|
Algeria
Budget
The government's commitment to nurturing a self-sufficient economy
caused its investment expenditure to exceed 50 percent of total
current expenditures in the 1970s and the first half of the 1980s.
Most of the nontax revenue came from the hydrocarbons industry,
which constituted the largest single source of income and provided
almost 65 percent of the country's total revenues until the early
1980s. But the oil price crash of 1986 forced the government to
revise the budget to bring hydrocarbon revenues down to almost
30 percent of the total. The Journal Officiel showed
the percentage of oil and gas revenues dropping from 44 in the
1985 budget to 32 in 1986 and to 23 in the following three years.
These figures continued to vary as the government introduced new
forms of taxation, such as corporation, income, road, and property
taxes. As of early 1993, the most recent tax to have been introduced
was the value-added tax of April 1992, which established a 7 percent
tax on strategic goods (e.g., electricity), 13 percent on reduced
tariff products (e.g., construction materials), 21 percent on
regular rate goods (e.g., automobiles), and 40 percent on luxury
items.
The government continued to face the dilemma of reconciling an
austerity policy designed to reduce a huge foreign debt with a
commitment to sustain a socialist economy with a ferocious appetite
for public expenditure. Rising tax receipts helped the government
cut investment spending by 26 percent in 1986. Continuation of
the austerity program reduced the fiscal deficit by 50 percent
between 1987 and 1989. Fortuitously, increased hydrocarbon revenues
in 1989 reduced 1988's deficit of more than US$4.4 billion to
just over US$1.0 billion.
Historically, the proportion of investment expenditure received
by each economic sector has varied from year to year. The variation
resulted from such factors as the underlying philosophy of each
development plan and the government's proclivity toward heavy
industries. A clear trend has favored either basic infrastructure
projects or education, health, and other social services. The
government could not ignore the latter areas without exposing
itself to serious public criticism or even social unrest. Education,
for instance, received the lion's share of current expenditures
in 1989 (26.9 percent) and in 1991 (25.8 percent), whereas defense
was limited to 9 percent and 8.8 percent for those years. The
construction industry exemplified a neglected sector in early
development plans. The construction sector later caught the government's
eye, however, because of its socially explosive impact on the
severe housing shortage, about which less-advantaged Algerians
had been complaining bitterly.
Data as of December 1993
|
