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Economy of Algeria

The hydrocarbons sector is the backbone of the Algerian economy, accounting for roughly 60% of budget revenues, nearly 30% of GDP, and over 97% of export earnings. Algeria is the fourth-largest crude oil producer in Africa. In 2009 Algeria produced 2.13 million barrels per day of oil liquids, of which 1.33 million barrels per day was crude oil. Algeria has the tenth-largest reserves of natural gas in the world and is the sixth-largest gas producer (2008). Algeria produced 3.05 trillion cubic feet of natural gas in 2008, 69% was exported. Its key oil and gas customers are Italy, Germany, France, the Netherlands, Spain, the United Kingdom, and the United States. U.S. companies have played a major role in developing Algeria's oil and gas sector; of the $5.3 billion (on a historical-cost basis, according to statistics gathered by the U.S. Department of Commerce, Bureau of Economic Analysis) of U.S. investment in Algeria the vast bulk is in the hydrocarbon sector.

Faced with declining oil revenues and high-debt interest payments at the beginning of the 1990s, Algeria implemented a stringent macroeconomic stabilization program and rescheduled its $7.9 billion Paris Club debt in the mid-1990s. The macroeconomic program was successful at narrowing the budget deficit and at reducing inflation from near-30% averages in the mid 1990s to almost single digits in 2000. The government reported an inflation rate of 5.7% in 2009 and an economic growth rate of 3.9%. The country's foreign debt fell from a high of $28 billion in 1999 to $4 billion in 2008. The spike in oil prices at various times this decade, along with the government's tight fiscal policy and positive trade surpluses based on oil exports, have led to a tremendous increase in the country’s foreign exchange reserves, which reached nearly $145 billion in 2008.

The government seeks to diversify the economy by attracting foreign and domestic investment outside the energy sector but announced several economic policies in 2008 and 2009 that would strengthen Algerian Government control over foreign investment projects. Algeria adopted a “complementary finance law” on July 22, 2009, which imposed new restrictions on foreign investment, import companies, and domestic consumer credit. The law requires a minimum of 51% Algerian partnership in new foreign investments, a 30% Algerian partnership in all foreign import companies, and payment of all imports by letters of credit opened by banks. The Algerian Government has had little success at reducing high unemployment--officially estimated at 10% in January 2009, though international estimates put the figure much higher--or at improving living standards.

Policies needed to modernize the economy and increase growth are banking and judicial reform, improving the investment environment, partial or complete privatization of state enterprises, and reducing government bureaucracy. The government has privatized or closed some state-owned enterprises in certain sectors of the economy and allowed joint venture investment in others. In 2001, Algeria concluded an Association Agreement with the European Union, which was ratified in 2005 by both Algeria and the EU and took effect in September of that same year. The government continues to expresses interest in working toward accession to the World Trade Organization.

GDP (2010): $159.7 billion.

GDP growth rate (2010 est.): 4.1%.

Per capita GDP (2010 est.): $4,470.

Agriculture: Products--wheat, barley, oats, grapes, olives, citrus, fruits; sheep, cattle.

Industry: Types--petroleum, natural gas, light industries, mining, electrical, petrochemical, food processing, pharmaceuticals, cement, seawater desalination.

Sector information as % GDP (2010 est.): Agriculture 8.3%, services 30.2%, industry 61.5%.

Monetary unit: Algerian dinar.

Inflation (2010 est.): 5.7%.

Trade: Exports (2010)--$56.7 billion: petroleum, natural gas, and petroleum products 97.58%. Partners (First six months of 2010 est.)--U.S. 22.67%, Italy 13.78%, Spain 10.80%, France 8.83%, Netherlands 5.67%, Canada 5.07%. Imports (2010)--$40.2 billion: capital goods, food and beverages, consumer goods. Partners (First six months of 2010)--France 16.57%, China 11.83%, Italy 9.06%, Germany 6.47%, Spain 5.88%, U.S. 5.88%.

Budget (2011): Revenues--$41.56 billion, expenditures--$47.69 billion.

Debt (external, January 1, 2010): $ 486 million.

U.S. economic assistance (2010 est.): $2.61 million (Development Assistance (DA); International Military Education and Training (IMET); Nonproliferation, Anti-Terrorism, Demining and Related Programs (NADR)).

