## 1. Tapping Algeria’s Nonhydrocarbon Tax Potential ## Source details **Canonical URL:** [1. Tapping Algeria’s Nonhydrocarbon Tax Potential](https://www.imf.org/-/media/files/publications/cr/2025/english/1dzaea2025001-source-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2025/english/1dzaea2025001-source-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2025/english/1dzaea2025001-source-pdf.pdf.json) --- ### Context and structural challenges - Recovery since the pandemic was driven by elevated hydrocarbon prices and increased public spending. - Growth model: heavily state-led and dependent on hydrocarbons, exposing the economy to external volatility, creating fiscal vulnerabilities, and limiting private sector development. - 2025 budget and electoral platform: continued focus on boosting household purchasing power and accelerating public investment in line with the 2021 Government Action Plan. - Fundamental need: transition to a more dynamic, private-sector-driven economy to unlock potential. ### Recent economic developments (key findings) - Real GDP growth: - Real economic growth declined from 4.1 percent in 2023 to 3.6 percent in 2024. - Hydrocarbons sector contracted by -1.4 percent in 2024 (driven by OPEC+ production cuts). - Nonhydrocarbon growth in 2024: 4.2 percent. - Inflation: - Average inflation fell from 9.3 percent in 2023 to 4 percent in 2024. - External sector: - Current account recorded a deficit of -1.1 percent of GDP in 2024 after two years of surplus. - NEER and REER appreciated by 4.7 percent and 3.3 percent y/y, respectively, in 2024. - Dinar movements in 2024: strengthened by 5.2 percent against the EUR; depreciated by 1 percent against the USD. - By end-2024, gross international reserves: US$ 67.8 billion (equivalent to 14 months of imports). - Through end-April 2025, NEER and REER depreciated by 2.5 percent. - Fiscal developments: - Hydrocarbon revenues declined by -35.7 percent y/y in 2024. - Wage bill increased by +12.8 percent y/y in 2024. - Capital expenditure increased by +31.8 percent y/y in 2024 (assuming half of 2024 unallocated expenditures comprised capital expenditures). - Overall fiscal deficit of the central government widened by 8.4 percentage points to -13.9 percent of GDP in 2024. - Nonhydrocarbon revenues shrank by -3.3 percent y/y in 2024 due to reallocation of some tax revenues to sub-national governments. - Nonhydrocarbon primary deficit reached -30.6 percent of NHGDP in 2024. - Use of all remaining funds in the FRR: 7½ percent of 2024 GDP. - Financial sector: - Banking sector aggregate solvency and liquidity ratios exceeded regulatory minima at end-2024. - Nonperforming loans (NPLs) remained at 20.7 percent of total loans; public banks’ NPLs: 22.5 percent. - Credit growth to the economy: 5.9 percent y/y in 2024. - Private sector credit growth decelerated from 8.6 percent to 8.3 percent. - Net credit to the government accelerated by about 21.5 percent. ### Outlook and projections (baseline) - Short term: - Easing of OPEC+ production cuts expected to stabilize hydrocarbon activity and support 3.4 percent growth in 2025. - Financing constraints expected to curb public expenditure and weaken nonhydrocarbon activity in 2025. - Current account deficit projected to widen further in 2025–26. - Medium term (staff baseline): - Growth projected to slow to about 2½ percent by 2030. - Inflation projected to ease to 3.3 percent by 2030. - Current account deficit expected to decline gradually to about -2.9 percent of GDP by 2030. - International reserves expected to decline to about 3.2 months of next year’s imports by 2030. - Nonhydrocarbon budget deficit expected to narrow by 8½ percentage points from its 2024 level, reaching -22 percent of NHGDP by 2030. - Public debt projected to rise, reaching 81.9 percent of GDP by 2030. - Projections excerpt (selected series): - Real GDP: 2024 = 3.6; 2025 (Proj.) = 3.4; 2030 (Proj.) = 2.5. - Hydrocarbon sector growth: 2024 = -1.4; 2025 (Proj.) = 0.1; 2030 (Proj.) = 1.2. - Nonhydrocarbon sector growth: 2024 = 4.2; 2025 (Proj.) = 2.3; 2030 (Proj.) = 2.6. - Consumer price index (period average): 2024 = 4.0; 2025 (Proj.) = 3.9; 2030 (Proj.) = 3.3. - Overall balance (central government): 2024 = -13.9 (percent of GDP); 2025 (Proj.) = -11.5; 2026 (Proj.) = -12.4. - Gross government debt (excl. guarantees): 2024 = 48.5; 2025 (Proj.) = 54.3; 2030 (Proj.) = 81.9 (percent of GDP). - Current account balance (percent of GDP): 2024 = -1.1; 2025 (Proj.) = -3.7; 2030 (Proj.) = -2.9. - Gross official reserves (US$ billions): 2024 = 67.8; 2025 (Proj.) = 59.4; 2030 (Proj.) = 18.6. - Reserves in months of next year's imports of G&S: 2024 = 14.0; 2025 (Proj.) = 12.3; 2030 (Proj.) = 3.2. ### Risks - Overall risks to the outlook are tilted to the downside. - Main external near-term risks: heightened commodity price volatility; shifts in US tariff policy; potential intensification of conflicts in the Middle East; increasing geoeconomic fragmentation disrupting trade. - Structural risks: extreme climate events affecting agriculture with high fiscal costs. - Domestic risks: contingent liabilities (including from SOEs), high fiscal financing needs, potential sovereign-bank nexus, and risk of fallback to monetary financing if timely macroeconomic adjustment and structural reforms are not implemented. - Downside scenario A (April 2025 WEO): rising global tensions and commodity price volatility would widen Algeria’s