Algeria/Morocco: Latest World Bank economic report causes further tensions

By Estelle Maussion
Posted on Tuesday, 18 January 2022 14:27

On 24 August 2021, Algeria announced that it would be ending its diplomatic relations with Morocco due to the Cherifian kingdom’s “hostile actions”. This decision came after several months of tension between the two countries. © FAROUK BATICHE/AFP

The World Bank’s latest report on Algeria’s economic situation has created a media-diplomatic-political conflict, in spite of itself. Published on 22 December, just before the end-of-year holiday season, it could have gone unnoticed had it not been for the official press agency Algérie Presse Service (APS).

By slamming the report, it triggered a tug-of-war between the multilateral institution and Algiers. This war of words is part of escalating tensions between Algeria and Morocco.

A few days after the report was launched, two APS dispatches criticising the World Bank document were published on 28 December. In its first report, the official agency accused the latter of “going beyond its institutional framework”, denouncing “a plot to harm the country’s stability” through “this kind of negative and harmful report, based on indicators and unsourced arguments”.

“Attempt to destabilise”

In its second write up, which was published less than two hours after the first, it complained about “an erroneous report” – particularly with regards to how it evaluates growth and poverty – which was “written at the instigation of certain parties known for their hostility towards Algeria” and constitutes an “attempt to destabilise” the country.

This violent charge had only just begun. In the days that followed, no less than eight other dispatches, on the report or referring to it, were published. Two of them called on experts to counter the World Bank’s observations. One gave the floor to a customs official, who criticised the value of the country’s imports for 2021 – which the World Bank estimated to be $50bn, compared to $30bn according to customs – while the others defended the economy’s good performance despite the Covid-19 pandemic.

On 31 December, Aymen Benabderrahmane, the prime minister and finance minister, tried to calm things down by calling for “a thorough reading of the report”. He said “even if we do not agree on certain data, it is full of positive indicators”.

The country has returned to growth, thanks to the recovery in oil prices and production, but the outlook remains highly uncertain.

It was a lost cause. The APS attack culminated in a final dispatch on 4 January, which stated that “the information that World Bank used to draw up its report on Algeria came from the imagination of a liar named Ferid Belhaj, vice-president of the World Bank in charge of the Middle East and North Africa (MENA) region”.

Clarification

The APS stressed that the “definitive proof” of the “false nature” of the report “was communicated by French friends of Algeria”. Furthermore, it criticised a document “produced under the guidance of the Moroccan royal palace” and cast aspersions on the World Bank vice-president, who was accused of being “a close friend of the Moroccan prince, Moulay Rachid, and many Moroccan ministers”. However, the report does not provide any specific facts or documents to support its assertions.

Although it had remained silent until then, the World Bank finally reacted by publishing a short “clarification” on 6 January. Reiterating that the report “is based exclusively on public data” and that it “was prepared with the utmost rigour” by “a team of economists working on the Maghreb region”, it stresses that its conclusions “are consistent with the official data available at the closing date of the report (1 November 2021), most of which are presented in the Bank of Algeria’s economic report published on 22 December 2021”.

Declining to respond to the ad hominem attack on its vice-president, the World Bank notes “with regret that some of the articles (…) adopted language that may have gone beyond the thoughts of their anonymous authors”. “While unacceptable, we will not respond to these comments, as we consider that they do not carry any weight or constitute an element of debate,” says the World Bank.

The World Bank did not wish to provide with any further details, reiterating that Algeria, “an active member of the World Bank Group, is represented on the institution’s board of executive directors” and that the World Bank supports the country through “12 technical assistance projects”.

Uncertain prospects

Contrary to what the APS indicated, the World Bank report in question does not only “see Algeria as being in the dark”.

“Algeria is enjoying a temporary respite as hydrocarbon prices reach new highs and the pressure of the Covid-19 pandemic eases. The surge in hydrocarbon export revenues is helping to significantly reduce external financing needs and stabilise growing domestic financing needs in the short term,” says the first page of the report’s summary.

“In the absence of a rapid implementation of the reform agenda, the recovery will be fragile and the fiscal and external balances will deteriorate in the medium term,” says the institution, estimating the growth rate of gross domestic product (GDP) in 2021 at 4.1%.

This is a measured assessment of the macroeconomic situation, no more severe than in the past and in line with that of other institutions, including the International Monetary Fund (IMF). The latter, which estimated growth at only 3.2% in 2021, has a similar view in its latest focus on the country, which was published on 2 December and is titled Algeria at a Crossroads.

“The country has returned to growth, thanks to the recovery in oil prices and production, but the outlook remains highly uncertain,” it says. Although “the authorities’ response has helped mitigate the impact of the crisis on the economy,” the “shocks of 2020 have exacerbated the imbalances that have long weakened the economy, precipitating the increase in public debt and the decline in foreign exchange reserves,” says the IMF, calling for “a change in governmental action”.

A tense socio-economic situation

The World Bank’s poverty analysis is also more nuanced than that of APS. “The multidimensional poverty indicator improved in Algeria between 2013 and 2019, reflecting progress in all its dimensions: education, health and living conditions,” says the World Bank. “Although Algeria performs well in the MENA region, and despite notable improvements, multidimensional poverty varies considerably across regions and between rural and urban areas,” it says.

As for the figure of $50bn of imports, which seems to have offended the official news agency, the World Banks indicates that it is an estimate, in other words, a figure subject to revision.

More than the report’s substance, it seems that the diplomatic tensions between Algiers and Rabat, as well as Algeria’s tense socio-economic situation, have played a major role in triggering this conflict. Faced with internal difficulties, Algiers has a tendency to brush aside the threat posed by the Morocco in order to maintain control. This is a very difficult reflex to unlearn.

As for World Bank vice-president Belhaj’s case, some observers point out that he may be a ready-made scapegoat, as his reputation has been tainted ever since it was revealed that he was involved in manipulating the bank’s Doing Business ranking.

The contents of the independent report commissioned by the World Bank to shed light on the affair have always been denied by the main person concerned, who did not respond to our requests for comment. Only one thing is certain: neither APS nor relations between Algeria and the World Bank have emerged victorious from this episode.

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