Abderrahmane Raouya, Minister of Finance : Interview

Interview : Abderrahmane Raouya

How will the new Organic Law relative to Finance Laws improve public budgetary management?

ABDERRAHMANE RAOUYA: The Organic Law No. 18-15 put in place in September 2018 defines the general framework by which financial laws are formulated, adopted and executed. This law is part of wider budgetary reforms that will ensure a better management of public funds, and improve the efficiency and transparency of public spending. This can be achieved through a more results-oriented budget with performance indicators established by a new public management, transparent and accurate accounts based on cost analyses, and giving managers new tools for managing public expenditure. In short, the implementation of the Organic Law will result in a restructuring of how finance laws are presented and will help to enhance transparency.

How will a multi-year strategy of public administration increase the visibility of economic actors?

RAOUYA: The multi-year strategy of public administration is a governance tool that defines the actions and needs of public administrations, taking into account both forecasts and recorded results.

This strategy is reflected in multi-year budget planning, including expenditure ceilings for multiple years. This management system, applied to the field of public procurement, allows for the development of a culture of project management as well as the improved monitoring of expenses in the markets. This contributes to better control of expenses, which from a multi-year perspective allows for better medium-term financial visibility and budgetary appropriations.

What incentives are in place to support innovative small and medium-sized enterprises (SMEs)?

RAOUYA: The development of entrepreneurship is one of the major concerns of the public authorities as it is at the heart of the national strategy for diversification. SMEs represent 95% of all companies in Algeria, employing 56% of the working population, and accounting for 52% of non-hydrocarbons production and 35% of value added. We have put in place organisations that encourage entrepreneurship, start-ups and innovative projects, and created start-up accelerators. A seed fund has been created to promote these companies.

SMEs also benefit from a national preference clause in the framework of public contracts when evaluating tenders. Young promoters of innovative projects can benefit from tax and financial advantages provided by investment promotion or employment facilitation mechanisms. Tax benefits are granted in the areas of value-added tax, Customs duties – with a reduced duty of 5% – and company registration fees and taxes. These companies can benefit from bank credit supported 100% by the Treasury. Investment credit guarantee schemes are in place to facilitate repayments.

What is your main focus in terms of subsidies?

RAOUYA: We want to ensure the continued purchasing power of the most disadvantaged social categories. The current system of subsidies comes at an excessive cost, and no longer meets our objectives of reducing inequality. It has therefore become imperative to initiate a reform that ensures the protection of lower-income social groups, by identifying and targeting this population. This reform will come about in a gradual manner, by revising the prices of goods and services, to bring them closer to their economic value.

A study conducted by the World Bank and led by the Ministry of Finance in association with the Ministry of the Interior, Local Authorities and Territorial Planning is focused on identifying the players involved and the necessary tools. The complexity and cross-sectorial nature of this reform requires a cautious and gradual approach in order to build a consensus before implementing a set procedure and setting a deadline for its launch. We are also working on a communications campaign to inform the general public about the measures adopted.