Prime Minister Abdelaziz Djerad’s recent presentation to parliament of the Algerian government’s action plan — notably the section on the economy — was dominated by: its criticisms of the Bouteflika era and especially the eight months of his predecessor  Noureddine Bedoui’s premiership; and a degree of prudence that rather clashes with the absurdly optimistic statements made by President Abdelmadjid Tebboune (Algeria Politics & Security – 31.01.20).

Djerad’s more realistic assessment of the economy may have been induced by the impact of coronavirus on the oil price — which has fallen to US$10 a barrel less than the average for 2019 — which has perhaps given Tebboune’s team a wake-up call.

As it was, Djerad has always made it very clear that he held little brief for either the previous management of the country and especially the 2020 Finance Law. Indeed, more or less in Djerad’s own words: two decades of Bouteflika followed by eight months of Bedoui has put the country in the situation in which it now finds itself.

The essence of this latest plan is that everything is up for review and especially the 2020 Budget which is likely to be thrown out. Djerad has been ruthless in his condemnation of his predecessor’s proposals for the 2020 Budget and made it very clear that a supplementary budget for 2020 will be introduced fairly soon.

He is committed to reviewing everything with the promise of reviving the economy. While there is no reason to doubt his abilities or good faith, the plan that he presented is open to doubts. In the 70 pages of the action plan there is no trace of any concrete measures that are capable of replenishing the state coffers in the short term — such as widening the tax base to the hidden billions of the informal sector — or the revival of sectors which require effective administration rather than major investment. One example is the tourism sector, for which infrastructure and demand exist, and could start creating wealth immediately if the authorities allow more flexibility in granting visas to tourists.

Perhaps the most interesting thing about the government’s economic plan is to exempt low-earning workers from income taxes. It is also saying all the right things about renewable power projects. The initiative targets the development of 4,000 MW of renewable energy by the time Tebboune’s mandate ends in 2024 and another 11,000 MW before 2035. But there are no details of how this or anything else will be financed. While the programme is big on ambition and very small on detail, we will have to wait for the supplementary budget to fully understand where this new government is trying to take the economy and whether it is remotely feasible. Meanwhile it appears that economic policy is a continuation of the Bouteflika era: keeping fingers crossed and hoping that oil prices rise.

This excerpt is taken from Algeria Politics & Security, our weekly intelligence report on Algeria. Click here to receive a free sample copy.