CHAPTER FOUR: ECONOMIC GOVERNANCE AND MANAGEMENT the group of countries which included Algeria had a slower economic growth rate that dropped further as inflation increased. This point would therefore have to be clarified before relying on strong growth after relaxing inflation control. In any event, the government‟s efforts in inflation control should be applauded, given the increase in public spending and large financial surpluses due to increased oil prices. This is evidence of conservative and enlightened policies for sterilising foreign exchange surpluses and fixing salaries. 445. Comfortable public finances dampened the effects of takeover mergers to finance the economy, even though qualitative measures are required to reduce dependency on the oil sector (about half of total income). Non-oil income increased by more than 78 per cent between 2000 and 2005, which is a net improvement. Total income on GDP was about 22 per cent, including 11.9 per cent of oil tax earnings, which still represents low tax earnings in relation to the rest of the economy. While total expenditure fell from 29 to 26 per cent for the same period, capital expenditure increased by 140 per cent and operations by 35 per cent. 446. External accounts reached a historic peak (18 per cent of the GDP in 2005), allowing anticipated payment of external debt. Like exports, imports also more or less doubled, whereas foreign exchange reserves increased almost fivefold at US$56.2 billion, with the average crude oil price increasing from US$28.6 to US$54.3. The import-export coverage rate was very high, at 175 per cent in 2004. Heavy industrial and agricultural equipment (40 per cent) and semifinished goods (20 per cent) represented a high proportion of imports, while food products represented 20 per cent and other consumer goods 15 per cent. Exports were almost exclusively made up of petroleum products (Table 2). 447. Development partners were pleased with the monetary stability of the country, because in an environment where liquid assets predominate, relative stability in the exchange rate would be considered a good thing. By way of example, the monetary situation shows that site deposits almost doubled between 2000 and 2004, while foreign earnings tripled over the same period (Table 3). 448. Financing from the Issuing House to the Public Treasury did a total about-turn, going from DA+677.5 billion to DA–939.3 billion in 2000 and 2005. The hitherto weak public sector currently absorbs more than half the economy‟s credits, compared with the public enterprise sector. 449. However, in the context of sustainable development, such progress demands a less simplistic solution both for environmental protection and the rational utilisation of natural resources, and for bridging the generational gap and safeguarding the future. In the absence of an effective development model in the CSAR, or any substantiation coming from contacts on the ground, the CRM was not able to establish whether the reference framework for national productivity reflected conditions that favoured improved internal and external competition, substantial diversification of the economy, with increased private local and foreign investment, and employment-generating economic growth, especially for the youth, and so forth. 143