response to new financing needs related to private and public enterprises investment programs. as a percentage of nonhydrocarbon gdp, the financing of public and private enterprises through bond issuance reached 3. 5 % in 2006, up from 1. 5 % in 2004. 2. macroeconomic stability and recent strengthening of the financial stability framework the return to macroeconomic stability in 2000 and the financial performance achieved between 2001 and 2008, allowed the domestic economy to weather the global crisis well. in particular, sustained accumulation of foreign reserves between 2000 and 2008 and early repayment of the external public debt in the mid - 2000s put algeria in a position of net creditor vis - a - vis the rest of the world. its net external position reached 91 % of gdp in 2013, in a context of continued prudent management of foreign reserves by the bank of algeria. this external financial stability is supported by bank of algeria ’ s active exchange rate management through its interventions in the interbank foreign exchange market aiming at stabilizing the real effective exchange rate of the dinar close to its medium term equilibrium level. in the first half of 2014, real effective exchange rate slightly appreciated, in a context of disinflation. the inflation performance over the last twelve years, except for the year 2012, is an anchor to monetary stability in algeria, despite structural excess liquidity in the money market. after a surge in 2012, the disinflation process started in february 2013 and continued through 2014, with inflation declining to an annual average of 1. 49 % in july. the contribution of monetary policy to preserving financial stability in algeria remains crucial, given the predominance of the banking sector in the algerian financial system and banks ’ potentially important role in the development of financial intermediation. at the same time, the financial capacity built during the period 2000 – 2008 enabled the budget to mitigate the impact of the 2009 external shock, while avoiding any crowding out effect. this financing capacity remains significant and accounts for 34 % of gdp at the end of 2013, in a situation of very low domestic public debt ( 8 % of gdp in 2013 ) and implementation of fiscal consolidation. in contrast with the case of several emerging and developing countries, credit expansion in algeria continued at the pre - global financial crisis pace, and even at a higher rate since 2010, in particular as regards credit to the private sector. the strong growth of credit to the economy in 2013 ( 20. 3 % against 15. 1 % in 2012

modernization of the existing credit bureau and the establishment of a new infrastructure for the development of a broader credit bureau will provide an important tool to monitor credit risk as of the second half of 2015. bis central bankers ’ speeches the new risk - based, forward - looking supervision approach will be focusing on the banks ’ credit allocation process in order to avoid the reemergence of credit risk concentration. anchored within a framework of strengthened stability, the deepening of the financial sector reform as of 2014 will form the basis for a better allocation of national savings to foster productive investments and financing of nonhydrocarbon inclusive and job - creating growth, that is less dependent on the budget and is driven by smes development. in this regard, a series of recommendations has been formulated at the end of 2012 by a working group chaired by the bank of algeria, with a view of improving the financing of smes development, especially through better access to credit and banking services. these efforts should be sustained. for their part, banks are expected to diversify their smes financing tools, while continuing to improve the assessment, analysis, and management of credit risks. bis central bankers ’ speeches