current account and fiscal deficits, slow growth, and reduce reserves relative to baseline. ### Authorities’ view - Authorities expected medium-term growth around 4 percent, citing structural reform agenda, large infrastructure projects, and the 2022–23 Investment and Land Laws to stimulate private sector investment. - Authorities highlighted a marked increase in nonhydrocarbon exports and indicated fiscal-financial risks are being closely monitored and managed. ### Policy implications and recommendations - Near term (urgent actions): - Urgent and sizable fiscal consolidation is needed to safeguard macro-financial stability given heightened global uncertainty and declining oil prices. - Complement fiscal consolidation with proactive data-dependent monetary policy and enhanced exchange rate flexibility. - Closely monitor financial sector risks to avoid escalation of sovereign-bank nexus. - Medium term (structural priorities): - Increase fiscal space to safeguard priority spending while ensuring debt sustainability and reducing fiscal risks, including from SOEs. - Improve the monetary policy framework and financial supervision to safeguard macro-financial stability and promote financial deepening. - Accelerate structural reforms to catalyze private investment and foster inclusive job-rich growth. - Fiscal specifics: - Staff projects overall fiscal deficit at -11.5 percent of GDP in 2025 and -12.4 percent in 2026 before gradual receding. - With the FRR depleted, large gross financing needs would strain the domestic banking sector and crowd out private credit. - Stabilizing debt by 2028 would require an additional fiscal consolidation of 5 percent of GDP (or 6 percent of nonhydrocarbon GDP) over 2025–28 relative to the baseline. - Recommended actions include revising the 2025 budget to limit fiscal expansion and more gradual implementation of public investment to reflect limited absorption capacity. - Authorities are encouraged to consider external or Islamic financing to alleviate financing challenges and to avoid monetary financing and financial operations such as the 2021 Programme Spécial de Refinancement (PSR). - Communication: - Careful and proactive communication of the gradual adjustment strategy is critical to garner public support. --- ### Fiscal framework and consolidation strategy - Adoption of a rules-based framework with a fiscal anchor would enhance budget resilience to shocks. - Staff’s recommendation to stabilize public debt in the medium term is an initial step towards a rules-based approach. - The fiscal consolidation proposed for 2025-28 could be achieved through: - Nonhydrocarbon revenue measures equivalent to 1.5 percent of GDP. - Expenditure rationalization equivalent to 3.5 percent of GDP (gradual phasing out of energy subsidies partially offset by direct cash transfers; reduction of transfers to SOEs; public investment restraint coupled with efficiency improvements). ### Alternative fiscal scenario (public debt stabilization), 2024–2028 — key figures (baseline) - Baseline (2024–28, percent of GDP unless otherwise indicated): - Total revenue: 23.2, 24.4, 22.3, 22.5, 22.1; ∆2024–28 = -1.1 - Nonhydrocarbon revenue (% Nonhydro GDP): 14.0, 16.7, 14.8, 15.0, 14.9; ∆2024–28 = 0.9 - Nonhydrocarbon tax revenue: 9.4, 9.9, 10.0, 10.2, 10.5; ∆2024–28 = 1.0 - Total expenditure: 37.1, 35.9, 34.7, 33.4, 32.6; ∆2024–28 = -4.5 - Total expenditure (% Nonhydro GDP): 44.6, 42.2, 40.7, 39.2, 38.4; ∆2024–28 = -6.2 - Current expenditure: 27.1, 26.9, 26.2, 25.4, 25.0; ∆2024–28 = -2.1 - of which Transfers: 14.6, 14.4, 13.8, 13.1, 12.6; ∆2024–28 = -2.1 - Capital expenditure: 9.9, 7.6, 7.3, 6.8, 6.3; ∆2024–28 = -3.5 - Overall balance: -13.9, -11.5, -12.4, -10.9, -10.5; ∆2024–28 = 3.4 - Nonhydrocarbon balance (% Nonhydro GDP): -30.6, -25.6, -26.1, -24.8, -23.9; ∆2024–28 = 6.7 - Gross government debt: 48.5, 54.3, 62.8, 68.9, 74.2; ∆2024–28 = 25.7 - Alternative (with additional fiscal measures) highlights (2024–28, percent of GDP): - Total revenue: 23.2, 24.4, 22.8, 23.4, 23.6; ∆2024–28 = 0.4 - Nonhydrocarbon revenue (% Nonhydro GDP): 14.0, 16.7, 15.3, 16.0, 16.6; ∆2024–28 = 2.6 - Nonhydrocarbon tax revenue: 9.4, 9.8, 10.4, 11.0, 11.8; ∆2024–28 = 2.4 - Total expenditure: 37.1, 35.4, 33.3, 30.9, 29.0; ∆2024–28 = -8.1 - Total expenditure (% Nonhydro GDP): 44.6, 41.7, 39.0, 36.4, 34.2; ∆2024–28 = -10.4 - Current expenditure: 27.1, 26.9, 25.5, 23.9, 22.6; ∆2024–28 = -4.5 - of which Transfers: 14.6, 14.4, 13.1, 11.6, 10.3; ∆2024–28 = -4.4 - Capital expenditures: 9.9, 7.1, 6.5, 5.8, 5.1; ∆2024–28 = -4.7 - Overall balance: -13.9, -11.0, -10.5, -7.5, -5.4; ∆2024–28 = 8.5 - Nonhydrocarbon balance (% Non-hydro GDP): -30.6, -25.0, -23.8, -20.3, -17.6; ∆2024–28 = -16.0 - Gross government debt: 48.5, 53.9, 60.6, 63.6, 64.3; ∆2024–28 = 15.8 - Additional fiscal measures (percent of Baseline GDP): - 2025: 0.5 - 2026: 1.5 - 2027: 1.5 - 2028: 1.5 - Total over 2025–28: 5.0 - Composition: - Nonhydrocarbon revenue: 0.5, 0.5, 0.5, 1.5 - Transfers: -0.7, -0.8, -0.8, -2.3 - Capital expenditure: -0.5, -0.3, -0.2, -0.2; total = -1.2 ### Revenue mobilization and tax potential - An updated Medium-Term Revenue Strategy (MTRS) could steer efforts to boost nonhydrocarbon revenue. - Progress in collection: digitalized filing, payment and monitoring; new data sharing platform among tax authorities; raising the IFU minimum payment for small enterprises; increases in excises on tobacco. - Challenges: widespread