Algeria’s inclusive budget plan points to president’s fifth term

Ouyahia’s economic plan amounts to “an election programme to prepare for the presidential election in 2019.”

Volte-face. Algerian Prime Minister Ahmed Ouyahia presents the government’s programme to the parliament, on September 17. (AFP)


2017/09/24 Issue: 124 Page: 19


The Arab Weekly
Lamine Ghanmi



Tunis - Algeria’s efforts to finance a comprehensive welfare programme amid an eco­nomic crisis suggest the country’s ailing president intends to stay in power beyond 2019, analysts said.

Algerian President Abdelaziz Bouteflika’s cabinet has agreed to revise money and credit legisla­tion that would allow the Central Bank to print money to manage the government`s budget deficit, esti­mated at $100 billion, for five years.

Bouteflika ordered the “uncon­ventional financing” to avoid incur­ring foreign debt and depleting for­eign currency reserves.

The move was a reversal to a po­sition laid out by Prime Minister Ahmed Ouyahia, who shocked the country with a warning that salaries and retirement pensions for govern­ment employees might go unpaid because of a budget crunch.

Algeria plunged into a severe cri­sis at the end of 2014 when oil prices slumped, causing an abrupt drop in the country’s reserves.

The Fund for the Regulation of Receipts (FRR) — an oil savings fund that had swelled to $445 billion in 2012 — helped the government plug its budget deficit, which was 13.5% of GDP in 2016. However, successive budget deficits have depleted the fund.

Algeria’s economy is dependent on oil and gas exports, with such goods accounting for 95% of foreign currency earnings and 60% of budg­et revenue.

The “unconventional financing” strategy is similar to quantitative easing, an expansionary monetary policy used by the US Federal Re­serve and the European Union to jump-start the global economy fol­lowing the 2008 financial crisis.

Ouyahia outlined the new vision to parliament in mid-September, saying the country had “resisted the crisis for three years… thanks to the president’s decision to bar foreign debt, set up the Fund of the Rev­enues Regulation and the cautious management of foreign currency re­serves.”

The move represents a break from austerity policies of Ouyahia’s pre­decessors, Abdelmadjid Tebboune and Abdelmalek Sellal, and comes despite warnings from economists.

“In 2019 all the foreign currency reserves will be emptied,” former Prime Minister Ahmed Benbitour said in an opinion piece printed in local dailies. “Algeria will face two choices: Reduce import bills and that is impossible or resort to foreign debt and that will be impossible too.”

Ouyahia pledged the “unconven­tional financing” plan would keep welfare programmes afloat and help finance the construction of 1.6 mil­lion free housing units for 2018-19. It would help fund job-creation plans for 53,000 new enterprises employ­ing 230,000 employees, as well as maintain funding for subsidy pro­grammes that cost $27.5 billion an­nually, he said.

In addition, Ouyahia pledged to freeze taxes for next year’s budget and push import bills higher.

Economist Samir Allam said Ouyahia’s economic plan amounts to “an election programme to pre­pare for the presidential election in 2019.”

“The Central Bank will print mon­ey for the equivalent of $20 billion annually for four or five years to fi­nance budget deficits, to pour more money into state banks and pay debts of several state companies, including (oil monopoly) Sonatrach and (power utility) Sonelgaz worth a total of $15 billion,” he said.

Former Speaker of Parliament Abdelaziz Ziari, a leading figure in the ruling National Liberation Front (FLN) party led by Bouteflika, said he could “not rule out a fifth term for the president.”

“Until further notice, the presi­dent is in the same health condition of the day when he was elected for a fourth term (in 2014),” he said.

While Bouteflika’s support­ers hailed the president as “a man emerging from the past to save Alge­ria’s future,” opponents have called for measures to prevent him from seeking a fifth term in office in 2019. Some have suggested the military should intervene.

The military, however, has opt­ed against such action, saying it is “committed to their constitutional republican duties.”

Military Chief Ahmad Gaid Salah, in a speech September 18, expressed support for Bouteflika and his poli­cies.

“Gaid Salah appeared to assert his allegiance to the head of state. It is a message aimed at those who ask him to intervene to stop a fifth term as well as to Bouteflika to affirm to him that he is always backing him,” said political analyst Hani Abdi.

Bouteflika, elected in 1999, is cred­ited with restoring political and so­cial stability to Algeria after a bloody civil war in the early 1990s.

He suffered a stroke in 2013 that left him with long-term health prob­lems and confined to a wheelchair. He has rarely been seen in public since.


Lamine Ghanmi is a veteran Reuters journalist. He has covered North Africa for decades and is based in Tunis.


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