Algeria’s 2025 Finance Bill: Key Features, Advantages for Strengthening National Economy, Enhancing Citizens’ Living Standards

BY: Dr. Hana Saada

Algiers, Algeria | November 20th, 2024 —  The Finance bill for 2025, approved by the Council of the Nation on Saturday, introduces bold measures designed to drive economic growth, bolster investments, and improve the living standards of Algerian citizens. The law strikes a balance between strengthening the national economy and supporting the purchasing power of the population through targeted tax incentives and infrastructure investments.

Among its key features, the law authorizes the Treasury to issue sovereign bonds, allowing individuals and institutions to participate in financing state-run commercial infrastructure projects. These bonds will enjoy a five-year exemption from individual income tax (IRG) or corporate profits tax (IBS). Additionally, sovereign bonds will be exempt from registration and real estate advertising fees for the same period, ensuring their attractiveness to potential investors.

To stimulate economic activity in southern regions, the Finance Law extends a 50% reduction in income tax or corporate profits tax for incomes generated in these areas over five years. It also exempts registration fees for contracts establishing companies by holders of the “Innovative Project” label, as well as for real estate acquisitions by startups and business incubators planning industrial activities. Tax exemptions for incubators have been extended for an additional two years upon renewal of their label.

The National Investment Fund’s social capital will be raised from 150 billion DZD to 275 billion DZD, reflecting the government’s commitment to enhancing financial support for investments. Additionally, the Credit Guarantee Fund for Small and Medium Enterprises will extend its guarantee coverage to all loans, further encouraging bank and financial institution support for SMEs.

Social Benefits and Housing Support

On the social front, the Treasury will absorb interest rates during the grace period and provide a 100% reduction in interest rates on public bank loans for constructing housing units and associated infrastructure under the 2025 program of 135,000 rent-to-own homes.

A 10% discount will be offered to beneficiaries of “AADL 03” housing who have paid 38% of their home’s cost and opt to settle their remaining payments in advance. The calculation will be based on the outstanding rent amount paid as a lump sum.

In a move to enhance consumer access to goods and services, the law extends the current authorization for banks to issue consumer loans for purchasing goods to include loans for services such as healthcare and travel.

Strengthening Purchasing Power

To support citizens’ purchasing power, the Finance Law exempts imports of frozen white meat from VAT from January 8, 2024, to December 31, 2025. It also extends VAT exemptions for sales of dried legumes, rice, fresh fruits, vegetables, eggs, and locally produced poultry until the end of 2025.

Reduced customs duties of 5% on live cattle, fresh beef, and sheep meat imports have been extended to December 31, 2025. The reduced rate now also applies to imports of live sheep, expanding its benefits to a broader range of livestock products.

Macroeconomic Projections

The Finance Law for 2025 offers a robust economic framework:

• Benchmark oil price: $60 per barrel (2025-2027).
• Market oil price: $70 per barrel (2025-2027).
• Economic growth rate: 5.4% (2025 and 2026), with non-hydrocarbon growth at 5% in 2025.
• Nominal GDP: 37,863 billion DZD ($71.278 billion).
• Export revenues: $9.50 billion.
• Import expenditures: $7.46 billion.
• Trade surplus: $83.4 billion.
• Balance of payments surplus: $17.1 billion.
• Foreign exchange reserves: $95.72 billion, equivalent to 16 months of import coverage.
• Budget revenues: 6,852.3 billion DZD (a 5.3% increase).
• Petroleum tax revenue: 6,345.3 billion DZD.
• Budget expenditures: 11,679.4 billion DZD (a 9.9% increase).
• Projected budget deficit: 5,582.71 billion DZD.

The 2025 Finance Bill underscores Algeria’s commitment to fostering economic resilience, reducing regional disparities, and enhancing the well-being of its citizens through sustainable and inclusive development policies.

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