and growing tax exemptions and incentives have eroded the tax base. - Staff estimates: - Significant nonhydrocarbon tax gap of 2–4 percent of GDP; Algeria’s potential estimated at 13.5 percent of GDP (tax gap estimated as 2.0 to 4.1 percent of GDP). - Identified reform areas: - VAT: current revenue averaging only 3.3 percent of GDP; streamlining could add 0.75 percent of GDP. Coordination with subsidy reform needed due to VAT exemptions on commodities under price controls and subsidies. - CIT: revenues at 1.8 percent of GDP; aligning with global standards (Pillar Two) and simplifying could boost collections. - Excise and property taxes: underused; updating valuations and increasing rates could yield short-term (excises) to medium-term (property) gains. - Informality: at 32 percent of GDP; simplifying SME regimes and stronger enforcement could expand the tax base. - Recommendation: develop an MTRS to provide a coherent framework to guide reforms and unlock revenue potential. ### Energy subsidy reform and expenditure rationalization - Gradual energy subsidy reform to bring fuel and electricity prices to cost recovery levels could yield substantial additional annual revenues over the medium term, reaching an average of 7.2 percent of GDP during the first 5 years of implementation. - World Bank is assisting in developing a framework for compensatory measures to protect vulnerable households; safeguards are critical. - Staff advised moving forward with energy subsidy reform to reduce the fiscal deficit, restore fiscal buffers, and enable more targeted support. ### Public financial management, investment efficiency, and SOEs - Strengthening PFM and enhancing fiscal transparency would help contain fiscal risks and improve public investment efficiency: - Implemented the Organic Budget Law, advanced shift to program budgeting, initiated reforms towards performance-based budgeting. - Implementation decree for the new Public Procurement Law pending Parliamentary approval. - Recommended actions: - Develop a financing plan to enhance budget credibility and strengthen cash and debt management. - Publish in-year budget execution reports, SOE financial statements, and regular updates on extrabudgetary entities. - Conduct a Public Investment Management Assessment (PIMA). - Establish a contingency planning framework for pension system deficits and climate change. - SOE risks and reforms: - Financial transfers to SOEs increased from 0.7 percent of GDP in 2005 to 4 percent of GDP in 2020 (prior to the 2021 PSR). - SOEs pose significant fiscal risk due to weak financial transparency, corporate governance, interconnectedness with public banks, subsidized lending, and government guarantees. - Recommendation: the SOE oversight unit in the Ministry of Finance should ensure regular publication of individual SOE financial statements and consolidated SOE sector performance; align governance with international standards and strengthen financial oversight. ### Authorities’ views on fiscal strategy - Authorities did not consider immediate fiscal adjustment necessary; intended to maintain public investment projects to support growth. - They use a conservative oil price assumption of USD 60 per barrel in budgets. - They viewed debt risks as manageable given absence of external debt and a public debt-to-GDP ratio of 48.5 percent at end-2024. - Authorities broadly agreed with recommendations, highlighted progress in revenue collection and performance-based budgeting, and requested additional TA on MTRS development, refining VAT exemptions, reforming mining taxation, and implementing TADAT. - Noted launch of a new online public procurement portal and expected full implementation of new procurement regulations in 2025. --- ### Monetary and exchange rate policies - Current stance and recent actions: - Banque d’Algérie (BA) policy rate and reserve requirement rate unchanged at 3 percent since mid-2023. - Headline inflation eased to BA’s target of 4 percent in 2024 and is projected to remain contained in 2025. - Falling net foreign assets and public banks’ repayments of loans for the 2021 PSR tightened banking sector liquidity since mid-2024. - BA injected liquidity via 3-month open market operations in February, April and May 2025. - In January 2025, BA provided a DZD 750 billion advance to the Treasury at zero interest (to be reimbursed by end-August 2025), and a DZD 850 billion dividend payment in February. - Staff views and recommendations: - Monetary stance considered adequate; BA should use all available tools to attain price stability and abstain from any monetary financing schemes. - Avoid monetary financing—direct or indirect—as it could undermine BA’s credibility and independence and heighten financial stability risks. - Continue guiding monetary policy by economic data and inflation developments. - Exchange rate flexibility and FX market measures: - Allow greater exchange rate flexibility to act as an automatic stabilizer. - Widen the BA’s buy/sell band around the officially set daily nominal exchange rate (currently +/- 0.15 DZD/USD) as a first step. - De jure arrangement: managed floating; de facto arrangement: crawl-like. - External Balance Assessment (EBA) suggests a moderate REER overvaluation of 6.3 percent in 2024. - Measures to increase FX availability for current transactions would help address widening parallel market premium (widened from 50 to 70 percent over the last two years). - July 