Algeria’s draft supplementary finance bill (Loi des Finance) — announced by Prime Minister Ahmed Ouyahia in early May — has been revoked following an instruction from the Presidency. Ever since Ouyahia made his optimistic announcement the Presidency has been displeased.

This review of the draft supplementary finance bill, undertaken by the Council of Ministers in Mid-May, has completely reversed the optimistic tone of Ouyahia’s announcements, particularly around taxation amid a higher oil price outlook. The major revisions are that new taxes have been created and existing ones have been increased.

Tax increases include the stamp duties on biometric passports, national identity cards and driving licenses. Taxes on phone recharges are being increased, while a heavy tax is being maintained on imported consumer goods. The new draft of the bill also revokes the agricultural concessions that the government announced previously for foreign investors.

Why has the Presidency overruled the prime minister?

The official line from the council of ministers is that the budgetary difficulties caused by the lower oil price remain. But that does not comply with Prime Minister Ouyahia’s past statement — when the oil price were lower than — that the economic situation of the country had recovered sharply thanks to the use of ‘unconventional financing’ (printing money) and the higher than expected oil price.

The more likely explanation is that the Presidency does not want to allow Ouyahia to gain credit for a possible economic recovery. His past announcements on the supplementary finance bill indicated cause for optimism, both domestically and for external investors. This, more likely than not, made the Presidency feel threatened because it would dramatically enhance Ouyahia’s credibility and presidential electability. That is something that the Bouteflika clan cannot countenance.

This segment is taken from the weekly Algeria country analysis, Algeria Politics & Security. To discuss the topic, or to receive a free sample, please contact us here.