Foreign Aid

Foreign Aid

Until the early 1990s, foreign assistance to Algeria consisted mainly of generous loans extended by Arab countries on unusually favorable terms. Algerian businesses have also managed to obtain soft credits from trading partners, mostly in France, Italy, and Spain.

The EC's Fourth Protocol (1992-96), however, called for more generous treatment of the Mediterranean countries that were not members of the EC, including Algeria, Morocco, and Tunisia. The Fourth Protocol increased EC spending under the Third Protocol by 28 percent and provided for financing regionally based projects undertaken by Algeria and its Union of the Arab Maghreb partners. The Fourth Protocol also allowed Algeria to obtain larger loans and draw on an EC budget allocation of 70 million European currency units (ECU), compared with ECU54 million in the Third Protocol. Algeria's risk capital provision also jumped from ECU6 million to ECU15 million.

Another important factor that should further enhance Algeria's foreign-aid prospects was the World Bank's increasing support for the government's economic reform program. The World Bank's loans to Algeria between 1990 and 1995 were expected to more than double the US$1.4 billion extended in the period 1985- 89.


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