ALGIERS - Algeria is preparing a new investment law to improve its business climate and attract foreign investors with the aim of boosting the non-energy sector, Prime Minister Ayman Benabderrahmane said on Thursday.

He also announced plans to develop the country's small stock exchange and launch banking and financial reforms to find new funding sources for the oil-reliant economy.

OPEC member Algeria, which relies heavily on oil and gas exports, has been facing financial problems due to lower energy earnings. The situation worsened during the pandemic, which slammed crude demand and pressured international prices.

The North African country has so far failed to reduce reliance on energy despite promises to develop the non-energy sector, with both local and foreign investors complaining about obstacles, including bureaucracy.

"The government is working on a deep review of the investment law to take care of the various concerns of businessmen and the obstacles that prevented the realization of projects," Benabderrahmane, also finance minister, told parliament after debating government action plan.

"We want to create an attractive investment environment to attract foreign direct investment to our country."

The new law will be ready within a few weeks to be submitted to lawmakers for debate, he said, without providing details on plans.

Legislation approved last year allowed foreign investors to take majority stakes in projects in non-strategic sectors to diversify the economy away from oil and gas. Strategic sectors include mainly energy and pharmaceutical industries.

The new investment law will be accompanied by other measures to seek new financing sources, including developing the Algiers stock exchange, improving banks management, encouraging partnerships between private and state firms to carry out major projects and opening door for greater role of Islamic finances, Benaberrahmane said.

"The banking and financial reform will allow a transparent and efficient management," he said, repeating the government will sell stakes in some of the country's six state banks.

The Algiers bourse is still one of the world's smallest, with a law capitalisation compared with neighbouring Tunisia and Morocco.

"We want to have alternative funding methods," Benabderrahmane said.

(Reporting by Hamid Ould Ahmed; Editing by David Gregorio) ((hamid.ouldahmed@thomsonreuters.com;))