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Journal of Research on Trade, Management and Economic Development
Category B
VOLUME 11, ISSUE 2(22)/2024
DETERMINANTS OF ISSUING THE SUPPLEMENTARY FINANCE
LAW IN ALGERIA DURING THE PERIOD FROM 2000 TO 2020
Messaoud BOUKHALFI, Assoc. Prof., PhD in Economic Sciences
Laboratory of Applied Studies in Financial & Accounting Sciences
University of Ghardaia, Algeria
E-mail: boukhalfi.messaoud@univ-ghardaia.dz
ORCİD: https://orcid.org/0009-0000-5808-5682
Abderraouf ABADA, Assoc. Prof., PhD in Economic Sciences
Laboratory of Applied Studies in Financial & Accounting Sciences
University of Ghardaia, Algeria
E-mail: abada.abderraouf@univ-ghardaia.dz
ORCİD: https://orcid.org/0009-0005-7389-7175
Abdelfattah DAOUDI, Assoc. Prof., PhD in Economic Sciences
Laboratory of Digitization in Economic and Media Institutions and Public Administrations
University Mohamed Boudiaf of M'Sila, Algeria
E-mail: abdelfattah.daoudi@univ-msila.dz
ORCİD: https://orcid.org/0000-0001-6461-2952
DOI: https://doi.org/10.59642/JRTMED.2.2024.05
Universal Decimal Classification: 336.14:330.113
JEL Classification: E50, H60, C30, C51, C88
Abstract
This study aimed to identify the underlying factors explaining the nature of decisions related to the
issuance of the Supplementary Finance Law during the period from 2000 to 2020, This was based on a set of
factors, including Gross Domestic Product (GDP), budget deficit, exchange rate, oil price, inflation, and external
debt, We employed the discriminant analysis methodology, which is one of the multivariate analysis methods, by
focusing on the Stepwise Discriminant Analysis (SDA) method, then estimating the discriminant function to
distinguish between two groups, issuing and not issuing, some testing to measure the quality of the classification.
The study found a single discriminant function, with 85.7% of the years in both groups correctly classified, the
budget deficit was found to have a significant impact on the decision to issue or not issue the Supplementary
Finance Law, in addition to the lack of influence of some other economic variables such as gross domestic
product and inflation. Therefore, this calls for the development of financial forecasting tools and strengthening
governance to improve the accuracy of original financial estimates and reduce reliance on supplementary
financial laws to ensure the stability of financial policies in the long term.
Keywords: Supplementary Finance Law, Budget Deficit, Public Finance, Macroeconomics, Stepwise
Discriminant Analysis, Discriminant Function
1. Introduction
Since the beginning of the third millennium, Algeria has witnessed a recurring phenomenon
of regularly adopting supplementary finance laws. From 2000 to 2020, a total of 21 laws of
this type have been issued (Finance, Supplementary Finance Laws, 2024). Ostensibly, these
laws aim to adjust the course of the original finance law and adapt it to emerging economic
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and social changes. However, they represent, in reality, a deviation from the principle of
annual budgeting. Researchers (Qadi, 2022) [14] suggest that the frequent resort to these laws
indicates a weak governmental capacity for financial planning and forecasting future
developments. This raises questions about the effectiveness of the state’s budget preparation
mechanisms and the impact of these supplementary or corrective laws on the government's
financial sustainability.
The repeated recourse to supplementary finance laws raises questions about the effectiveness
of the mechanisms used by Algeria’s General Directorate of Budget in preparing the annual
finance law draft and the executive authority's capacity to anticipate future economic
developments. It also calls into question the extent of the government's commitment to the
plans and programs set forth in the primary finance laws. This research aims to contribute to a
deeper understanding of this phenomenon and propose solutions to address it, in light of the
reforms that the Algerian legislator is pursuing through the implementation of the Organic
Law on Finance Laws No. 18-15 and the gradual adoption of program and performance
budgeting since 2023 (Ministry of Finance, 2023) [12]. Additionally, the focus on publishing
the Budget Settlement Law-since 2008, which serves as the document verifying the
implementation of the finance law and, when necessary, any supplementary or amended
finance laws for each fiscal year (Ministry of Finance, Budget Settlement Laws, 2024) [13]
stands as an indicator supporting transparency and governance.
