Inflation has a direct impact on the purchasing power is back in Algeria, threatening to undermine the macroeconomic balances that have required significant sacrifices of the Algerian population since 1994 dated rescheduling as having lagged behind in the microeconomic reforms and institutional changes. Algeria is likely to return to square one if we have this vision of the past that the development assimilates spending money through the rent of hydrocarbons, and achievements without worrying about the physical impacts and costs in an economy increasingly globalized. While posing the problems, far from euphoric speech and legalism is the subject of this modest contribution to the approach of the holy month of Ramadhan, because for small grants, the bitter fact is, prices for wide products Consumer experiencing unprecedented increases during this period, the organizations expected to make merchants have little impact, preaching in the desert.
1 - What is the origin of inflation?
Algeria-focus (August 4, 2010) - As the issue as complex as that of inflation, it seems worth noting that these phenomena must take into account the structure and characteristics of the economy to which they are applied, aspects of international economic structures of the domestic economy resulting from the election strategy of economic development, consumption patterns generated within it for historical reasons, socio-cultural influences and components of various social forces to capture a fraction of national income.
Urgency through regulatory mechanisms for price control is not very effective, otherwise it would take an army of controllers with huge costs. This inflationary process is amplified by the influence of the informal sphere, proceeds from the central bureaucracy and local relationships with the diffuse sphere of corruption, saying the international relations of the three years 2005/2009 to a rank of Algeria high levels of corruption, it is intelligently integrate away from inefficient bureaucratic measures, controlling 40% of the money supply in circulation with financial intermediation Informal.
The counterfeit market gangrene in Algeria Algeria's economy, since by some estimates 1 / 3 of sales in Algeria are counterfeit. And all sectors are affected (tobacco, cosmetics, clothing, household appliances ...) but also much more sensitive areas such as automotive parts, half counterfeit endangering motorists. Even drugs are concerned, since most are imported and are expensive. In employment, the proportionate share of the informal economy, the rate of population working in the informal sector grows about 8% annually, according to reports from CNES which would give us the rate in 2009 announced recently by the Ministry of Labor over 25% of the workforce with a contribution in the GDP (gross domestic product) nonhydrocarbon 20 to 25%.
An investigation by the CREAD (Centre for Applied Economic Research for Development) shows that over 7500 SMEs, 42% of the workforce are not reported and 30% of their revenue outside the tax department. On justly tax evasion due to the informal sphere, for the General Union of Algerian Traders and Artisans (UGCAA) in a statement May 19, 2009 reproduced by the official news agency APS loss of earnings caused by tax evasion in commercial transactions in Algeria exceeds 200 billion dinars annually, at the current 2.6 billion.
Over 80% of business transactions are no billing, while 70 to 80% of transactions use the "cash" as a means of payment, while the base of the modern economy relies on credit, and that beyond 100 dollars, the credit card is often required. But it does not accept checks by administrative measures (laws) of little efficiency, but by global regulatory mechanisms transparent and arises from the effectiveness of this measure to impose a check for an amount exceeding 500,000 dinars without addressing the cause of this anomaly are dysfunctional structures of the State and lack of confidence. This sphere
controls four key segments: the fruit and vegetables, meat, one fish for domestic goods and imports, textile - footwear (posing the problem of customs control). The finding in Algeria is the lack of genuine competition, with a tendency to substitute a state monopoly a private monopoly more harmful that could amplify the passage, without transition or reforms in the financial system, rather than income distribution, the Remdoc Crédoc the latter requiring significant financial resources.
It follows that the circuits between the producer and the consumer (wholesale informal) tend to lengthen, the profit margin of between 2 to 3 times the price of production (especially in agriculture), which does may discourage immediate producer and direct it towards speculative activities. The reason for the inflationary process, deeply tied to the logic of accumulation in Algeria, is structurally related to low supply resulting from the failure of comprehensive reform. Because, since 1986, Algeria is in an endless transition is neither a state-controlled economy, nor a true competitive market economy, explaining the limited effectiveness of both the political regulation, social and economic development.
For the government, the inflation rate was 1.6% in 2005, 3% in 2006 to 3.5% in 2007, 4.5% in 2008, 5.7% in 2009 and 5 4% for first 6 months of 2010. However, as an important document for a study on North Africa and Middle East American Research Center, Casey Research dated March 6, 2008, the inflation rate in Algeria is 12% for 2008 according to this study, against an average of 7 / 8% at the Mena region, putting also question the statements of experts of the IMF mission in Algiers in mid November 2009 as saying that the inflation rate going down, the trend in 2010/2011 should not fundamentally change.
In this case the interest rate can not be less than the inflation rate, what will the future monetary policy of the Bank of Algeria, though this rate is maintained at this level are likely to go to recapitalizations repeated at the risk of failing banks that are primary imposes an interest rate below the inflation rate, posing the dilemma of investment that can only be achieved with a relatively low interest rates. Invoke foreign exchange reserves exceeding 150 billion dollars, a positive trend in overall income between 2000/2010 approximately 31% (that is indisputable in terms of overall figure) but an overall figure has little meaning without an analysis of the social structure.