Geography of Algeria

Algeria, the second-largest state in Africa, has a Mediterranean coastline of about 998 kilometers (620 mi.). The Tellian and Saharan Atlas Mountain ranges cross the country from east to west, dividing it into three zones. Between the northern zone, Tellian Atlas, and the Mediterranean is a narrow, fertile coastal plain--the Tell (Arabic for hill)--with a moderate climate year round and rainfall adequate for agriculture. A high plateau region, averaging 914 meters (3,000 ft.) above sea level, with limited rainfall and great rocky plains and desert, lies between the two mountain ranges. It is generally barren except for scattered clumps of trees and intermittent bush and pasture land. The third and largest zone, south of the Saharan Atlas range of mountains, is mostly desert. About 80% of the country is desert, steppes, wasteland, and mountains.

Algeria's weather is irregular from year to year. In the north, the summers are usually hot with little rainfall. Winter rains begin in the north in October. Frost and snow are rare, except on the highest slopes of the Tellian Atlas Mountains. Dust and sandstorms occur most frequently between February and May.

Soil erosion from overgrazing and other poor farming practices; desertification; dumping of raw sewage, petroleum refining wastes, and other industrial effluents is leading to the pollution of rivers and coastal waters; the Mediterranean Sea, in particular, is becoming polluted from oil wastes, soil erosion, and fertilizer runoff; there are inadequate supplies of potable water.

Official Name: People's Democratic Republic of Algeria

Location: Northern Africa, bordering the Mediterranean Sea, between Morocco and Tunisia.

Area:Total--2,381,740 sq. km. Land--2,381,740 sq. km.; water--0 sq. km. More than 3 times the size of Texas.

Cities: Capital--Algiers.

Terrain: Mostly high plateau and desert; some mountains; narrow, discontinuous coastal plain. Mountainous areas subject to severe earthquakes; mud slides.

Climate: Arid to semiarid; mild, wet winters with hot, dry summers along coast; drier with cold winters and hot summers on high plateau; sirocco is a hot, dust/sand-laden wind especially common in summer.

Land use: Arable land--3%; permanent crops--0%, permanent pastures--13%; forests and woodland--2%.

Government of Algeria

Under the 1976 Constitution (as modified 1979 and amended in 1988, 1989, 1996, and 2008), Algeria is a multi-party state. The Ministry of the Interior must approve all political parties. According to the Constitution, no political association may be formed "based on differences in religion, language, race, gender or region." Algeria has universal suffrage at the age of 18.

The head of state and of government is the president of the republic. The president, elected to a five-year term, is the head of the Council of Ministers and of the High Security Council. He appoints the prime minister as well as one-third of the upper house of parliament (the Council of the Nation).

The Algerian parliament is bicameral, consisting of a lower chamber, the National People's Assembly (APN), with 389 members and an upper chamber, the Council of the Nation, with 144 members. The APN is elected every five years. Legislative elections for the APN were held in May 2007. Two-thirds of the Council of the Nation is elected by regional and municipal authorities; the rest are appointed by the president. The Council of the Nation serves a six-year term with one-half of the seats up for election or reappointment every three years. Either the president or one of the parliamentary chambers may initiate legislation. Legislation must be brought before both chambers before it becomes law, but this cannot happen without the support of the presidency. If the APN vetoes legislation, it must technically be dissolved. Sessions of the APN are televised.

Algeria is divided into 48 wilayat (states or provinces) headed by walis (governors) who report to the Minister of Interior. Each wilaya is further divided into communes. The wilayat and communes are each governed by an elected assembly.

POLITICAL CONDITIONS

Terrorist violence in Algeria resulted in more than 150,000 deaths during the 1990s. Although the security situation in the country has improved, addressing the underlying issues that brought about the political turmoil of the 1990s remains the government's major task. President Bouteflika implemented the Charter on Peace and National Reconciliation on March 1, 2006, as one way to bring closure. Thus far, it has successfully gained the surrender of a number of moderate Islamists but, paradoxically, has emboldened the more hard-core elements, in particular the Salafist Group for Preaching and Combat (GSPC), which merged with al-Qaida in September 2006, and changed its name in January 2007 to al-Qaida in the Islamic Maghreb (AQIM).

In keeping with its amended Constitution, the Algerian Government espouses participatory democracy and free-market competition. The government has stated that it will continue to open the political process and encourage the creation of political institutions. Presidential elections took place in April 2009 and returned President Bouteflika to office for a third term. The next presidential elections are scheduled for 2014.

