Economy
GDP (2006): $92.22 billion.
GDP growth rate (2006): 5.6%.
Per capita GDP (PPP, 2006): $7,777.
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 (2006): Agriculture 9.4%, services 32.5%, industry 58.1%.
Monetary unit: Algerian dinar.
Inflation, GDP deflator (2004): 10.2%.
Trade: Exports (f.o.b., 2006 est.)--$55.6 billion: petroleum, natural gas, and petroleum products 97.52%. Partners (2005 est.)--U.S. 23.5%, Italy 16.7%, France 11.4%, Spain 11.25%. Imports (f.o.b., 2006 est.)--$27.6 billion: capital goods, food and beverages, consumer goods. Partners (2005)--France 28%, Italy 7.8%, Germany 6.3%, U.S. 5.4%, China 6.6%, Spain 7.2%.
Budget (2006 est.): Revenues--$59.26 billion; expenditures--$49.14 billion, including capital expenditures of $5.8 billion.
Debt (external, 2006 est.): $5 billion.
U.S. economic assistance (2005 est.): $4.40 million (MEPI, IMET).

GEOGRAPHY
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, 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 pastureland. The third and largest zone, south of the Saharan Atlas mountain range, is mostly desert. About 80% of the country is desert, steppes, wasteland, and mountains. Algeria's weather varies considerably from season to season and from one geographical location to another. 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, other poor farming practices, and desertification--and the dumping of raw sewage, petroleum refining wastes, and other industrial effluents are 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.

ALGERIA ECONOMY
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 has the ninth-largest reserves of natural gas in the world (2.7% of proven world total) and is the fourth-largest gas exporter; it ranks 14th for oil reserves (2006). 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 petroleum 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 has been particularly successful at narrowing the budget deficit and at reducing inflation from of near-30% averages in the mid 1990s to almost single digits in 2000. Inflation was at 3.6% in 2004. Algeria's economy has grown by more than 5% in each of the past five years, posting 5.6% growth in 2006. The country's foreign debt fell from a high of $28 billion in 1999 to $5 billion in 2006; in that year Algeria paid off the last of its Paris Club debt. The spike in oil prices in 1999-2000 and 2004, the government's tight fiscal policy and conservative budgeting of oil prices from 2000 to present, a large increase in the trade surplus, and the near tripling of foreign exchange reserves have helped the country's finances.

The government pledges to continue its efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector. The Algerian Government has had little success at reducing high unemployment, officially estimated at 13% in 2006, though international estimates put the figure higher, and at improving living standards.

Priority areas are banking and judicial reform, improving the investment environment, partial or complete privatization of state enterprises, and reducing government bureaucracy. The government has privatized certain sectors of the economy and embraced joint venture investment opportunities with traditionally state owned and operated entities. 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 is working toward accession to the World Trade Organization.

DEFENSE
Algeria's armed forces, known collectively as the Popular National Army (ANP), total 138,000 active members, with some 100,000 reservists. The president serves as Minister of National Defense. Military forces are supplemented by a 60,000-member national gendarmerie, a rural police force, under the control of the president and a 30,000-member Sureté Nationale or Metropolitan Police force under the Ministry of the Interior. Eighteen months of national military service is compulsory for men.

Algeria is a leading military power in the region and has demonstrated remarkable success in its struggle against terrorism. The Algerian military, having fought a decade-long insurgency, has increased expenditures in an effort to modernize and return to a more traditional defense role.

Due to historical difficulties in acquiring U.S. military equipment, Algeria's primary military supplier has traditionally been Russia, and to a lesser extent China; Algeria recently made large purchases of advanced weaponry from the former. Algeria has, however, in recent years, begun to diversify its supplies of military equipment to include U.S.-made airborne surveillance aircraft and ground radars.