGERIA: COUNTRY ASSISTANCE STRATEGY CHAIRMAN'S CONCLUDING REMARKS Meetingof Executive Directors June 12,2003 The ExecutiveDirectorswelcomed thejoint IBRD/IFC Country Assistance Strategy (CAS) for Algeria and commendedits quality and comprehensive andcandid assessmentof the challenges facing the country. Directorsnoted with deep sympathy the damage to thecountrycausedby therecent earthquake. They supportedthe Bank re-engagement strategy with Algeria and welcomedthe quality of dialogue and consultationwhich underpinned the preparationof the strategy. Recognizing thepolitical and implementationrisks to thestrategy,Directorsnoted that successful achievement of the CASobjectives will require continuedcommitment,broad ownership of the reform agenda, and socialstability. Directorswelcomed the country'sfocuson growth and employmentcreationto reduce poverty. They congratulatedthe Algerian authoritieson their successin maintaining a solid macroeconomic frameworkand achievinga majorturnaroundin performance over thelast three years despitesevere domesticconstraints. At the same time, they noted withconcern the slowpace of implementationof structuralreformsover the past two years. They underscoredthat Algeria's currentpoliticaluncertainties may slow furtherreform implementationand make achievingeconomicgrowthand povertyreduction even more challenging. Directors stressedthe need to supportthe government in its commitment to and implementationof the agendaof neededreforms. They also underlinedthe importanceof providing such possible Bank post-disaster emergencyassistanceas requestedand appropriate. Directorsappreciatedthe demand-driven nature of thejoint IBRD/IFC CAS,its focus on analyticaland advisory services, andemphasison selectivity. However, they urgedfor more clarity on suggestedperformancebenchmarksand triggers.Directorspointed to theimportanceof the strategy being more results-oriented,especiallygivenits plannedprogrammatic nature.Directorswere broadly supportiveof the CAS's three key priority areas:(i) support to fiscal sustainabilityand hydrocarbon revenue management to build the basis for a sustained growth;(ii) supportto removing theconstraintsfor private sector-ledgrowth,particularlythose affectingthebusinessenvironment,SMEs,the financial sector, and infrastructuredevelopment;and (iii) supportthe Government's efforts toarticulateand implementa strategyfor better service delivery, particularlyfor water supply, housing, environmental services,andhuman developmentto meetthe criticalneeds of its population. Directorsurged the authoritiesto acceleratetheir effortson privatization.Directorswelcomed IFC's expandedprogram of activitiesto supportfinancial sectordevelopment, SMEs, and topromoteprivateinvestmentsin infrastructure.They expressedthe hopethatMIGA will play anactiverole in attractingforeign investmentin the non-oil economy and the WBI will contributeto thecapacitybuildingneeds of the country. Directorsemphasizedthe importanceof continued structural reform and the needto create a favorableinvestmentclimate, as apreconditionto promoteeconomicdiversificationfromhigh dependenceon oil sector.Broadly supportingthe proposed assistance strategy,Directorsalsounderlined the importanceof reforming the public andfinancialsectors,strengthening governance, and building institutionalcapacity.They also stressed the necessityof communicationsin presentingand explaining the CAS to facilitate its implementation.