Research Question: What are the reasons behind the repeated amendments to the Finance
Law in Algeria during the period 2000–2020?
Research Hypothesis: The proposed hypothesis to answer the research question is as
follows:
The repeated reliance on supplementary or corrective finance laws in Algeria reflects a flaw
in the mechanisms for preparing the annual finance law draft, an inability to anticipate
economic changes, and weaknesses in parliamentary oversight and accountability
mechanisms.
Research Methodology:
This study relies on the analytical economic model to analyze the factors influencing the
issuance of supplementary finance laws in Algeria. A quantitative analysis model will be used
to understand the relationship between the economic, social, and political factors affecting
this context.
2. The degree of investigation of the problem currently, and purpose of research
Despite the significance of the effects resulting from the repeated recourse to amending the
annual finance law in Algeria during the period under study (despite the reforms initiated by
the Ministry of Finance since 2018), the specialized scientific literature in this field is limited.
There are not many studies that directly address the research question. However, there are
some relevant studies related to the research topic that can provide a theoretical framework
for our research. This chapter will review these studies and identify the knowledge gaps that
this research seeks to address. Below are the key studies that we believe are relevant to the
research topic, arranged chronologically:
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First: Bouchekhi's study [7] presents an analysis of the estimates for public revenues and
expenditures through annual and supplementary finance laws for the years 2000-2011. It is
considered one of the prominent studies addressing the reasons for adopting a supplementary
finance law in the context of having an annual finance law that is prepared in advance. The
study relied heavily on data from the official gazette that issues estimates for annual and
supplementary finance laws. The main findings indicate a development in the rate of public
expenditure compared to the rate of public revenues due to the impacts of falling oil prices
and the weak contribution of tax revenues, along with the social transfer policies adopted in
Algeria. The researcher considered the results to be conservative (lacking real data) due to the
absence of a budget control law for the period under study.
Second: Qamish’s study [15] addressed an important topic by discussing the Budget Control
Law in her master's thesis. She argued that the Budget Control Law intervenes throughout the
year through various means to amend the parliamentary license via legislative amendments
through the supplementary finance law as a primary mechanism the government resorts to for
requesting additional appropriations. The researcher considered that the various reasons for
issuing the supplementary finance law contradict the goals of transparency and governance.
Third: Bkalem’s study [5] details the procedures for amending draft finance laws, reflecting a
deep understanding of financial legislation. It also highlights the constraints facing Parliament
regarding the amendment of these drafts, where the author presents two jurisprudential
viewpoints on the extent of deputies' ability to amend these projects. This analysis enriches
the legal debate. Although the study offers a strong theoretical discussion, it lacks practical
examples and does not address the economic and political impacts of these amendments.
Therefore, while this study is a good reference in constitutional jurisprudence related to
finance laws, it could benefit from improvements in practical dimensions and economic and
political analysis.
Fourth: Study of Bouaichawy & Ghrazi [6] aimed to present how to design and prepare a
medium-term budget framework as a mechanism to achieve financial sustainability for the
state, under Organic Law 18-15 on finance laws and Executive Decree No. 335-20, dated
November 2020. The study's results concluded that Algeria suffers from fragile financial
sustainability due to its public revenues being linked to oil taxation and its vulnerability to oil
shocks.
Fifth: Report of International Monetary Fund & Middle East and Central Asia Department
[11] on financial reforms in Algeria suggests that Algeria needs an initial transitional period
of 10 years to support macroeconomic stability and financial sustainability. Among the
beneficial characteristics to ensure the effectiveness of this proposed framework, the adoption
process should be accompanied by ongoing efforts to enhance macroeconomic forecasting
capabilities and budget oversight within the Ministry of Finance, enabling it to play a real role
in strategic planning, budget preparation, and implementation.