2025 increase in foreign exchange allowance for travel: from EUR 100 to EUR 750 per person, effective July 20, 2025; travel allowance for the hajj pilgrimage already increased to USD 1000. - BA should ensure sufficient foreign exchange for current international transactions, in line with IMF Article VIII obligations. - Operational and framework improvements: - BA strengthened liquidity management, absorbed excess liquidity, and repaid PSR loans during 2024 and early 2025, helping reactivate the interbank market. - BA developed the Forecasting and Policy Analysis System (FPAS) with IMF TA and aims to start regular communication on monetary policy decisions. - Recommendation: establish price stability as the primary objective and a nominal anchor in any future MBL revisions; narrow the interest rate corridor; gradually and transparently unwind government bond holdings; foster development of a domestic bond market. ### Monetary policy transmission and financial sector policies - Monetary policy has stronger impact on inflation than on growth; nonhydrocarbon growth—particularly agriculture—is heavily influenced by weather. - Key frictions undermining transmission: - Limited competition in the banking sector weakens pass-through of interest rate changes. - Limited interbank market activity; banks prefer to hold excess liquidity at the central bank. - Challenges in reducing government bond holdings on the BA balance sheet because bonds issued in 2017 are non-marketable, have low interest and long maturities. - Financial sector findings and risks: - As of end-2024: NPLs at 20.7 percent—22.5 percent in public banks and 9.3 percent in private banks—with about half provisioned. - Declining hydrocarbon revenues and growing public financing needs could challenge system resilience. - Rising exposure of banks to the public sector increases macro-financial risks and crowds out private sector credit. - Past practices (debt exchanges, monetary financing, public support for SOEs) could amplify risks during shocks and create feedback loops jeopardizing debt sustainability. - AML/CFT and supervisory reforms: - IMF TA provided to revamp AML/CFT regulatory framework, design risk-based supervision, and update supervision manuals. - Progress on broader AML/CFT gaps and a national assessment of ML/TF risks. - Key priorities: improve risk-based supervision of non-bank financial institutions, improve accuracy of beneficial ownership information in the new centralized registry, and enhance enforcement of terrorism-related targeted financial sanctions. - Implementation of 2020 FSAP recommendations and the new MBL would reinforce financial stability and inclusion. - Next priorities: finalize collateral framework and ELA mechanism; level the playing field for public and private banks; phase out subsidized lending; strengthen NPL resolution; improve stress testing and risk monitoring; publish financial stability reports. ### Governance, transparency, and statistics - Reforms undertaken: - July 2023 national anti-corruption strategy. - June 2023 new MBL. - New Procurement Law. - Establishment of a centralized beneficial ownership registry. - Digitalization initiatives to improve fiscal oversight and revenue collection. - Remaining needs: - Enhance transparency and independence of judiciary and anticorruption agencies; exit FATF’s list of jurisdictions under increased monitoring. - Improve coverage, timeliness and quality of statistics: - Update CPI basket weights. - Restart the labor market survey (unemployment and labor market participation data not published since 2019). - Address long delays in some data (budget execution report) and frequent revisions (historical data on GDP sectoral growth and deflators). - Expand institutional coverage of government statistics and provide more granular Financial Soundness indicators. ### Staff appraisal — outlook, risks, and policy recommendations - Near-term outlook: - Prospects broadly positive but clouded by growing fiscal vulnerabilities. - 2024 fiscal impulse supported growth into 2025 but, with falling hydrocarbon prices, led to a wider fiscal deficit and depleted buffers. - Headline inflation eased in 2024 and is expected to remain moderate. - Current account reversed to a deficit in 2024, projected to widen in 2025-26 before narrowing. - Medium term: growth expected to slow due to moderating hydrocarbon output, financing constraints, and structural bottlenecks. - Fiscal sustainability and debt: - With fiscal buffers depleted, large fiscal deficits pose significant financing and debt challenges and warrant urgent policy adjustment. - Double-digit fiscal deficits projected for 2025-26 risk straining the banking sector and crowding out private credit. - Absent concerted policy adjustment, large financing needs would significantly increase public debt over the medium term. - SR-DSA: Algeria’s overall risk of sovereign stress increased to “high”. - Stabilizing the debt trajectory by 2028 would require additional fiscal consolidation measures of 5 percent of GDP over 2025-28 relative to the baseline. - Recommendation: adopt a rules-based framework with a fiscal anchor. - Revenue and spending reforms: - Energy subsidy reform could yield substantial additional annual revenues over the medium term. - Closing the nonhydrocarbon tax gap, estimated at 2–4 percent of GDP, offers further revenue potential. - Staff recommends advancing tax policy reform guided