Algeria has more than 45 daily newspapers published in French and Arabic, with a total circulation of more than 1.5 million copies. There are 20 domestically printed weekly publications with total circulation of 622,000 and 11 monthly publications with total circulation of 600,000. In 2001, the government amended the Penal Code provisions relating to defamation and slander, a step widely viewed as an effort to rein in the press. While the Algerian press is relatively free to write as it chooses, use of the defamation laws significantly increased the level of press harassment following President Bouteflika's April 2004 re-election victory and, as a result, the press began to censor itself. In July 2006, President Bouteflika pardoned all journalists convicted of defaming or insulting state institutions. The pardon effectively dismissed the charges against 67 people. Critics point out that, according to the criminal code, insulting the president is punishable by prison sentence. Nevertheless, the pardon was widely seen as a significant step toward democracy. The government holds a monopoly over broadcast media; however, Algerian newspapers are widely seen to be among the freest in the region. Editors of major Arabic- and French-language print dailies often complain of the government’s reluctance to share information, grant interviews, or relax its defamation law. Under this law, a joint criminal-civil lawsuit can be brought against a newspaper’s publisher, editor in chief, and the reporting journalist, which can result in fines, a jail sentence, and civil liability.

Population growth and associated problems--unemployment and underemployment, inability of social services to keep pace with rapid urban migration, inadequate industrial management and productivity, a decaying infrastructure--continue to affect Algerian society. Increases in the production and prices of oil and gas over the past decade have led to foreign exchange reserves exceeding an estimated $150 billion in 2010. The government began an economic reform program in 1994, focusing on macroeconomic stability and structural reform that has met with some success in certain sectors. At the start of his third term in office, President Bouteflika announced that his five-year plan (2009-2014) would include an increase from $120 billion to $150 billion in spending to improve national infrastructure, create three million jobs, and build one million new homes.

Principal Government Officials

President and Minister of National Defense--Abdelaziz Bouteflika

Prime Minister--Ahmed Ouyahia

Minister of State for the Interior and Local Communities--Nourredine Yazid Zerhouni

Minister of State for Foreign Affairs--Mourad Medelci

Minister of State--Bouguerra Soltani

Minister Delegate in Charge of National Defense--Abdelmalek Guenaizia

Ambassador to the United States--Abdallah Baali

Permanent Representative to the United Nations, New York--Mourad Benmehidi

 

Government Type: Republic.

Independence: July 5, 1962 (from France).

Constitution: November 19, 1976, effective November 22, 1976; revised November 3, 1988, February 23, 1989, and November 28, 1996. NOTE: Referendum approving the revisions of November 28, 1996 was signed into law December 7, 1996.

Branches: Legal system based on French and Islamic law; judicial review of legislative acts in ad hoc Constitutional Council composed of various public officials, including several Supreme Court justices; has not accepted compulsory ICJ jurisdiction.

Administrative divisions: 48 provinces (wilayet; singular, wilaya).

Suffrage: 18 years of age; universal.

Flag: Two equal vertical bands of green (hoist side) and white; a red, five-pointed star within a red crescent centered over the two-color boundary; the crescent, star, and color green are traditional symbols of Islam (the state religion).

National holiday: Revolution Day, November 1, 1954

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History of Algeria

Since the 5th century B.C., the indigenous tribes of northern Africa (identified by the Romans as "Berbers") have been pushed back from the coast by successive waves of Phoenician, Roman, Vandal, Byzantine, Arab, Turkish, and, finally, French invaders. The greatest cultural impact came from the Arab invasions of the 8th and 11th centuries A.D., which brought Islam and the Arabic language. The effects of the most recent (French) occupation--French language and European inspired socialism--are still pervasive.

North African boundaries have shifted during various stages of the conquests. The borders of modern Algeria were created by the French, whose colonization began 1830. To benefit French colonists, most of whom were farmers and businessmen, northern Algeria was eventually organized into overseas departments of France, with representatives in the French National Assembly. France controlled the entire country, but the traditional Muslim population in the rural areas remained separated from the modern economic infrastructure of the European community.

Algerians began their uprising on November 1, 1954, to gain rights denied them under French rule. The revolution, launched by a small group of nationalists who called themselves the National Liberation Front (FLN), was a guerrilla war in which both sides targeted civilians and otherwise used brutal tactics. Eventually, protracted negotiations led to a cease-fire signed by France and the FLN on March 18, 1962, at Evian, France. The Evian Accords also provided for continuing economic, financial, technical, and cultural relations, along with interim administrative arrangements until a referendum on self-determination could be held. Over 1 million French citizens living in Algeria at the time, called the pieds-noirs (black feet), left Algeria for France.