Sixth: Bertelsmann Stiftung’s Study [1], the BTI 2024 report highlights the role of the
supplementary finance law as a key tool for addressing the economic fluctuations facing
Algeria, particularly due to its heavy reliance on oil revenues. The report indicates that
Algeria frequently resorts to supplementary finance laws to confront financial challenges
arising from changes in oil prices or unstable economic conditions. These laws are primarily
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used to amend the annual budget after its approval, providing the government with greater
flexibility to respond to unforeseen events such as inflation or rising financial costs. However,
these repeated amendments are seen as indicators of weak financial planning, as the report
suggests that the continuous reliance on these laws reflects an inability to accurately predict
economic developments. The report calls for improved financial planning and a reduction in
the frequent dependence on supplementary finance laws through enhanced transparency and
improved efficiency in financial and economic institutions.
The results of a previous study can also be linked to us (Abada, 2023) [3], entitled "The
Dynamic Relating Between Oil Revenes and Goovenment Spending in Algeria: Durling the
period from 1965 to 2020" with the results of many previous studies that dealt with the impact
of economic factors on the financial policy in Algeria. For example, the Bouchekhi [7] study
showed the impact of the fluctuation of oil revenue on public spending, while the
BERTELSMANN STIFTUNG [1] report indicated the role of tactical financial laws in
adapting to oil prices fluctuations. The results of the study are also compatible with what was
stated in the Qamish [15] study that dealt with the impact of economic crises on government
financial measures, as all of these studies emphasize a strong relationship between the
fluctuations of oil revenues and financial policies in Algeria.
Although there are many studies that have addressed the effects of the supplementary finance
law in many countries, the academic literature on Algeria in this field remains limited. This
study aims to analyze the factors influencing the issuance of the supplementary finance law in
Algeria during the period from 2000 to 2020, which constitutes a scientific novelty for this
research. While previous studies have focused on studying the effects of financial laws in
general, the purpose of this study is to provide a new perspective based on identifying the
economic and political factors that contribute to the decision to issue this law in Algeria,
including major economic changes, fluctuations in oil prices, and the financial policies
followed. Therefore, this study seeks to fill the gap in the literature related to explaining the
motives for issuing supplementary finance laws in the Algerian context.
The theoretical importance of this article is also to expand the academic understanding of the
phenomenon of issuing the supplementary finance law in Algeria by studying the factors
influencing the issuance of this law in a specific economic and political context. Although
there are some studies that have addressed supplementary financial laws in other countries,
this study contributes to bridging a knowledge gap in the economic literature on Algeria, by
linking local economic and political factors (such as oil price fluctuations, inflation, economic
growth) to determining the motives for issuing supplementary financial laws. Thus, this study
provides a new model for understanding the interaction between economic policies and other
factors, which contributes to the development of economic theories related to fiscal budget
policies in countries that depend heavily on oil revenues.
In practical terms, the importance of this article emerges in helping decision-makers in
Algeria understand the factors that affect the issuance of supplementary financial laws and
how these factors affect the stability of the national economy. By analyzing the relationship
between major economic changes such as oil price fluctuations, government fiscal policies,
and their relationship to the issuance of supplementary financial laws, the Algerian
government can improve its fiscal policies and plan its budget in a more sustainable and
flexible manner. This study can also help achieve greater financial stability and guide policies
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towards better management of financial resources in times of economic crises or fluctuations
in global oil markets.
On the practical level, the authors aim through this article to provide useful insights for
decision-makers in Algeria (executive and legislative authorities), based on the results that
emphasize the importance of monitoring the budget deficit as a key indicator for making
future financial decisions. These results can also be used to develop financial bills that are
characterized by sound assessment and reduce the need to issue supplementary financial laws.
