CHAPTER FOUR: ECONOMIC GOVERNANCE AND MANAGEMENT 458. The recently defined industrial strategy is intended to respond to the problem of the low rate of utilisation of industrial capital, which was less than 50 per cent in 2004. Furthermore, it would have been useful to understand the thrust of agricultural policy. It is evident that the government heavily supported the revival of this sector, although the strategy for regaining the local market and the solely European foreign market is not clear. The same questions could be asked about the advocated development of tourism, especially in respect of neighbouring Maghreb and North African countries. 459. Employment promotion was well documented and fully discussed. The figures produced are indicative of a strong political will. Upon examining them in relation to the active target population, however, it would seem that the results need to be evaluated with a view to redefining strategies. 460. Generally the state lacks experience in diversification and liberalisation and should use outside expertise to address these new challenges. As it has begun to do with industry, it should also engage in dialogue with national economic operators in other sectors of the national economy, such as agriculture, tourism, new high value-added technologies, etc. Finally, the state should find ways to formulate a long-term global and consensual vision for Algeria, which would inform sectoral strategies in the light of liberalisation and privatisation, diversification and reduction of heavy dependency on oil revenues. 461. Mobilisation of internal resources and accumulation of capital. At the micro-financial level, the CRM encourages Algeria to continue to pursue its prudent management of surplus oil resources through the FRR mechanism. Success in this area is the result of Algeria‟s careful budgetary policy, which has kept the budget deficit to a minimum, even though the latter could have been financed internally. Under these conditions of surplus structural liquidity, accumulated as a result of a number of positive economic cycles, the risks are ongoing and the authorities have to continue to protect the economy against them. They should ensure the stability of the treasury in the face of minor deviations, which can quite rapidly give rise to major deviations; and ensure bank liquidity in the face of the temptation to use easy credit to carry out as many projects as possible. The Bank of Algeria should maintain its current rigorous position, which is the reason for the low inflation rate, while also exploring the possibility of managing public savings. This will promote productive investment and the creation of more jobs in the private sector. 462. The financial market is still weak and not well developed. Privatisation is slow, especially that of state banks, which nonetheless adopt fairly cautious policies to ensure the success of sensitive operations. Management of the exchange rate is still too centralised and falls outside the flexible control of primary banks. 463. Susceptibility to shocks. A performing economy cannot afford to be managed in a way that does not take into account possible disruptions that could cause it to deviate from its path. Good governance means that a country has to make 148