Loukal presents finance bill 2020 before Lower House’s finance committee

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ALGIERS- Minister of Finance Mohamed Loukal on Monday presented the Finance Bill 2020 before the People’s National Assembly’s Committee for finance and budget chaired by Tarek Tridi in the presence of Minister of Relations with Parliament, Fethi Khouil. 

The draft law was drafted in “a particular international context characterized by a fluctuation of the energy market that has made the oil-exporting countries more vulnerable and has led to a deep reflection to ensure permanent financial resources”, said Loukal.

The restoration of major fiscal balances and external equilibrium is needed in the face of the continued pressure on the state treasury due to the decline in oil revenues due to the decline in oil prices to 66.1 dollars last July compared to an average of 73 dollars in 2018 with a decline in the quantities of hydrocarbons exported by 12% at the end of July against a decrease of 7.3% in 2018, added the Minister .

Despite these challenges, maintaining the social policy of the state to preserve the purchasing power of the ordinary citizen, keeping a high budget of social transfers estimated at 1.798,3 billion AD in the bill, or 8.4% of Gross Domestic Product (GDP ) remains among the constants.

The State is careful to maintain a certain level of investment that is able to achieve economic growth and create jobs.

Next year will see “a significant improvement” in ordinary tax revenues of up to AD  $ 300 billion by broadening the tax base, improving collection and combating against tax fraud, according to Loukal.

On the other hand, government spending will suffer “a drop” thanks to the decline in the state of living, as well as spending will generally be streamlined especially with regard to imports, said the head of the sector.

It also forecasts economic growth of 1.8%, the same rate for nonhydrocarbon growth and an increase in the inflation rate to 4.08% in 2020, 5.07% in 2021 and 5.87%. % in 2022.

An increase in hydrocarbon export revenues of 2% expected in 2020

The text forecasts an increase in hydrocarbon export revenues in 2020 of 2% compared to 2019 to reach $ 35.2 billion (against $ 34.5 billion in 2019), due to an increase of 2 , 06% of the quantities of hydrocarbons to be exported.

As for imports, the bill provides for their decline from 13.3% to 38.6 billion dollars in 2020. Imports of goods are expected to fall by 12% and those of services by 16%.

The balance of payments deficit is expected to reach -8.5 billion USD in 2020 against -16.6 billion USD in 2019, a decrease of 8.1 billion USD.

Foreign exchange reserves will contract a contraction at 51.6 at the end of 2020, which represents 12.4 months of imports without factors of production.

PLF 2020 also forecasts a drop of 8.6% to 7.823 billion USD in public expenditure, a decrease of 1.2% in operating expenses and 18.7% in terms of equipment expenditures. The operating budget for next year will provide 33,179 budget items including 16,117 new posts to ensure the management of 1,353 establishments being received for the benefit of several sectors.

In 2020, the payroll will exceed 2,900 billion DA exceeding 2,279,555 positions.

With regard to the capital budget, the PLF has earmarked an amount of 1.619.88 billion DA (37.7%) for the 2020 program authorization budget, in addition to another amount of 2929.7 billion DA for payment credits.

Also, the 2020 budget included a new program of 469.88 billion DA including 190.19 billion AD for new programs and 279.69 billion AD for the revaluation of programs in progress, in addition to 150 billion DA allocated to unforeseen expenses.

In addition, overall budget revenues will increase to 6,200.3 billion DA in 2020, a decrease of 7% due to the decline in the oil tax to 2,200.3 billion DA.

In addition, regular resources will increase by 1% due to the double effect of estimated fiscal imports of 9.2% in addition to the decline of the exceptional imports of 23.1%.

Thus, the 2020 PLF forecasts a budget deficit of -1,533.4 billion DA (-7% of GDP) and a treasury deficit of -2,435.6 billion DA (-11.4% of GDP).

According to the minister, this deficit is explained by the coverage, by the treasury, of the deficit of the National Pension Fund (CNR) which amounts to 700 billion DA / year.

The financing of the treasury deficit for next year, he said, requires a financial coverage of 2.10.6 billion DA through the use of internal resources.

 46 new tax measures and 9 new customs procedures

Regarding the main legislative provisions contained in the text, divided into 42 fiscal measures, 9 customs procedures and 43 different measures, Mr. Loukal said that the bill provided for tax incentives for start-ups, in addition to the creation of 4 types of industrial zones across the country to house these start-ups and create a fund to support them.

In order to improve the investment climate, it has been suggested that rule 51/49 should be deleted for non-strategic sectors.

According to the law, citizens can import used vehicles of less than three years old with petrol engines and respecting environmental standards, with their own financial means.

With regard to the protection of the environment, it has been suggested that an environmental tax be levied on the underwriting of insurance contracts with an amount of 1,500 Da on tourist cars and 3,000 Da on other types of  vehicles, the reorganization of the tax system imposed on high-consumption electrical appliances and the increase in the amount of environmental taxes according to the “polluter-pays” principle.

As for the strengthening of national solidarity, it has been proposed to increase, from 1% to 2%, the solidarity contribution applied to imports for the benefit of CNR.

For his part, the Chairman of the Finance Committee emphasized the imperative diversification of sources of non-hydrocarbon financing, the strengthening of ordinary fiscal resources and the promotion of productive investment in the agricultural sectors. industry and tourism.

Mr. Tridi also stressed the importance of applying the budget management model according to objectives, which has proved its effectiveness on a global scale.

He estimated that the 2020 PLF is based on a conservative price of a barrel of oil in response to fluctuations in international oil prices, highlighting the legislative procedures introduced by the PLF for the simplification of procedures and the improvement and enlargement of oil. the tax base to increase ordinary tax revenues.

These procedures will have to be thoroughly examined by the members of the commission in order to suggest the necessary amendments, he added.

APS

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