Algeria's Hard Road to Prosperity

THE bananas that hang in bunches like giant spiders are the lone cheery note at Abdelkarim's fruit stall in the Algerian capital's central market.

"What's to be happy about," says Abdelkarim, barely visible behind the yellow arachnids that hover over a display limited mostly to apples and a few pears. "At 200 dinars a kilo [about $5 a pound] the bananas aren't exactly hot sellers. People remember that they were half the price last year," he says.

"But the law says we have to do without imports, so we get what we can locally at the prices we can, and decorate to remember the rest," says Abdelkarim, pointing to the faded promotional photos of kiwis that frame a portrait of Elvis. "It's a mean law," he adds, "and I can tell you people don't like it."

The law the fruit vendor refers to dates from October, when the government of Prime Minister Belkaid Abdesselam announced the immediate application of a "war economy" aimed at turning around Algeria's disastrous economic and financial condition over the next three years.

Government officials say it is a "war" Algeria is fighting with itself, to accept years of austerity while reforms in the country's centralized, public-owned economic system are implemented. But the discourse of Mr. Abdesselam and other leaders sounds just as much like a war being fought with "foreign powers" set on thwarting the country's turnaround.

Abdesselam's plan is to stabilize the economy by drastically limiting spending - on nonessential imports such as bananas and kiwis - until increased energy sales starting in 1995 allow an easing-up. With new fields and pipelines coming on line, Algeria expects a major jump in export receipts - primarily in natural gas deliveries to Europe.

In the meantime, one priority is to keep a lid on the country's explosive social condition - primarily by maintaining job-laden public industries and by addressing a dire housing shortage. An indefinite curfew imposed Dec. 5 only adds to the tension.

But the government is walking a thin tight rope. Saddled with a $25 billion foreign debt, repayment of which siphons off 80 percent of the $12 billion in annual energy export revenues, Algeria is desperate for fresh loans.

Such loans will be hard to come by unless the government agrees to restructure its debt. But the government refuses to consider a restructuring that would be accompanied by externally imposed economic reforms.

"Twenty years of debt experience in the third world shows us that restructuring, as practiced by international institutions, results in a snow-plow effect," says Abdel-Madjid Bouzidi, economic advisor to Algerian President Ali Kafi. "You just push everything off farther down the road, and never do get rid of it."

The economic adjustment programs that generally accompany debt-restructuring plans are equally poorly viewed here. "Not only are objectives imposed, but so are the means for achieving them," Mr. Bouzidi adds. "National independence and authority are the victims."

1 | 2

Next