3. Methods and materials applied
In order to determine the explanatory factors for the nature of the issuance of the
supplementary finance law, annual time series data from 2000 to 2020 were relied upon,
totaling 21 observations distributed over 10 years in which the supplementary finance law
was issued and 11 years in which it was not issued for the following study variables: Z: the
dependent variable, a binary qualitative variable that takes the value of 1 in the case of no
issuance of the supplementary finance law, and the value of 2 in the case of issuance of the
supplementary finance law. As for the independent variables represented by : Gross
Domestic Product, : Exchange Rate, : Oil Price, : Inflation, :
Budget Deficit, External Debt, data on Gross Domestic Product, Exchange Rate, and
Inflation were obtained from the World Bank database, oil price data from the Organization of
the Petroleum Exporting Countries (OPEC) website, budget deficit data from the National
Statistics Office (ONS) website, and external debt data from the Bank of Algeria (BANK of
ALGERIA) website.
In this study, the methodology of Discriminant Analysis will be followed, which is one of the
methods of Multivariate Analysis that focuses on examining the effect of a set of factors on
the characteristics of distinct groups. It is used to distinguish between two or more groups that
share many characteristics based on the presence of several variables (Brown & Tinsley,
2018) [8]. There are several types of discriminant analysis; in terms of objective, there are
two types: Descriptive Discriminant Analysis and Predictive Discriminant Analysis. In terms
of the number of discriminant functions, there are two types: Univariate Discriminant
Analysis (DA) and Multivariate Discriminant Analysis (MDA). Regarding the methods for
entering variables into the analysis, there are three types: Direct Discriminant Analysis,
Hierarchical Discriminant Analysis (Lu, Ding, Xu, & Wang, 2018) [2], and Stepwise
Discriminant Analysis (SDA) (Stąpor, 2016) [16], which is what we will apply in this study.
This type of analysis is used to determine whether adding an independent variable to the
model significantly improves the classification of the dependent variable, thus assessing the
extent of differences between the groups based on the independent variables. There are
several criteria used with stepwise analysis, which will be clarified in the results section.
4. Results obtained and discussions
4.1. Preliminary Tests for the Study:
Before the standard study of the model, several preliminary tests must be conducted, the most
important of which are:
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4.1.1. Normal Distribution of Data:
This involves graphical representation of the variables and identification of outliers.
Figure 1. Normal Distribution of the Study Variables
Source: Prepared by the researchers, based on SPSS software outputs.
From Figure 1, it is evident that the histogram closely matches the normal distribution curve,
indicating that all study variables follow a normal distribution.
4.1.2. Test of Multicollinearity Among the Independent Variables:
The variance inflation factor (VIF) measure was used to test for multicollinearity issues.
Table 1. Variance Inflation Factor (VIF)
Variable
Collinearity Statistics
Tolerance
VIF
EXR
0.524
1.909
INF
0.886
1.128
DEX
0.929
1.077
DIFB
0.901
1.110
OILP
0.413
2.419
GDP
0.814
1.228
Source: Prepared by the researchers, based on SPSS software outputs.
It is clear from Table 1 that the variance inflation factor (VIF) values for the six independent
variables are, in order, 1.909, 1.128, 1.077, 1.110, 2.419, and 1.228, all of which are less than
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5.00. Therefore, it can be concluded that there is no multicollinearity among the independent
variables.
4.1.3. Test of the Homogeneity of Variance Hypothesis Between the Two Groups:
To determine the homogeneity of the discriminant variable groups. Box's M test for
homogeneity was conducted.
Table 2. Box's Test of Equality of Covariance Matrices
Log Determinant
Rank
Z
9.209
1
Non-issuance
7.341
1
Issuance
8.697
1
Pooled within-groups
Source: Prepared by the researchers, based on SPSS software outputs.
The results in Table 2 indicate that the Log Determinant values are approximately equal for
the two groups, which signifies the homogeneity of the individuals in both groups.