Besides these data are challenged by the statements of Minister of Solidarity in 2009 that announced in Ramadhan triumphantly past the distribution of increasingly high baskets of Ramadhan. More than 1.2 million baskets with a financial envelope for this operation more than 3 billion dinars.
It reflects the extension of undeniable deterioration in the purchasing power of the majority not to mention that according to the latest UNDP reports 2007/2009, 2.3 million Algerians living in makeshift homes with a consumption pattern away from international standards, a person under nutritionnée impacts both labor productivity with frequent illness, explaining in part the surge of post importation of drugs (more than U.S. $ 1 billion between 2007/2009). Certainly
solidarity as well but it just reminded one of the most famous economists of the twentieth century, the British government advisor, and negotiator Breeton Woods Agreements of 1945, John Maynard Keynes "some leaders misused public funds merge with their income. If they want to work really good charity, they do so on their own bank account. "
we not attend to this paradox in foreign exchange reserves and the significant deterioration of purchasing power the majority with an excessive concentration in favor of a minority annuitant. Have we not a rich country but a population increasingly poor with an uncertainty for the future in so far in 16/20 years as the Algerian exports of oil that gas will flow to the exhaustion according to the standards financial profitability because you can discover thousands of deposits but not profitable, that is to say tomorrow with a population of 36 million in 2010 and will approach 50 million inhabitants in 2030 where this strategic issue how to pass a cash economy to a non-hydrocarbon economy taking into account new global change?
2-What is the purchasing power of the Algerians against the concentration of national income?
Any reliable wage policy that would promote the creation of lasting values, there is an emergency investigation precise analysis of the dialectical relationship between the concentration of income source of social injustice in favor of speculative layers at the expense of both producers wealth and the process of capital accumulation, investigations nonexistent in Algeria but the trappings of wealth of a minority rentier (not wealth-creating entrepreneurs) show clearly.
Linked to the previous aspect must be taken into account the analysis of the productive middle pillar of any development in endangered middle course and not productive at rentier gravitating spheres of power by extension, wealth-destroying . While the Algerian SNMG has more than doubled from 6,000 to 15,000 dinars in recent years, but despite this increase, one question is: How does an Algerian who lives in SNMG, (140 euros per month, or 4 euros per day, while a kilo of meat in August 2010 from 10 euros) faces spending constraints and indispensable: food, transportation, health, education.
This deterioration of purchasing power is reinforced by the devaluation of the dinar ring that inflates the prices of goods imported and is now accepted that a family with 5 dependent children who do not work needs a minimum net income of 36,000 dinars. Based on the basket that keeps unchanged the National Statistics Office (NSO) for years while the need is historically dated, inflation would be controlled by the government while the returns to experience a different reality . The gap between perceived inflation by the Algerian and that calculated by the ONS shows the difficulty of verifying the veracity of official data. Never
between 2007/2010, the concentration of income in favor of a minority of rentier strata and corruption have been so important to explain that certain government austerity measures even commendable in these moments of crisis, not impact of mobilization and instead a general rejection because the sacrifice is not shared, demobilization accelerated by various scandals. More so than inflation according to our surveys, the majority of the population with a net income less than 20,000 dinars spent more than 80% of its income on necessities while under investigation CNEAP September 2007, the rate was already 70%.
However it should not be utopian, and be realistic, the quadrupling of the minimum wage would result in an uncontrolled inflationary process that would penalize the most vulnerable fixed-income posing the problem of inefficiency of the overall expenditure essential source of inflation in Algeria, to carry out targeted actions to promote exceptionally two segments as recommended World Bank to Algeria, education and health, which creates value over time, unlike other segments of civil servants who receive a transfer value.
However, the monthly payment generally a teacher from primary to tertiary supposed to train leaders of tomorrow, late career, is about a third of those of his colleagues Morocco and Tunisia, with further increases (less than one third compared to the salary of a backbench MP or senator for a university professor) and 80% of this amount in retirement (giving away a quarter of that retirement of senior executives is 100%) besides working conditions much better, especially considering: the status of the elite level of society in Algeria devalued which contradicts the speech. For companies
any increase must be linked to productivity, but unfortunately in Algeria that productivity is dependent on overall economic policy often incoherent because public managers were not truly independent since being returned to the administrative management of the past while defining the company is just taking risks facing a turbulent world. So how to place the responsibility where the firm has low productivity based on a bad policy?
Paradoxically, the informal sphere is currently playing in Algeria with the family as a social buffer, the housing crisis (same pot, same specifications) and distributions of income without creating value in the name of solidarity (although the destination social transfers, a staggering 10% of GDP in 2007/2009, is not always the most disadvantaged) to allow a family to have multiple income over time temporarily postponing social tensions to the extent that any nation does not distribute than has been previously produced.