by an MTRS, incorporating a credible financing plan in the budget, and strengthening SOE oversight. - Monetary and exchange rate policy: - With inflation receding, current accommodative monetary stance to counter tight banking sector liquidity is adequate. - BA should continue vigilant monitoring of banks’ liquidity and refrain from any monetary financing. - Establish price stability as the primary objective in the MBL and identify a nominal anchor. - Enhanced exchange rate flexibility would facilitate its role as an automatic stabilizer; widen BA’s official daily buy/sell nominal exchange rate band and prioritize measures to reduce the parallel market premium (e.g., increasing foreign exchange allowance for travel). - Financial sector and governance recommendations: - Vigilant enforcement of financial sector regulatory requirements is critical given interlinkages between the government, SOBs, and SOEs. - Complete remaining FATF recommendations to facilitate exit from the list of jurisdictions under enhanced monitoring. - Continue business climate reforms, deepen product and labor market reforms, limit price distortions, expand regional trade, and spur private sector development. - Data and capacity: - Improving coverage, timeliness and quality of statistics would better inform policymaking; the IMF stands ready to offer technical assistance. --- ### Downside scenario and fiscal consolidation design (selected) - Downside scenario effects (selected): - Current account deficit larger by 1.2 percent of GDP in 2025 and by 1.4 percent of GDP in 2026 relative to baseline. - Reserves drop 1.2 months below the baseline; reserves fall from 3.2 months to 2 months of next year’s imports by 2030. - Real growth reduced by 0.5 percent in 2025 and by 0.1 percent in 2026 relative to baseline. - Hydrocarbon sector: 1.9 percent below baseline in 2025. - Nonhydrocarbon sector: 0.3 percent below baseline in 2025. - Fiscal deficit: 1.3 percent larger than baseline in 2025; remains 0.6 percent below baseline by end-2030. - Policy Reform Scenario: Fiscal Consolidation (Annex VIII): - Additional fiscal adjustment of five percentage points of GDP over 2025–28 to stabilize public debt at about 64 percent of GDP by 2028. - Composition: revenue mobilization 1.5 pp of GDP; spending adjustments 3.5 pp of GDP. - Examples of revenue measures: eliminating inefficient VAT exemptions; reforming mining sector taxation; improving compliance; strengthening tax debt recovery. - Note: Partial list of tax expenditures in “Etat H” of the 2025 budget law amounts to DZD 616.5 billion, 1.6 percent of GDP. - Examples of spending measures: gradually phasing out fuel and energy subsidies over five years with targeted cash transfers; limiting transfers to SOEs; improving public investment efficiency. - Macroeconomic effects: proposed measures would reduce average real GDP growth by 0.2 pp per year over 2025-2028 (fiscal multipliers estimated low). - Under the scenario, public debt to GDP stabilizes at about 64 percent by 2028 and reduces government gross financing from banks, leaving more space for private borrowing. ### Capacity development priorities (selected) - Macroeconomic frameworks: develop FPAS at the BA — ICD — Ongoing. - Revenue administration and tax policy: METAC/FAD/LEG missions and planned STX Customs missions in 2026 and 2027. - PFM: implementation of Organic Budget Law and integrated IT system; cash management progress. - Financial supervision and central bank operations: liquidity forecasting, risk rating frameworks, payment systems supervision. - Statistics: compilation of Energy & Air Emission Accounts — STA — Planned; CPI update and other statistical improvements. --- *Source: IMF staff report excerpt — 1. Tapping Algeria’s Nonhydrocarbon Tax Potential.* ### 1. Tapping Algeria’s Nonhydrocarbon Tax Potential _____________________________________________ 14 ### 1. Tapping Algeria’s Nonhydrocarbon Tax Potential ### Context and structural challenges - Since the end of the pandemic, recovery was driven by elevated hydrocarbon prices and increased public spending. - Algeria’s growth model remains heavily state-led and dependent on hydrocarbons, exposing the economy to external volatility, creating fiscal vulnerabilities, and limiting private sector development. - The 2025 budget and electoral platform signal continued focus on boosting household purchasing power and accelerating public investment in line with the 2021 Government Action Plan, but unlocking potential requires transition to a more dynamic, private-sector-driven economy. ### Recent economic developments (key findings) - Real GDP growth: - Real economic growth declined from 4.1 percent in 2023 to 3.6 percent in 2024. - Hydrocarbons sector contracted by 1.4 percent in 2024 (driven by OPEC+ production cuts). - Nonhydrocarbon growth in 2024: 4.2 percent. - Inflation: - Average inflation fell from 9.3 percent in 2023 to 4 percent in 2024. - External sector: - Current account recorded a deficit of 1.1 percent of GDP in 2024 after two years of surplus. - NEER and REER appreciated by 4.7 percent and 3.3 percent y/y, respectively, in 2024. - Dinar movements in 2024: strengthened by 5.2 percent against the EUR; depreciated by 1 percent against the USD. - By end-2024, gross international reserves: US$ 67.8 billion (equivalent to 14 months of imports). - Through end-April 2025, NEER and REER depreciated by 2.5 percent. - Fiscal developments: - Hydrocarbon revenues declined by -35.7 percent y/y in 2024. - Wage bill increased by +12.8 percent y/y in 2024. - Capital expenditure increased by +31.8 percent y/y in 2024 (assuming half of 2024 unallocated expenditures comprised capital expenditures). - Overall fiscal deficit of the central government widened by 8.4 percentage points to 13.9 percent of GDP in 2024. - Nonhydrocarbon revenues shrank by 3.3 percent y/y in 2024 due to reallocation of some tax revenues to sub-national governments. - Nonhydrocarbon primary deficit reached 30.6 percent of NHGDP in 2024. - Use of all remaining funds in the FRR: 7½ percent of 2024 GDP. - Financial sector: - Banking sector aggregate solvency and liquidity ratios exceeded regulatory minima at end-2024. - Nonperforming loans (NPLs) remained at 20.7 percent of total loans; public banks’ NPLs: 22.5 percent. - Credit growth to the economy: 5.9 percent y/y in 2024. - Private sector credit growth decelerated from 8.6 percent to 8.3 percent. - Net credit to the government accelerated by about 21.5 percent. ### Outlook and projections (baseline) - Short term: - Easing of OPEC+ production cuts expected to stabilize hydrocarbon activity and support 3.4 percent growth in 2025. - Financing constraints expected to curb public expenditure and weaken nonhydrocarbon activity in 2025. - Current account deficit projected to widen further in 2025–26. - Medium term (staff baseline): - Growth projected to slow to about 2½ percent by 2030. - Inflation projected to ease to 3.3 percent by 2030. - Current account deficit expected to decline gradually to about 2.9 percent of GDP by 2030. - International reserves expected to decline to about 3.2 months of next year’s imports by 2030. - Nonhydrocarbon budget deficit expected to narrow by 8½ percentage points from its 2024 level, reaching 22 percent of NHGDP by 2030. - Public debt projected to rise, reaching 81.9 percent of GDP by 2030. - Projections excerpt (selected series from Text Table 1): - Real GDP: 2024 = 3.6; 2025 (Proj.) = 3.4; 2030 (Proj.) = 2.5. - Hydrocarbon sector growth: 2024 = -1.4; 2025 (Proj.) = 0.1; 2030 (Proj.) = 1.2. - Nonhydrocarbon sector growth: 2024 = 4.2; 2025 (Proj.) = 2.3; 2030 (Proj.) = 2.6. - Consumer price index (period average): 2024 = 4.0; 2025 (Proj.) = 3.9; 2030 (Proj.) = 3.3. - Overall balance (central government): 2024 = -13.9 (percent of GDP); 2025 (Proj.) = -11.5; 2026 (Proj.) = -12.4. - Gross government debt (excl. guarantees): 2024 = 48.5; 2025 (Proj.) = 54.3; 2030 (Proj.) = 81.9 (percent of GDP). - Current account balance (percent of GDP): 2024 = -1.1; 2025 (Proj.) = -3.7; 2030 (Proj.) = -2.9. - Gross official reserves (US$ billions): 2024 = 67.8; 2025 (Proj.) = 59.4; 2030 (Proj.) = 18.6. - Reserves in months of next year's imports of G&S: 2024 = 14.0; 2025 (Proj.) = 12.3; 2030 (Proj.) = 3.2. ### Risks - Overall risks to the outlook are tilted to the downside. - Main external near-term risks: heightened commodity price volatility; shifts in US tariff policy; potential intensification of conflicts in the Middle East; increasing geoeconomic fragmentation disrupting trade. - Structural risks: extreme climate events affecting agriculture with high fiscal costs. - Domestic risks: contingent liabilities (including from SOEs), high fiscal financing needs, potential sovereign-bank nexus, and risk of fallback to monetary financing if timely macroeconomic adjustment and structural reforms are not implemented. - Downside scenario A (April 2025 WEO): rising global tensions and commodity price volatility would widen Algeria’s current account and fiscal deficits, slow growth, and reduce reserves relative to baseline. ### Authorities’ view - Authorities expected medium-term growth around 4 percent, citing structural reform agenda, large infrastructure projects, and the 2022–23 Investment and Land Laws to stimulate private sector investment. - Authorities highlighted a marked increase in nonhydrocarbon exports and indicated fiscal-financial risks are being closely monitored and managed. ### Policy implications and recommendations - Near term (urgent actions): - Urgent and sizable fiscal consolidation is needed to safeguard macro-financial stability given heightened global uncertainty and declining oil prices. - Complement fiscal consolidation with proactive data-dependent monetary policy and enhanced exchange rate flexibility. - Closely monitor financial sector risks to avoid escalation of sovereign-bank nexus. - Medium term (structural priorities): - Increase fiscal space to safeguard priority spending while ensuring debt sustainability and reducing fiscal risks, including from SOEs. - Improve the monetary policy framework and financial supervision to safeguard macro-financial stability and promote financial deepening. - Accelerate structural reforms to catalyze private investment and foster inclusive job-rich growth. - Fiscal specifics: - Staff projects overall fiscal deficit at 11.5 percent of GDP in 2025 and 12.4 percent in 2026 before gradual receding. - With the FRR depleted, large gross financing needs would strain the domestic banking sector and crowd out private credit. - Stabilizing debt by 2028 would require an additional fiscal consolidation of 5 percent of GDP (or 6 percent of nonhydrocarbon GDP) over 2025–28 relative to the baseline. - Recommended actions include revising the 2025 budget to limit fiscal expansion and more gradual implementation of public investment to reflect limited absorption capacity. - Authorities are encouraged to consider external or Islamic financing to alleviate financing challenges and to avoid monetary financing and financial operations such as the 2021 Programme Spécial de Refinancement (PSR). - Communication: - Careful and proactive communication of the gradual adjustment strategy is critical to garner public support. *Source: IMF staff report excerpt — 1. Tapping Algeria’s Nonhydrocarbon Tax Potential.