Algeria must urgently create jobs for its young unemployed, the International Monetary Fund (IMF) said in a report published on Wednesday, highlighting a problem that has fuelled unrest throughout the region.

Jobless young men spearheaded protests in neighbouring Tunisia that helped to topple that country's long-serving president, and there have been anti-government protests this month in Egypt as well as rioting in Algeria itself.

Energy exporter Algeria has about $150 billion in foreign currency reserves, almost no external debt, and forecasts economic growth of 4 percent in 2011. But the economy, dominated by the oil and gas sector, produces too few jobs.

Further reducing unemployment, especially among the young, remains a pressing need, the IMF report said.

Algeria's economy has continued to perform well but the main challenge remains to ensure sustainable, diversified and private investment-led growth to reduce unemployment further, especially among the young, it said.

According to official figures, Algeria's unemployment rate is around 10 percent, while joblessness among the young is more than twice that figure.

Algeria responded to a nationwide outbreak of rioting over price rises early this month by reducing the price of some staple foodstuffs. But the potential remains for new unrest.

There are still some underlying tensions (in Algeria) related to high unemployment among the youth, said Joel Toujas-Bernate, the head of the IMF mission to Algeria.

If there is the perception that the country's oil wealth is not benefiting all segments of the population, this could strain things further, he said.

Tunisia's unrest was triggered by a young unemployed man setting fire to himself in protest at living conditions and his treatment by the authorities.

In Algeria, seven people have since set fire to themselves, local media reported, in apparent copycat protests that have also been repeated in other countries in the region.