On 7 December Algeria’s Minister of Finance, Hadji Baba Ammi, presented the text for the 2017 Budget Law to the Senate, which is the last step before submitting it to President Bouteflika for his final signature. The passage in the acquiescent Senate was a mere formality for the Executive. The major part of the work — of getting it through the lower People’s National Assembly (APN) — was done a few days earlier thanks to the most government MPs not even bothering to turn up to debate the Bill and then rubber-stamping it.
One pertinent criticism from the Senate — which has been repeated at many levels around the country such as by former premier Ali Benflis — is that the government, rather than raising taxes, would be doing better to fight illicit enrichment and recovering pubic funds removed from the Treasury through tax evasions and the illicit transfer of foreign currency. That, however, is a touchy subject, because the main culprits are mostly members of the regime including some of its most senior ministers.
In addition to tax increases, the 2017 Budget Law envisages a phasing-out in the coming years (i.e. by 2019) of the food subsidy system in particular. A system of direct (i.e. targeted) aid to the most fragile social categories will replace the current subsidy system. This will make it possible to apply real prices to milk, oil and sugar — which are currently subsidised — and to pave the way for total market freedom. However, the application of real prices to food stuffs that are currently subsidised will accentuate the surge in the prices of all consumer goods, whether local or imported, and dangerously burden the budget of modest households and of the middle class.
The 2017 Budget will put employees at the forefront of the ‘social sacrifices’ to be made. It provides for: a reduction in salary costs by the non-replacement of retiring staff (i.e. 11,338 posts in 2017); the extension of the promotional period for civil servants; and the freezing of recruitment.
This article was taken from Menas Associates’ Algeria Politics & Security publication.