You still can invoke to explain inflation and hence the deterioration of the purchasing power of most Algerians, only the effects of past wage increases especially at the Civil Service (the amount estimated at about 170 billion dinars annually, or about 1.8 billion euros, pittance), the drop in oil prices, as proof, the price of oil hit a course between 110 / 140 dollars, having stagnated wages and inflation relatively under control, or outside because with global crisis see deflation, decreased activity, unemployment, lower prices, whereas in Algeria we are seeing stagflation (recession, unemployment and price increases).
In emerging markets, although the rate of inflation is relatively high as in China, India, Brazil or Russia, but the growth rate is above the world average. Is the question facing deflation (lower prices globally) why the Algerian consumer does not benefit? The main reason for the failure to pass these lower prices globally is that the central bank devalued Algeria simultaneously (and it is a paradox since the listing of these currencies is not moving in the same direction) the dinar against the dollar at a time, 15% and the euro over 20%, but as shown in latest Customs statistics of November 2009.
Moreover, these devaluations artificially inflate oil taxes and regulation fund in non-convertible dinars, obscuring the importance of the budget deficit. Government measures contained in the Supplementary Budget Law 2009/2010 have not had and will have no significant impact on the value of imports, in terms of overall value, affecting some swelling but other segments, because the swelling is essentially public spending, assistant always a monetary value up to $ 40 billion for both 2009 and 2010 if we maintain the current pace of public spending.
For reassessments of ongoing projects ranging from 20 to 25% on average, more for others, remediation repeated public companies, tens of billions of dollars between 1991/2010 with mixed results over 70% of these companies being returned to the starting square, public banks controlling about 90% of the overall credit to the economy in 2009, being sick of their customers enterprises where repeated recapitalizations, excluding doubtful accounts of some private companies, reflecting both the inefficiency of public expenditure and low overall productivity (blocking systemic) source of inflation.
That lack of an objective and calm which is attributed only to wage inflation, so that we forget they regress in Algeria in the gross domestic product was less than 20% in 2009 against over 50% in developed countries and emerging markets, reflecting desalarization dangerous of the Algerian economy for the benefit of annuities destructive of wealth, forgetting that the salary is certainly a cost, but also a demand that the couple work / intelligence combined with good governance are the fundamentals of value creation and competitiveness in the twenty-first century.
3-Fight against inflation: a socio-economic policy more visible and consistent
The objective to improve the purchasing power of the majority passes the time by improving the overall reform The removal of environmental constraints that hinder the development the company creates lasting wealth, including terrorism bureaucratic, sclerotic financial system, a socio-educational inadequate and the thorny issue of unresolved land to date, and management of public expenditure to promote sustainable non-oil growth, infrastructure and foreign exchange reserves is just one way.
Now we are seeing now is a waste of resources because we should never forget that both the reduction of external debt (less than 4 billion dollars) of domestic public debt (less than $ 1 billion) in late 2009 is of the annuity hydrocarbons and not value creation.
is that public expenditure between 2004/2009 and 2010/2014 between certainly if there is not a new governance is not commensurate with economic and social impacts, noting that the infrastructure are a secondary means of development and the recent negative experiences of Spain and the recent failure of semi Dubai are striking examples. For without a growth rate of 6 / 7% per year over five years based on non-oil real enterprising, the current growth rate nonhydrocarbon being fictitious as the rate of Official unemployment, as the majority of these segments are irrigated by public spending through the oil it is impossible, it is a universal economic law, to create 3 million jobs reliable value-added and thus increase the medium term wages so the purchasing power of Algerians at the risk of hyperinflation in a fall in the price of oil because there is no real wage policy but redistribution of rents.
And what will it be for future pensions without hydrocarbons with the mismanagement of social security funds, the National Statistics Office (NSO) make public from July 20 2010 a survey of the second half of 2009, it highlights that half of the employed population was not affiliated to social security in the 4th quarter of 2009, a rate of 50.4% of all employed workers. More specifically, the 9,472,000 workers employed identified, 4,778,000 people are not affiliated with the social security system, a busy two. Also, the purchasing power of Algerians raises the whole issue of greater coherence and visibility of socio-economic changes avoiding perpetual legal frameworks as if laws were ending the distortions that have their origin in the dysfunction of the system as the importance of the informal sphere, the company brings forth its own rules of operation when authoritarian measures without consultation and social dialogue are imposed.
As she raises the issue of the two basic development of the XXI century namely the rule of law, good governance and enhancement of knowledge. The analysis of inflation in a world increasingly interdependent, is inseparable from the analysis of regulatory mechanisms linking the accumulation, distribution of national income and the model consumption by social strata, analysis of new mutations inseparable world whose place of Algeria in the Arab-African, Euro-Mediterranean where the importance of integration of the Maghreb.
Dr. Abderrahmane Mebtoul University Professor, International Expert - Economist
NB-Editor Mebtoul Abderrahmane, study disciplines (economists, sociologists, demographers) between January 2006 and May 2007 for the Algerian authorities "Responding to Global Change, proposed a policy of employment and wages for Algeria between 2008/2012 "(5 volumes 925 pages).
