Lending Institutions, Healthcare and Human Capital in Algeria

Lending Institutions, Healthcare and Human Capital in Algeria
The central bank gives the system its overall consistency and provides resources to other bodies. In addition, laws and regulations underpinning bank supervision may not be formally deficient. However, the extensive state ownership of banks severely undermines regulatory governance (IMF, 2004). Many uncertainties also surround the preconditions for effective banking supervision and sustainable macroeconomic policies. These uncertainties also hinders well-developed public infrastructure, effective market discipline, efficient resolution of banking problems and appropriate level of systemic protection.
Evident in the IMF (2004) report is the award of banking licenses to individuals without experience. The net worth of bank owners could not be reliably established (IMF, 2004). The 1990 law on money did not require full capital payment. This culminated to the failure of the largest private bank in 2003 with assets of 3% of GDP.
The Algerian banking system currently has 28 active lending institutions of which 21 are banks and 7 are financial institutions. There is also one development bank and an offshore bank. The total number of lending institutions has increased from end 1999 when there were 21 as a result of private sector development. Even though, currently there are 15 private banks, the public sector remains predominant (IMF, 2004). They have long been mere instruments of state policies.
Public banks accounts for a high proportion of total banking sector activity, in particular, they represent 86.5% of the aggregate balance sheet, 91% of loans extended and 84% of deposits taken as of end-2002. The restructuring of public enterprises that have been insufficiently productive and not very profitable continues. However, government banks