France has said it is willing to write off debts owed by Algeria if the former colony awards contracts to some of its leading companies.
Algeria's infrastructure needs improving
Finance minister Nicolas Sarkozy met Algeria's President Abdelaziz Bouteflika over the weekend to discuss ways of strengthening business ties.
He was accompanied by representatives from firms including Total, SNCF, Gaz de France and Bouygues.
Algeria is a significant, if underdeveloped, oil and gas producer.
Interest in the North African country has increased as bloody clashes with Islamic terrorists have declined following an amnesty in 1999.
With a more stable domestic environment and high oil and gas prices, the economy has seen signs of improvement over the past few years.
Mr Sarkozy said he was optimistic about the outlook for Algeria, which won its independence from Paris in 1962, and that France wanted to play a role in its future development.
The Reuters news agency reported that France would be willing to convert 110 million euros (£73.7m) of outstanding loans.
"The idea is that the debt could be transformed into contracts and these contracts can be in the form of concessions or long-term contracts," Mr Sarkozy said.
"That would be an expression of the faith we have in the Algerian economy and of our ambition."
Because of its recent political unrest and natural disasters such as floods, drought and earthquakes, many observers say that Algeria's main resources of oil and gas are underdeveloped.
The re-election of Mr Bouteflika has raise hopes of stability
Algeria has room to increase its daily output of crude, even though it is a member of the Opec group of oil exporting countries which sets production quotas.
Furthermore, much of Algeria's transport and communications infrastructure needs building and updating, providing companies with large and profitable jobs.
A consortium led by French engineer Alstom announced over the weekend that it had won a contract worth 88m euros to electrify local train lines.
Mr Sarkozy also said that France is now willing to underwrite half of the loans needed to finance the first underground line in Algiers.
Initially Paris had offered to take on about a third of the risk.
He added that France would consider changing 61m euros of Algerian debts into new investments, allowing projects planned by Michelin and cheese maker Bel to go proceed.