Assessment of financial sustainability in Algeria in light of inflationary pressures and fluctuations in oil prices during the period (2000-2020)

Abstract

This study aimed to evaluate the financial sustainability in Algeria in light of inflationary pressures and fluctuations in oil prices during the period (2000-2020).And from the standard aspect, we used the Autoregressive Distributed Lag Model (ARDL) method,Where the results of the unit root tests showed that all variables are stable at the first difference, except for the variable of economic openness, which is stable at the level. As showed that there is a structural shift in the budget deficit as a percentage of GDP and public debt as a percentage of GDP in 2012 and 2015 respectively,As the result of the bound test indicate that there is a co-integration between budget deficit and public debt and this confirms sustainability of the public debt, also the estimated findings showedthe importance of the public debt to explain the budget deficit in the long  and short run, and also showed the existence of a positive relationship between the budget deficit, and both local inflation and the real exchange rate and economic openness in the long run.