Statements issued by Algerian Prime Minister Abdel Maguid Taboon reflected the increasing role performed by the Algerian businesspersons in the country’s political life. The businesspersons performed a major role in politics during the era of former Prime Minister Abdel Malek Salal.
He expressed his optimism over the future of Algerian economy during the coming period, saying that the country will witness economic progress during the coming period. He blamed the decline of oil prices for the current economic problem, stressing that the country needs serious measures to attract more investments to push forward the country’s economy.
He added, during his speech before the Algerian parliament, that the country will resume keeping freedoms, stressing that such atmosphere is needed to attract more investors during the coming period. He stressed that his government will take serious measure to contain the interference of businesspersons in politics, saying that the major role performed by the businesspersons in the country’s political life led the country to the current problems.
Algeria's new government is preparing the legal framework for Islamic finance and new Islamic bonds and will make changes to its welfare system, largely unchanged for decades, to offset lower oil prices, according to an official document.
The document gave the first indications of policy for Prime Minister Abdelmadjid Tebboune along with new ministers in the key portfolios of finance, commerce and energy. He was named by President Abdelaziz Bouteflika last month.
The North African OPEC member has seen its energy revenues, which account for 60 percent of the budget, more than halved due to the slide in crude oil prices, forcing the government to cut spending, look for new revenue and announce economic reforms.
Tebboune's government will "prepare the regulatory and legal framework relating to participatory funding ... and to issue sovereign bonds for participatory funding," according to its action plan.
Participatory funding is generally a reference to Islamic financing tools. It was one of the first times the government has so openly discussed such financing options, though authorities have said they plan a local bond that is interest-free, complying with sharia law which forbids interest payments.
Authorities in Algeria are cautious about changes to an economic system still largely state run. Many Algerians are also wary about changes that upset social peace following a 1990s war with Islamist militants that killed more than 200,000 people.
The government has in the past largely failed to diversify the economy away from oil and gas, which make up 94 percent of total exports revenue. But it is under growing pressure to speed up reforms and adapt to the new circumstances.
Tapping into money from the country's informal, parallel market, estimated by some at around $90 billion, is among the government's aims in opting for sharia-compliant funding. Tebboune's government also plans to reform the country's vast subsidy system as part of efforts to cut spending, a change to a system that in the past has helped maintain social peace.
Subsidy accounts for about $30 billion in state spending a year in Algeria, where the government subsidies everything from basic foodstuffs and gasoline to medicine, housing and education.
Algeria will remain committed to social welfare policy, but there are plans to "set up new mechanisms gradually so as to identify categories eligible for state aid in an efficient way," the government said in its action plan.
To achieve that goal, the government, named just weeks ago after last month's legislative election, will launch consultation with parliament, political parties and civil society to help smooth the changes.
Algeria has increased the prices of subsidized products including electricity, gasoline and diesel for the first time in years, but experts say the price rise is insufficient to cover production costs for those products.