The referendum was held in Algeria on July 1, 1962, and France declared Algeria independent on July 3. In September 1962 Ahmed Ben Bella was formally elected president. On September 8, 1963, a Constitution was adopted by referendum. On June 19, 1965, President Ben Bella was replaced in a non-violent coup by the Council of the Revolution headed by Minister of Defense Col. Houari Boumediene. Ben Bella was first imprisoned and then exiled. Boumediene, as President of the Council of the Revolution, led the country as Head of State until he was formally elected on December 10, 1976. Boumediene is credited with building "modern Algeria." He died on December 27, 1978.

Following nomination by an FLN Party Congress, Col. Chadli Bendjedid was elected president in 1979 and re-elected in 1984 and 1988. A new constitution was adopted in 1989 that allowed the formation of political parties other than the FLN. It also removed the armed forces, which had run the government since the days of Boumediene, from a designated role in the operation of the government. Among the scores of parties that sprang up under the new constitution, the militant Islamic Salvation Front (FIS) was the most successful, winning more than 50% of all votes cast in municipal elections in June 1990 as well as in the first stage of national legislative elections held in December 1991.

Faced with the real possibility of a sweeping FIS victory, the National People's Assembly was dissolved by presidential decree on January 4, 1992. On January 11, under pressure from the military leadership, President Chadli Bendjedid resigned. On January 14, a five-member High Council of State was appointed by the High Council of Security to act as a collegiate presidency and immediately canceled the second round of elections. This action, coupled with political uncertainty and economic turmoil, led to a violent reaction by Islamists. On January 16, Mohamed Boudiaf, a hero of the Liberation War, returned after 28 years of exile to serve as Algeria's fourth president. Facing sporadic outbreaks of violence and terrorism, the security forces took control of the FIS offices in early February, and the High Council of State declared a state of emergency. In March, following a court decision, the FIS Party was formally dissolved, and a series of arrests and trials of FIS members occurred resulting in more than 50,000 members being jailed. Algeria became caught in a cycle of violence, which became increasingly random and indiscriminate. On June 29, 1992, President Boudiaf was assassinated in Annaba in front of TV cameras by Army Lt. Lembarek Boumarafi, who allegedly confessed to carrying out the killing on behalf of the Islamists.

Despite efforts to restore the political process, violence and terrorism dominated the Algerian landscape during the 1990s. In 1994, Liamine Zeroual, former Minister of Defense, was appointed Head of State by the High Council of State for a three-year term. During this period, the Armed Islamic Group (GIA) launched terrorist campaigns against government figures and institutions to protest the banning of the Islamist parties. A breakaway GIA group--the Salafist Group for Preaching and Combat (GSPC)--also undertook terrorist activity in the country. Government officials estimate that more than 100,000 Algerians died during this period.

Zeroual called for presidential elections in 1995, though some parties objected to holding elections that excluded the FIS. Zeroual was elected president with 75% of the vote. By 1997, in an attempt to bring political stability to the nation, the National Democratic Rally (RND) party was formed by a progressive group of FLN members. In September 1998, President Liamine Zeroual announced that he would step down in February 1999, 21 months before the end of his term, and that presidential elections would be held.

Algerians went to the polls in April 1999, following a campaign in which seven candidates qualified for election. On the eve of the election, all candidates except Abdelaziz Bouteflika pulled out amid charges of widespread electoral fraud. Bouteflika, the candidate who appeared to enjoy the backing of the military, as well as the FLN and the RND party regulars, won with an official vote count of 70% of all votes cast. He was inaugurated on April 27, 1999 for a 5-year term.

President Bouteflika's agenda focused initially on restoring security and stability to the country. Following his inauguration, he proposed an official amnesty for those who fought against the government during the 1990s with the exception of those who had engaged in "blood crimes," such as rape or murder. This "Civil Concord" policy was widely approved in a nationwide referendum in September 2000. Government officials estimate that 80% of those fighting the regime during the 1990s have accepted the civil concord offer and have attempted to reintegrate into Algerian society. Bouteflika also launched national commissions to study education and judicial reform, as well as restructuring of the state bureaucracy.

