Algeria: Public spending set to rise by 25 per cent

The authorities recognise that how they deal with socio-economic challenges is of the utmost political importance, and this is reflected in additional funding contained in the supplementary finance law for 2011, approved by the cabinet this month. State spending is set to rise from AD6,618 billion to AD8,275 billion – a hefty 25 per cent increase. As finance minister Karim Djoudi explained, the spending hike is required to support the decisions reached by the government in February to alleviate the rising cost of living, to create job opportunities for young people and to promote economic productivity.

Included in the budget is funding for credits to enable access to housing and to finance, and to provide more sources of finance for citizens in need. Some AD400 billion has been set aside for civil servants' salaries and AD178 billion to fund extra subsidies for foods such as wheat, oil, milk and sugar. This means that the bill for subsidies will rise from AD93 billion to AD271 billion for the current year. Djoudi insists that the level of public spending is “sustainable”, and will remain so until 2014–15.

A 20 per cent increase in the state's non-hydrocarbons revenues in recent years would alleviate the impact of the extra spending on the state budget. “Today, what is important for us is to make sure that public resources are a lever for economic growth, job creation and greater equality in the social sphere,” Djoudi told a press conference on 5th May.

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