The surpluses of the balance of payments in the 1970s resulted from high levels of hydrocarbon exports, considerable foreign borrowing by the government, and healthy remittances by Algerian workers abroad. The surplus slipped into deficit in the early 1980s, however, as the government decided to ease iÍÍÍÍmport restrictions, suspend foreign borrowing temporarily, and repay its external debt more rapidly. The 1986 drop in the world oil price decreased revenues from hydrocarbon sales, while imports of agricultural products were increasing in response to growing domestic demand the combination of factors further worsened the balance of payments.

Algeria's balance of payments began to improve in 1988, largely because of an unexpected rise in oil prices (see table 6, Appendix). However, the price of, and demand for, imports continued to grow, and the government's interest payments on its foreign debt rose from US$1.5 billion in 1988 to nearly US$2 billion in 1989.

Data as of December 1993