Algeria: Government Foresees Further Increases In Fuel Prices And Water Bills

The Government has decided to set a ceiling to the state annual budget, by issuing instructions to the Ministry of Finance demanding not to skip the 4,000 billion dinars (400 thousand billion centimes) in a bid to adjust next year’s budget as a half-board approach for a smooth management and the other half of the amount covers the equipment budget.

 This is an unprecedented procedure in the history of governments of President Bouteflika and is aimed at enabling the government to reduce annual expenses by half, in line with the decline in external state revenues by more than a half.

“Echorouk” has learnt from government sources that the executive branch agreed to draw up a list of caveats which it forwarded to the Ministry of Finance for the purpose of the formulation of the draft finance bill for the coming year, in coordination with various ministerial departments. 

The latter are supposed to determine their needs and which will be subject this time to the recent guidelines issued by the tripartite meeting, and to ensure a minimum service,  in addition to curtailing the import bill by half and not crossing the threshold of $ 25 billion dollars in expenditures through the year 2017.

According to the same sources, the government is also seriously envisaging further increases soon in fuel prices and water bills in a effort to garner more revenues and stabilize the annual budget for 2017.

To this effect, economic experts are calling for more efforts to curb the current economic crisis gripping the country. They believe that much remains to do to get the economic machine up and, above all, to safeguard internal and external balances. 

They believe that some products that are still funded are not sufficiently expensive to reduce consumption, for example, fuel. In  statements to Echorouk, they advocate a more substantial increase in the price of fuel and water so that it approximates its actual value and, above all, that we reduce the “lingering waste”. 

They believe it is imperative “to flatten the subsidy system.” Besides fuel, the experts also suggest the upward revision of the price of electricity, gas and water. He also called to handle the issue of “wasteful public spending.”

They point out that the widening trade deficit that will exceed all expectations. Estimated at $ 25 billion, the deficit will reach 30 billion and perhaps even surpass it. They thus consider urgent to take stock of the “reforms” carried out since 2014, following the oil price fall. 

They also speak of incentives to investment that deserve to be rigorously enforced. For these experts, the oil crisis is likely to last very long and Algeria’s interest to implement reforms in order to create an alternative economy. they claim that the country has more that needs an economic double-digit growth outside hydrocarbons.

Commenting on the new economic model discussed at the last tripartite encounter, they believe that the most important is the effectiveness of its implementation.  They argued that the government has been slow to take measures to rationalize expenditure. They noted that “it was only during the 2016 Finance law that was actually taken into account the magnitude of the biting crisis whose first element was illustrated by the severe budget constraints.”

This untoward juncture has forced the government to find other ways to “turn on other engines of growth” to mobilize additional budgetary resources.