* ### 14. Consistent with past advice, a rules-based fiscal framework could enhance the budget’s ### 14. Consistent with past advice, a rules-based fiscal framework could enhance the budget’s resilience to shocks ### Fiscal framework and consolidation strategy - Adoption of a rules-based framework with a fiscal anchor to guide medium-term fiscal projections would make the budget more resilient to shocks. - Staff’s recommendation to stabilize public debt in the medium term is an initial step towards a rules-based approach. - The fiscal consolidation proposed for 2025-28 could be achieved through a combination of: - Nonhydrocarbon revenue measures equivalent to 1.5 percent of GDP. - Expenditure rationalization equivalent to 3.5 percent of GDP (gradual phasing out of energy subsidies partially offset by direct cash transfers to compensate vulnerable households; reduction of transfers to SOEs; public investment restraint coupled with measures to improve its efficiency). ### Alternative fiscal scenario (public debt stabilization), 2024–2028 — key figures (as reported) - Baseline scenario highlights (2024–28, percent of GDP unless otherwise indicated): - Total revenue: 23.2, 24.4, 22.3, 22.5, 22.1; ∆2024–28 = -1.1 - Nonhydrocarbon revenue (% Nonhydro GDP): 14.0, 16.7, 14.8, 15.0, 14.9; ∆2024–28 = 0.9 - Nonhydrocarbon tax revenue: 9.4, 9.9, 10.0, 10.2, 10.5; ∆2024–28 = 1.0 - Total expenditure: 37.1, 35.9, 34.7, 33.4, 32.6; ∆2024–28 = -4.5 - Total expenditure (% Nonhydro GDP): 44.6, 42.2, 40.7, 39.2, 38.4; ∆2024–28 = -6.2 - Current expenditure: 27.1, 26.9, 26.2, 25.4, 25.0; ∆2024–28 = -2.1 - of which Transfers: 14.6, 14.4, 13.8, 13.1, 12.6; ∆2024–28 = -2.1 - Capital expenditure: 9.9, 7.6, 7.3, 6.8, 6.3; ∆2024–28 = -3.5 - Overall balance: -13.9, -11.5, -12.4, -10.9, -10.5; ∆2024–28 = 3.4 - Nonhydrocarbon balance (% Nonhydro GDP): -30.6, -25.6, -26.1, -24.8, -23.9; ∆2024–28 = 6.7 - Gross government debt: 48.5, 54.3, 62.8, 68.9, 74.2; ∆2024–28 = 25.7 - Alternative (with additional fiscal measures) highlights (2024–28, percent of GDP unless otherwise indicated): - Total revenue: 23.2, 24.4, 22.8, 23.4, 23.6; ∆2024–28 = 0.4 - Nonhydrocarbon revenue (% Nonhydro GDP): 14.0, 16.7, 15.3, 16.0, 16.6; ∆2024–28 = 2.6 - Nonhydrocarbon tax revenue: 9.4, 9.8, 10.4, 11.0, 11.8; ∆2024–28 = 2.4 - Total expenditure: 37.1, 35.4, 33.3, 30.9, 29.0; ∆2024–28 = -8.1 - Total expenditure (% Nonhydro GDP): 44.6, 41.7, 39.0, 36.4, 34.2; ∆2024–28 = -10.4 - Current expenditure: 27.1, 26.9, 25.5, 23.9, 22.6; ∆2024–28 = -4.5 - of which Transfers: 14.6, 14.4, 13.1, 11.6, 10.3; ∆2024–28 = -4.4 - Capital expenditures: 9.9, 7.1, 6.5, 5.8, 5.1; ∆2024–28 = -4.7 - Overall balance: -13.9, -11.0, -10.5, -7.5, -5.4; ∆2024–28 = 8.5 - Nonhydrocarbon balance (% Non-hydro GDP): -30.6, -25.0, -23.8, -20.3, -17.6; ∆2024–28 = -16.0 - Gross government debt: 48.5, 53.9, 60.6, 63.6, 64.3; ∆2024–28 = 15.8 - Additional fiscal measures (percent of Baseline GDP): - 2025: 0.5 - 2026: 1.5 - 2027: 1.5 - 2028: 1.5 - Total over 2025–28: 5.0 - Composition of measures (percent of GDP): - Nonhydrocarbon revenue: 0.5, 0.5, 0.5, 1.5 - Transfers: -0.7, -0.8, -0.8, -2.3 - Capital expenditure: -0.5, -0.3, -0.2, -0.2; total = -1.2 ### Revenue mobilization and tax potential - An updated Medium-Term Revenue Strategy (MTRS) could steer efforts to boost nonhydrocarbon revenue. - Progress in tax collection has included digitalizing filing, payment and monitoring systems, a new data sharing platform among tax authorities, raising the IFU (Impôt Forfaitaire Unique) minimum payment for small enterprises, and increases in excises on tobacco. - Widespread and growing tax exemptions and tax incentives have eroded the tax base. - Staff estimates a significant nonhydrocarbon tax gap of 2–4 percent of GDP, with Algeria’s potential estimated at 13.5 percent of GDP (tax gap estimated as 2.0 to 4.1 percent of GDP). - Identified reform areas to reduce the gap: - VAT: Multiple rates and widespread exemptions reduce efficiency (current revenue averaging only 3.3 percent of GDP); streamlining could add 0.75 percent of GDP. Coordination with subsidy reform is needed due to VAT exemptions on commodities also subject to price controls and subsidies. - CIT: Complex rules and incentives keep revenues low (1.8 percent of GDP); aligning with global standards (Pillar Two) and simplifying could boost collections. - Excise and property taxes: Underused; updating valuations and increasing rates could yield short-term (excises) to medium-term (property) gains. - Informality: At 32 percent of GDP, informality weakens compliance; simplifying SME regimes and stronger enforcement could expand the tax base. - A Medium-Term Revenue Strategy (MTRS) could provide a coherent framework to guide reforms and unlock revenue potential. ### Energy subsidy reform and expenditure rationalization - Gradual energy subsidy reform to bring fuel and electricity prices to cost recovery levels could yield substantial additional annual