4.2. Formation of the Discriminant Function
After confirming the conditions for conducting the discriminant analysis, we will proceed to
execute the discriminant analysis according to the following steps:
4.2.1. Variables Entering the Analysis
Based on the discriminant analysis and using the Stepwise Method by selecting the best
variables to distinguish between the group issuing the supplementary finance law and the non-
issuance group, we obtained the following results:
Table 3. Wilks' Lambda
Step
Number of
Variables
Lambda
df1
df2
df3
Exact F
Statistic
df1
df2
Sig.
1
1
0.764
1
1
19
5.875
1
19.000
0.026
Source: Prepared by the researchers, based on SPSS software outputs.
Table 3 shows that among the six variables used, one variable was extracted that can explain
and distinguish between cases of issuing and non-issuing the supplementary finance law.
Additionally, the Lambda value was significant, equal to 0.764, and the statistical significance
level of 0.026 is less than 0.05 at a 5% significance level. This explains the ability of this
variable to distinguish between the two groups of issuing and non-issuing the supplementary
finance law.
Table 4 also indicates the first step taken to determine the variables entering the analysis,
showing that the variable is the variable since the significance value of F for removing
the variable from the analysis was 0.026, which is less than 0.05. This represents the upper
limit for the significance value of F; to enter any variable into the analysis, it must not exceed
0.05 (Maximum significance of F to enter is .05.).
Table 4. Variables in the Analysis
Step
Tolerance
Sig. of F to Remove
1 DIFB
1.000
0.026
Source: Prepared by the researchers, based on SPSS software outputs.
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4.2.2. Variables Exiting the Analysis
The following table shows the first step taken to remove variables from the analysis:
Table 5. Variables Not in the Analysis
Step
Tolerance
Min.
Tolerance
Sig. of F to
Enter
Min. F
Between Groups
0
EXR
1.000
1.000
0.540
0.389
Non-issuance and Issuance
INF
1.000
1.000
0.903
0.015
Non-issuance and Issuance
DEX
1.000
1.000
0.142
2.353
Non-issuance and Issuance
DIFB
1.000
1.000
0.026
5.875
Non-issuance and Issuance
OILP
1.000
1.000
0.413
0.701
Non-issuance and Issuance
GDP
1.000
1.000
0.637
0.230
Non-issuance and Issuance
1
EXR
0.975
0.975
0.398
3.275
Non-issuance and Issuance
INF
0.998
0.998
0.849
2.807
Non-issuance and Issuance
DEX
0.996
0.996
0.166
4.147
Non-issuance and Issuance
OILP
0.978
0.978
0.684
2.895
Non-issuance and Issuance
GDP
1.000
1.000
0.682
2.897
Non-issuance and Issuance
Source: Prepared by the researchers, based on SPSS software outputs.
Table 5 indicates the two steps taken to determine the variables exiting the analysis, where the
first step involved extracting the significance value of F for entry (Sig. of F to Enter) for the
six variables, and the second step involved extracting the significance value of F (Sig. of F to
Enter) for the five variables , , , , . The significance values (Sig. of
F to Enter) for the variables were 0.396, 0.849, 0.166, 0.684, and 0.978, respectively,
indicating that all were greater than 0.05, the upper limit for the significance value of F for
entering any variable into the analysis (Maximum significance of F to enter is .05.).
Additionally, they were all greater than 0.1, the minimum significance value of F for
removing any variable from the analysis (Minimum significance of F to remove is .10).
4.3. Quality of Discriminant Function Fit:
The following table shows the Eigenvalues and statistics related to the discriminant function:
Table 6. Eigenvalues
Function
Eigenvalue
% of Variance
Cumulative %
Canonical Correlation
1
0.309
100.0
100.0
0.486
Source: Prepared by the researchers, based on SPSS software outputs.
