ALGERIA ECONOMIC HIGHLIGHTS

UNCLAS ALGIERS 001593

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EINV BEXP PGOV AG
SUBJECT: ALGERIA ECONOMIC HIGHLIGHTS

AIR ALGERIE CEO SUMMONED
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1. Air Algerie General Manager Tayeb Benouis has been
summoned by the prosecutor in charge of the ongoing Khalifa
Airways case. The prosecutor will question Benouis about the
relationship between the state airline company and Khalifa
Group CEO Abdelmoumen Khalifa. The Khalifa Group and various
government officials are still under investigation for
illegal activities that led to the demise of Khalifa Bank
and Khalifa Airways, as well as the loss of billions of
dollars in state and private savings.

BANNING THE IMPORTATION OF USED CARS
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2. The GOA is studying a new law that would ban the
importation of all used cars into Algeria, expanding the
scope of an existing importation ban on used vehicles more
than three years old. The growing black market for used
cars and the ensuing increased auto emissions of older and
less sophisticated car models has led authorities to clamp
down on a potentially harmful trend that shows no signs of
abating. Enforcement of the new measure, however, could be
politically problematic. Previous attempts by former
administrations to expand the ban faced opposition from
deputies in parliament, and the new law would not be in
conformity with the EU Association Agreement and WTO
regulations. During a recent visit to the Port of Algiers,
President Bouteflika expressed his support of a total ban.
About 70,000 used cars have been imported since 2002, valued
at $700 million. Most representatives of foreign automobile
firms, eager to see increased auto sales, hope that the GOA
will expand the existing law and ban all used car imports in
the forthcoming supplemental finance law of 2005.

HIGH-SPEED RAIL LINE FOR ALGERIA
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3. The National Railroad Company (SNTF) will release an
international call for bids on a feasibility study for a 320
km high-speed rail line. The line would link Algiers to
other provinces including Bouira, Bordj Bou Arreridj, and
Khemis Meliana. The project is part of the GOA's massive
five-year plan (2005-2009),which includes an allocation of
$675 million for the modernization of the railroad sector.

A NEW LAW FOR SCIENTIFIC RESEARCH
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4. A new draft law governing scientific research will be
examined and voted in September to amend existing
legislation on the topic. Minister of Higher Education and
Scientific Research Rachid Harraoubia declared that the new
law aims to improve structural and administrative research
conditions as well as the management of scientific research
projects. The commission charged with developing the law
will tackle the lack of funding for researchers to travel
overseas. The draft law will also review and update the
socio-economic objectives of scientific research and the
list of national research programs.

TRADE BALANCE SURPLUS
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5. The National Center for Information and Statistics (CNIS)
reported that, for the first six months of 2005, Algeria's
trade balance recorded a surplus of $9.28 billion, an
increase of 11% from the same period in 2004. Exports
increased 17.25%, reaching $19.89 billion, while imports
increased 22% to $10.61 billion. According to CNIS,
hydrocarbon exports represent 97.7% of the total value of
exports, while non-hydrocarbon exports represent only 2.34%
or the total, with a value of $454 million, representing a
decrease of 0.8% from last year. Industrial equipment was
the largest single category of imported products with a
value of $4.72 billion, approximately 44% of total imports.

SIEVERS