OBG talks to Karim Djoudi, Minister of Finance

Intreview: Karim Djoudi

What efforts have been made to promote investments in Algeria?

KARIM DJOUDI: A wide range of measures are being conducted to promote investment that have impacted several areas, such as the legislative framework, investment activity, land acquisition, development of economic and logistical activity zones, and tax benefits.

The decrease of the tax burden represents a new regime of financial and tax benefits. We are also offering fiscal encouragement for new modes of financing, strengthening bank capital to increase banks’ engagement capacity, and credit guarantees for small and medium-sized enterprises (SMEs). The creation of investment funds, at both national and wilaya (province) levels and state funding for infrastructure are crucial to improving the business environment.

Other policies and actions specifically designed for these kinds of enterprises have also been implemented, such as accelerating the issuance of leasing subsidiaries for public banks, easing measures related to warranties, creating the National Investment Fund in the capital for SMEs and adding a SME category at the Algiers Stock Exchange.

What has been the impact of the 49-51% rule on the Algerian business environment?

DJOUDI: Willingness to invest is not only influenced by shareholding rules but by other factors. Political and economic stability, the overall legal framework governing investment, and incentives and measures granted to investors regardless of their citizenship are also necessary elements that need to be taken into account.

The 49-51% rule has not prevented negotiations with major investors, and it is also important to clarify some issues: this rule allows an association of several partners, management is devolved to the foreign partner and a shareholder agreement is negotiated to define the investment and dividend distribution policy.

Finally, the large number of delegations of foreign businessmen coming to Algeria lately shows that there is active interest for partnership with domestic investors. In addition to its economic stability and abundant natural resources, Algeria holds considerable development opportunities in its domestic market.

How much progress has been made in the fight against corruption?

DJOUDI: Algeria has been engaged in reforming all laws governing its economy to fight corruption as well as other forms of economic crime for a few years now. The revision of these laws aims at strengthening control mechanisms and enhancing transparency throughout the government. Also, new laws targeting specific forms of crime have been enacted. They relate to the prevention of money laundering, terrorism funding and drug trafficking in particular.

In addition, regulatory provisions introduced in the new penal code and code of criminal procedure, combined with the creation of courts specialised in organized crime cases, aim at making judicial intervention more effective in the fight against new forms of crime.

How is Algeria’s contribution to the IMF in line with its exchange reserve principles?

DJOUDI: The IMF had requested assistance from Algeria to strengthen its financial capacity, because the country holds financial surpluses that could increase the institution’s resources, enabling it to provide loans to countries in need. Algeria contributed $5bn to the IMF lending by purchasing Special Drawing Rights (SDR). This operation is an opportunity for Algeria to diversify its investments and reduce the risk of interest rate fluctuations. It is a move that contributes to the stability of the SDR interest rate and gives a yield equivalent, or superior, to that of a leading sovereign debt.

This interest rate is determined on the basis of the rates of developed countries participating in the SDR; it is not volatile, due to the effect of equalisation between interest rates. Thus, this contribution is definably in line with all of the criteria for safety and performance.