From Table 6, we observe that the Eigenvalue of the discriminant function was 0.309,
indicating that the discriminant function has a high ability to differentiate, confirming that
100% of the variance was explained. Additionally, the square of the canonical correlation
represents the coefficient of determination, meaning that 23.61% of the
variation in-group membership is attributed to changes in the variables included in the
analysis.
Table 7 shows Wilks' Lambda, highlighting the importance of the discriminant function in
distinguishing between the two groups.
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Table 7. Wilks' Lambda
Source: Prepared by the researchers, based on SPSS software outputs.
We observe that the significance level for the Chi-square test equals 0.026, which is less than
0.05 at the 5% significance level. This indicates that there are statistically significant
differences between the group that issued the supplementary finance law and the group that
did not, attributed to the variable of budget deficit. This highlights the importance of the
discriminant function in distinguishing between the two groups.
4.4. Estimation of the Discriminant Function
4.4.1. Standardized Discriminant Function Coefficients
The table indicates the standardized discriminant function coefficients, which express the
canonical correlation between the discriminant function and each independent variable,
specifically the variable that was included in the discriminant analysis, expressed in
standardized units. It is evident that the budget deficit variable has a significant weight in
enhancing the discriminative power between the two groups, with the canonical correlation
coefficient between the discriminant function and the budget deficit equal to one. Thus, the
discriminant function can be referred to as the budget deficit.
Table 8. Standardized Canonical Discriminant Function Coefficients
variable
Function
1
DIFB
1.000
Source: Prepared by the researchers, based on SPSS software outputs.
4.4.2. Unstandardized Discriminant Function Coefficients
Table 9 includes a set of unstandardized discriminant function coefficients that represent the
correlation between each independent variable included in the analysis and the discriminant
function, which can be used to predict the group to which new cases belong.
Table 9. Canonical Discriminant Function Coefficients
Source: Prepared by the researchers, based on SPSS software outputs.
Therefore, the discriminant analysis model becomes as follows:
(1)
The purpose of the discriminant analysis model function is to achieve the prediction objective
through a set of variables and weighted values to distinguish between the two groups: those
Test of Function(s)
Wilks' Lambda
Chi-square
df
Sig.
1
0.764
4.985
1
0.026
Function
1
DIFB
0.013
(Constant)
0.067
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that issue the supplementary finance law and those that do not, as illustrated in the following
table:
Table 10. Functions at Group Centroids
Source: Prepared by the researchers, based on SPSS software outputs.
Table 10 shows the unstandardized discriminant function evaluated according to group
means. There are two means in the table: the mean of the first group, which is the group not
issuing the supplementary finance law, is -0.504, indicating the likelihood of belonging to the
group that does not issue the supplementary finance law. Additionally, the mean of the group
issuing the supplementary finance law is 0.555, where the positive sign indicates that higher
scores on the variables involved (budget deficit) increase the probability of belonging to the
group that issues the supplementary finance law.
4.5. Validity of Classification
4.5.1. Quality of Case Classification
Table 11. Classification Results
Z
Predicted Group Membership
Total
Non-issuance
Issuance
Original
Count
Non-issuance
9
2
11
Issuance
1
9
10
%
Non-issuance
81,8
18,2
100,0
Issuance
10,0
90,0
100,0
a. 85,7% of original grouped cases correctly classified.
Source: Prepared by the researchers, based on SPSS software outputs.
Table 11 indicates the accuracy of the final classification results, showing that 9 years from
the first group (the group of non-issuance of the annual finance law) were correctly classified,
representing 81.8%. Consequently, the remaining 2 years from the first group, accounting for
18.2%, were incorrectly classified.
At the same time, it is evident that 9 cases from the second group (the group of issuance of the
annual finance law) were correctly classified, representing 90%. Consequently, the remaining
case from the second group, accounting for 10%, was incorrectly classified.
As a general result, the findings indicated that 85.7% of the years in both groups were
classified correctly, demonstrating a high quality of classification.
