Financial rationalisation to be accompanied by structural reforms

January 25th, 2018

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APS : Wednesday, 24 January 2018

ALGIERS-The macro-financial rationalization adopted by Algeria will be accompanied by a programme of structural reforms to transform the economy, diversify exports and ensure sustainable growth,
affirmed President Bouteflika in an interview to Oxford Business Group (OBG) released Monday in its report on Algeria “The Report: Algeria 2017.”
Questioned about the step to take to place the country on the path of emergence, President Bouteflika said that faced with the serious difficulties in relation to both public finances and the balance of payments, “we have taken stoke of this crisis situation in our public finance and external resources, and in a more comprehensive way the structural limits of the economic model in force.”
The measures to address this situation have been taken while respecting “a frame of social and economic development that preserves our independence and social balance in particular.”
The necessary adjustments to the budget policy “do not scarify the principles of national solidarity and social justice that have always guided our action and will not be implemented at the expense of the completion of the public equipment programme,” stated the Head of State.
Recalling that in 2018, the funds allocated to the equipment budget will experience an increase of 76% to revive education, health and water projects, and provide further support to local development plans, President Bouteflika said that “social transfers will also be raised by some 8%.”
However, “it must be said that these restrictive measures do not represent a return to any kind of bureaucratic management, nor are they a renouncement of any of our international commitments,” affirmed President Bouteflika.
In this connection, the Head of State said that “the macro-financial rationalisation programme will be accompanied by a number of structural reforms that will contribute to transforming our economy and also help reach further export diversification.”
In response to a question on Algeria’s new economic growth model, President Bouteflika said its implementation “requires deep structural transformations” with a view to ensuring an accelerated economic growth and social equity, freed from dependence on hydrocarbons.”
In this regard, he said “the launch of the new growth model will allow public accounts to regain balance in the short term, particularly in the 2020-2030 period, contributing to GDP growth outside of hydrocarbons revenue, which we expect will grow by an average of 6.5%. Moreover, the model will also make significant GDP per capita growth possible, doubling the participation of the manufacturing industry to 10%, a successful transition that will notably reduce internal consumption rates, and result in a more diversified export portfolio that will support financing growth.”
Speaking about the priority sectors to boost economic diversification and the measures to encourage investment, President Bouteflika stressed that all investment sectors are priority sectors when they contribute to diversifying the economy, reducing imports, boosting non-hydrocarbon exports and encouraging innovation and job creation.
“Our priority is to produce a stable legal framework for private investment, clean up the business environment and make it clearer while inspiring further trust among private investors, both local and foreign,” said the Head of State.
Referring to the organizational and operational actions to support and facilitate investment, the Head of State stressed that “we will continue to take all measures that boost businesses and encourage them to invest in sectors that reduce our vulnerabilities, notably in promising sectors such as renewable energy, digital technology and knowledge-based economy.”
Revision of law on hydrocarbons to further attract foreign investors
As for the Public-Private Partnerships (PPPs), President Bouteflika recalled that the private sector “has always found its place in our economy. It is actually inconceivable for it to grow without a strong and active private sector.”
Concerning the PPP, “our formula has a number of advantages, particularly when it comes to implementing new forms of management, associations and partnerships between the public and private sector, but also when it comes to mobilising financing alternatives to the budget that we hope to promote in the near future,” affirmed the Head of State.
“Furthermore, we encourage any partnership and collaboration process between public and private companies, both national and foreign, to implement infrastructure or productive projects in all sectors of activity”, noted the President.
In this connection, he recalled that “PPPs are not new for Algeria. According to the United Nations Conference on Trade and Development (UNCTAD), Algeria features among the top-five African countries in terms of PPPs in the last 15 years.”
For President Bouteflika, the implementation of the new growth model and the set goals in terms of competitive transformation of the productive structures of the national economy represents “a fertile land for PPP deployment” and, more generally, for an active collaboration between public and private companies on the basis of the win-win principle.”
Besides, the Head of State affirmed that “the current revision of the law on hydrocarbons will help make conditions more attractive to foreign investment in this sector.”
“The financial and technical contribution that foreign businesses will make to oil will allow the country to increase the value of its energy potential to meet the long-term domestic demand and fulfil our international commitments of gas and oil delivery under the projects implemented by the public company Sonatrach.”