Discussions on fiscal transparency were held in Algiers from February 22 to March 7, 2004. The IMF mission, comprising Messrs. Lazare (head of mission), Bouley and Calcoen (all FAD), and Bifani (member of the FAD panel of experts), met with the Minister of Finance and the Governor of Banque d’Algérie, senior officials from various ministries, agencies, and public enterprises, and representatives of private sector employers. The mission also met with authorities from the National Audit Court and the Inspectorate General of Finance, and with a representative of the National Economic and Social Council.
The People’s Democratic Republic of Algeria shall hereinafter be referred to as “Algeria.”
There are some 5,560 national and local EPA, according to an IMF Statistics Department mission.
These comprise the National Health Insurance Fund for Wage Earners (Caisse nationale d’assurance maladie des travailleurs salariés), the National Pension Fund (Caisse nationale de retraite), the National Unemployment Insurance Fund (Caisse nationale d’assurance chômage), and the Self-Employed Social Insurance Fund (Caisse d’assurance sociale des non salaries).
An order has the same legal status as a law.
Article 49: “The BA is the government’s financial agent for all its cash, banking, and credit operations. It maintains the Treasury’s current account and handles all credit or debit transactions on this account free of charge. The credit balance on current account earns one percent less interest than that charged for debit balances. The latter rate is set by the Money and Credit Council. The BA also places, free of charge, government or government-guaranteed bond issues and, together with the Treasury’s agencies (les caisses publiques), makes payment on the coupons of government or government-guaranteed securities.”
Article 50: “The BA may handle the servicing of government borrowing and safeguard and manage government-owned securities; and for local governments and public institutions, the BA may place and service their borrowing, make payments on the coupons of the securities they issue, and perform the operations contemplated in Article 49.”
It is estimated that these activities currently cost the Treasury the equivalent of at least one percentage point of GDP per year.
The Treasury occasionally extends explicit guarantees on banking liabilities of some public enterprises or “freezes” liabilities of distressed enterprises (i.e., pending financial restructuring decisions, the treasury services the debt incurred by these enterprises). Furthermore, in the case of at least one of the larger public enterprises, the Treasury has extended an explicit guarantee on bank credit that might be needed to pay the wage bill.
Determination of the repurchase price will be a key factor in the ultimate assessment of the degree of transparency involved in an operation of this kind. However, there are some grounds for doubt, in this respect, given that an explicit governmental guarantee, in another case in 2003, called in by the CNEP, never materialized.
The government estimates that the implicit subsidies in energy prices total approximately US$1 billion per year, but this amount varies with oil price fluctuations. This information is not published.
Furthermore, the electricity and gas distribution company (Sonelgaz) receives a budget transfer to offset the cost of maintaining at below market prices the prices of energy sold to the steel making company privatized in 2001.
The principal laws governing the nonbank private sector are Order No. 03-03 of July 19, 2003 on competition; Order No. 01-02 of August 28, 2001 on investment promotion; Order No. 95-25 of September 25, 1995 on the management of government assets (capitaux marchands de l’Etat); Order No. 03-04 of July 19, 2003 on the general rules applicable to commodity imports and exports; Amended and Supplemented Law No. 90-22 of August 18, 1990 on the commercial register; and amended and supplemented Order No. 75-59 of September 26, 1975, containing the Commercial Code.
The receipts from the sale of the cellular telephony licenses were however posted under nontax revenue.
Oversight over district budgets is exercised by the walis, the government’s representatives at the wilaya level, or by the heads of the daïra, the government’s representatives at the daïra level between the municipality and the wilaya levels). The Ministry of the Interior oversees the wilaya budgets. The walis are also in charge of executing the wilaya budget.
Nevertheless, the Minister of Finance recently undertook, in a speech to Parliament, to submit a draft organic law on budget laws to it in the course of 2004. It is envisaged that such a text tackles the STAs’ shortcomings.
While the periodic “Tripartite” (government, trade unions and employers) meetings and the existence of the National Economic and Social Council serve to reinforce social dialogue, there are no systematic consultation of social partners on tax policy issues.
Parafiscal taxes are taxes and duties collected by the government and earmarked to legal entities other than central and local governments. They must be authorized by a budget law (article 15 of the Budget Framework Law No 84-17).
Tax legislation is contained in five codes: direct taxes and others in the same category; indirect taxes; turnover taxes; registration taxes; and stamp taxes. There is also a customs code (due to be reformed).
Some of these nonperforming claims may be relatively old.
Administrators of appropriations are not truly held accountable, despite the laws in force, except in cases of gross misconduct or embezzlement. Responsibility for budget execution boils down to the personal and pecuniary liability of the government accounting officer.
Thus, in the report introducing the 2004 budget law, operating expenditures for 2005 and 2006 are calculated simply by raising them 2 percent per year.
Procurement regulations were the subject of a Presidential Decree of July 24, 2002, amended and supplemented by a Presidential Decree dated September 11, 2003.
The mission would have liked to receive samples of these statements, in order to examine their contents and possibly make recommendations with a view to extracting the maximum amount of data.
Expenditures are recorded on a payment order basis, not on a basis of disbursement.
The wilaya treasurers are senior accounting officers (comptables principaux) and they centralize the findings of the secondary accounting units in their district, which may extend over more than 400,000 square kilometers.
The geographical distribution of the government accounting officers partly accounts for this not unreasonable lag. Indeed, sometimes there may be a distance of over 700 km between a secondary accountant and the latter’s centralizing accountant.
For administrative centers in wilayas where there is no branch of Banque d’Algérie, a correspondent is appointed to fulfill this function. The BA’s monthly position is published. Each month the BA draws up a statement of its assets and liabilities with the Treasury’s current account balance. This statement is published at irregular intervals in the Official Gazette. This information serves to verify the consistency of Treasury data.
However, this rule was not systematically enforced prior to 2004.