4.5.2 Kappa Test
The Kappa test is a good measure of reliability because it takes the factor of chance into
account.
Function
Z
1
-0.504
Non-issuance
0.555
Issuance
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Table 12. Kappa Test
Value
Asymp. Std.
Errora
Approx. Tb
Approx.
Sig.
Measure of
Agreement
Kappa
0.715
0.152
3.291
0.001
N of Valid Cases
21
Source: Prepared by the researchers, based on SPSS software outputs.
We notice from the table that the statistical significance value for the Kappa test is 0.001,
which is less than 0.05 at the 5% significance level. Therefore, there is a high accuracy
prediction, confirmed by the Kappa value of 0.715, which is greater than 0.700.
4.6. Discussion
In this study, discriminant analysis was used to analyze the factors influencing the issuance of
the supplementary finance law in Algeria during the period from 2000 to 2020. The results of
the study showed that the budget deficit is the main variable that has repeatedly influenced the
decision to adopt a supplementary finance law in Algeria. This finding aligns with previous
studies that addressed the role of the budget deficit in shaping financial policies, especially in
developing countries, which is consistent with the economic literature concerning developing
nations such as Tunisia and Egypt. In Tunisia, the rise in the budget deficit after 2011 led to
corrective financial measures, with the deficit reaching 16% of the Gross Domestic Product,
forcing the government to adopt strict financial policies to contain the crisis (Diwan, Alaya, &
Meddeb, 2024) [9]. Similarly, in Egypt, despite improvements in financial performance
following reforms implemented by the government in cooperation with the International
Monetary Fund, the budget deficit remained a challenge, necessitating the adoption of
austerity measures to regulate public finances.
On the other hand, the study showed that other variables, such as GDP, inflation, and
exchange rates, did not have the expected impact on decisions regarding the issuance of the
supplementary finance law. Some studies in developed countries indicate that the relationship
between the budget deficit and financial policies does not necessarily have the same effect. In
developed countries, such as the United States and the OECD member states, research has
concluded that discretionary fiscal policies are not always effective due to time lags in
implementation and impact. A recent study indicated that fiscal policies are often pro-cyclical,
with governments increasing spending during periods of prosperity and reducing it during
recessions. This contrasts with findings that suggest the budget deficit drives increased
spending during crises, as is the case in Algeria (Haan & Gootjes, 2023) [10].
Moreover, the analysis in some developed countries, such as the United States, shows that
low long-term interest rates and inflation may delay the need to correct the budget deficit,
thereby reducing the pressure on fiscal policies (Adrian, Gaspar, & Gourin, 2024) [4]. This
makes the financial context in developed countries different from that in developing
countries, which rely on more stringent fiscal policies and quicker responses to correct the
budget deficit.
It is important to note some limitations of this study: the sample size is relatively small (21
years, as the available data has only been available since 2000), which may affect the
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interpretive power of the results. Additionally, relying solely on economic variables without
considering social pressures or political influences may reduce the comprehensiveness of the
findings. Based on this, recommendations for future studies could include analyzing
additional variables such as political conditions or global economic crises and their impact on
financial decision-making.
5. Conclusions
In conclusion, this study demonstrated through discriminant analysis that the budget deficit
was the primary variable leading to the repeated issuance of supplementary finance laws in
Algeria during the period from 2000 to 2020. These results support the main research
hypothesis of a dysfunction in the mechanisms for preparing the annual finance law draft. The
repeated reliance on supplementary laws reveals shortcomings in the forecasting and
anticipatory processes. Furthermore, the findings indicate the fragility of oversight and
parliamentary accountability mechanisms, which have failed to address the budget deficit
proactively or to prevent the recurrence of the need for corrective financial laws, despite the
reforms initiated by the Ministry of Finance in Algeria since the adoption of the organic law
on finance laws in 2018.