In 2001, Berber activists in the Kabylie region of the country, reacting to the death of a youth in gendarme custody, unleashed a resistance campaign against what they saw as government repression. Strikes and demonstrations in the Kabylie region were commonplace as a result, and some spread to the capital. Chief among Berber demands was recognition of Tamazight (a general term for Berber languages) as an official language, official recognition and financial compensation for the deaths of Kabyles killed in demonstrations, an economic development plan for the area and greater control over their own regional affairs. In October 2001, the Tamazight language was recognized as a national language, but the issue remains contentious as Tamazight has not been elevated to an official language.

Algeria's most recent presidential election took place on April 8, 2004. For the first time since independence, the presidential race was democratically contested through to the end. Besides incumbent President Bouteflika, five other candidates, including one woman, competed in the election. Opposition candidates complained of some discrepancies in the voting list; irregularities on polling day, particularly in Kabylie; and of unfair media coverage during the campaign as Bouteflika, by virtue of his office, appeared on state-owned television daily. Bouteflika was re-elected in the first round of the election with 84.99% of the vote. Just over 58% of those Algerians eligible to vote participated in the election.

In the years since Bouteflika was first elected, the security situation in Algeria has improved markedly. Terrorism, however, has not been totally eliminated, and terrorist incidents still occur, particularly in the provinces of Boumerdes, Tizi-Ouzou, and in the remote southern areas of the country. In April 2007, a series of bombings in Algiers targeted a government facility and police stations, killing 33 people. In addition, on July 11 a suicide bomber targeted military barracks in the Kabylie region, killing eight soldiers. The alleged mastermind behind the 2007 attacks was killed later in July during a raid led by Algerian security forces.

In September 2005, Algeria passed a referendum in favor of President Bouteflika's Charter for Peace and National Reconciliation, paving the way for implementing legislation that will pardon certain individuals convicted of armed terrorist violence. The new Charter builds upon the Civil Concord, and the Rahma (clemency) Law shields from prosecution anyone who laid down arms in response to those previous amnesty offers. The Charter specifically excludes from amnesty those involved in mass murders, rapes, or the use of explosives in public places. The Charter was implemented in March 2006, and the window for combatants to receive amnesty expired in September 2006. Approximately 2,500 Islamists were released under the Charter, many of whom are now suspected of having returned to militant groups in Algeria.

People of Algeria

Ninety-one percent of the Algerian population lives along the Mediterranean coast on 12% of the country's total land mass. Forty-five percent of the population is urban, and urbanization continues, despite government efforts to discourage migration to the cities. About 1.5 million nomads and semi-settled Bedouin still live in the Saharan area.

Nearly all Algerians are Muslim, of Arab, Berber, or mixed Arab-Berber stock. Official data on the number of non-Muslim residents is not available; however, practitioners report it to be less than 5,000. Most of the non-Muslim community is comprised of Methodist, Roman Catholic and Evangelical faiths; the Jewish community is virtually non-existent. There are about 1,100 American citizens in the country, the majority of whom live and work in the oil/gas fields in the south.

Algeria's educational system has grown dramatically since the country gained its independence. In the last 12 years, attendance has doubled to more than 5 million students. Education is free and compulsory to age 16. Despite government allocation of substantial educational resources, population pressures and a serious shortage of teachers have severely strained the system. Modest numbers of Algerian students study abroad, primarily in Europe and Canada. In 2000, the government launched a major review of the country's educational system and in 2004 efforts to reform the educational system began.

Housing and medicine continue to be pressing problems in Algeria. Failing infrastructure and the continued influx of people from rural to urban areas have overtaxed both systems. According to the United Nations Development Program, Algeria has one of the world's highest per housing unit occupancy rates, and government officials have publicly stated that the country has an immediate shortfall of 1.5 million housing units.

Nationality: Noun--Algerian(s); adjective--Algerian.

Population (January 2011 official government est.): 36.3.

Annual growth rate (2010 est.): 1.177%. Birth rate (2010 est.)--16.71 births/1,000 population; death rate (2010 est.)--4.66 deaths/1,000 population.

Ethnic groups: Arab-Berber 99%, European less than 1%.

Religions: Sunni Muslim (state religion) 99%, Christian and Jewish 1%.

Languages: Arabic (official), Berber (national language), French.

Education: Literacy (age 15 and over can read and write)--total population 69.9% (2004 est.); female 60.1% (2004 est.); male 79.6%.

Health (2010 est.): Infant mortality rate--26.75 deaths/1,000 live births. Life expectancy at birth--total population 75.26 years; male 72.57 years; female 76.04 years.

Work force (2008): 9.464 million.

Unemployment rate (2010 est.): 30%; Algerian Government estimate 10% in February 2011.

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