Additionally, despite the significance of the budget deficit in explaining the reliance on
supplementary laws, the study revealed a lack of significant impact from other economic
variables such as GDP and inflation. This calls for further research into the institutional and
political factors that influence the process of preparing annual finance laws.
Practically, this study provides valuable insights for decision-makers in Algeria (both the
executive and legislative authorities), as the results emphasize the importance of monitoring
the budget deficit as a key indicator for future financial decision-making. These findings can
also be utilized in developing finance law projects that are characterized by sound estimation,
thereby reducing the need for issuing supplementary finance laws in light of the gradual
implementation of program and performance budgeting starting in 2024.
This study also contributes to enhancing the current understanding of fiscal policy
formulation in developing countries and underscores the need for budgetary discipline and the
utilization of modern standards to achieve fiscal sustainability.
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Rezumat
Autorii acestui studiu și-au propus să identifice factorii de bază care explică natura deciziilor legate de
emiterea Legii finanțării suplimentare în perioada anilor 2000-2020. Cercetarea s-a bazat pe un set de factori,
inclusiv Produsul Intern Brut (PIB), deficitul bugetar, cursul de schimb, prețul petrolului, inflația și datoria
externă. În cadrul cercetării s-a folosit metodologia analizei discriminante, care constituie una dintre metodele
de analiză multivariată, accentul fiind pus pe metoda Stepwise Discriminant Analysis (SDA). S-a estimat funcția
discriminantă pentru delimitarea celor două grupuri, cu acordul și dezacordul emiterii, s-au efectuat unele teste
pentru evaluarea calității clasificării. Studiul a identificat o singură funcție discriminantă, cu o corectitudine de
clasificare de 85,7% a anilor din ambele grupuri. S-a constatat că deficitul bugetar are un impact semnificativ
asupra deciziei de a emite sau nu Legea finanțării suplimentare, în timp ce alte variabile economice, precum
produsul intern brut și inflația, nu au avut o influență semnificativă. Prin urmare, acest lucru subliniază
necesitatea dezvoltării instrumentelor prognozării financiare și consolidării guvernanței pentru a îmbunătăți
acuratețea estimărilor financiare inițiale și pentru a reduce dependența de legile financiare suplimentare,
asigurând astfel stabilitatea politicilor financiare pe termen lung.
Cuvinte-cheie: legea finanțării suplimentare, deficit bugetar, finanțe publice, macroeconomie, analiză
discriminantă treptată, funcție discriminantă
Аннотация
Данное исследование было направлено на выявление основополагающих факторов, объясняющих
характер решений, связанных с выпуском Закона о дополнительном финансировании в период с 2000 по
2020 год. Анализ основывался на наборе факторов, включая валовый внутренний продукт (ВВП),
дефицит бюджета, обменный курс, цену на нефть, инфляцию и внешний долг. Для исследования была
применена методология дискриминантного анализа, являющаяся одним из методов многомерного
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анализа, с акцентом на методе ступенчатого дискриминантного анализа. Была оценена
дискриминантная функция для различения двух групп, на принятие и непринятие закона, а также
проведены тесты для оценки качества классификации. Исследование выявило единственную
дискриминантную функцию с точностью классификации в 85,7% в обеих группах. Было установлено, что
бюджетный дефицит оказывает значительное влияние на решение о принятии или непринятии Закона о
дополнительном финансировании, тогда как другие экономические переменные, такие как валовый
внутренний продукт и инфляция, не оказывают существенного влияния. В связи с этим необходимо
разработать инструменты финансового прогнозирования и усилить управление для повышения
точности первоначальных финансовых оценок и снижения зависимости от законов о дополнительном
финансировании, что обеспечит стабильность финансовой политики в долгосрочной перспективе.
Ключевые слова: закон о дополнительном финансировании, дефицит бюджета, публичные финансы,
макроэкономика, ступенчатый дискриминантный анализ, дискриминантная функция
Received 04.11.2024
Accepted 09.12.2024
Published 26.12.2024