revenues over the medium term, reaching an average of 7.2 percent of GDP during the first 5 years of implementation. - The World Bank is assisting in developing a framework for compensatory measures to protect vulnerable households; safeguards will be critical to accompany subsidy reform. - Staff advised moving forward with energy subsidy reform, which would help reduce the fiscal deficit, restore fiscal buffers, and enable more targeted support for those most in need. ### Public financial management, investment efficiency, and SOEs - Strengthening public financial and investment management and enhancing fiscal transparency would help contain fiscal risks and improve public investment efficiency: - Implemented the Organic Budget Law, advanced shift to program budgeting, initiated reforms towards performance-based budgeting. - The implementation decree for the new Public Procurement Law is pending Parliamentary approval. - Recommended actions: develop a financing plan to enhance budget credibility and strengthen cash and debt management; publish in-year budget execution reports, SOE financial statements, and regular updates on extrabudgetary entities; conduct a Public Investment Management Assessment (PIMA); establish a contingency planning framework for pension system deficits and climate change. - SOE risks and reforms: - Financial transfers to SOEs increased from 0.7 percent of GDP in 2005 to 4 percent of GDP in 2020 (prior to the 2021 PSR). - SOEs pose significant fiscal risk due to weak financial transparency, corporate governance, interconnectedness with public banks, subsidized lending, and government guarantees. - Recommendation: the new dedicated SOE oversight unit within the Ministry of Finance should ensure regular publication of individual SOE financial statements and report on consolidated SOE sector performance; align governance with international standards and strengthen financial oversight. ### Authorities’ views on fiscal strategy - Authorities did not consider immediate fiscal adjustment necessary; they intended to maintain public investment projects to support growth. - They use a conservative oil price assumption of USD 60 per barrel in budgets, which they note has historically allowed them to exceed budget targets and build fiscal buffers. - They viewed debt risks as manageable given the absence of external debt and a public debt-to-GDP ratio of 48.5 percent at end-2024. - Authorities broadly agreed with recommendations, highlighted progress in revenue collection and performance-based budgeting, and requested additional TA on MTRS development, refining VAT exemptions, reforming mining taxation, and implementing TADAT. - Authorities stressed the need for stability of the tax regulatory framework and coordination between VAT exemption streamlining and subsidy reform. - Noted launch of a new online public procurement portal and expected full implementation of new public procurement regulations in 2025. *Source: IMF staff estimates and projections as presented in the referenced IMF chapter.* ### Monetary and exchange rate policies - Current stance and recent actions: - Banque d’Algérie (BA) policy rate and reserve requirement rate unchanged at 3 percent since mid-2023. - Headline inflation eased to BA’s target of 4 percent in 2024 and is projected to remain contained in 2025. - Falling net foreign assets and public banks’ repayments of loans for the 2021 PSR tightened banking sector liquidity since mid-2024. - To manage liquidity, BA injected liquidity via 3-month open market operations in February, April and May 2025. - In January 2025, at the Treasury’s request, BA provided a DZD 750 billion advance to the Treasury at zero interest (to be reimbursed by end-August 2025), and a DZD 850 billion dividend payment in February. - Staff views and recommendations: - Monetary policy stance is considered adequate; BA should use all available tools to attain price stability and abstain from any monetary financing schemes. - Monetary financing—direct (as in 2017) or indirect (as in the 2021 PSR)—should be avoided as it could undermine BA’s credibility and independence, hinder conduct of monetary policy, weaken inflation management, heighten financial stability risks, and pressure foreign reserves. - Continue guiding monetary policy by economic data and by developments in actual and expected inflation. - Given lower expected export revenues in 2025 and elevated fiscal financing needs, liquidity is likely to remain tight, helping counter inflationary pressures. - Exchange rate flexibility and FX market measures: - Allowing greater exchange rate flexibility would facilitate the exchange rate’s role as an automatic stabilizer amid volatile hydrocarbon prices and global uncertainty. - Widening the BA’s buy/sell band around the officially set daily nominal exchange rate (currently +/- 0.15 DZD/USD) is recommended as a first step. - Greater flexibility would support interbank FX market development, diversification efforts, boost nonhydrocarbon exports, and improve monetary policy transmission. - The de jure exchange rate is managed floating; the de facto exchange rate is crawl-like. - External Balance Assessment (EBA) suggests a moderate REER overvaluation of 6.3 percent in 2024. - Measures to increase FX availability for current transactions would help address the widening parallel market premium, which widened from 50 to 70 percent over the last two years. - The July 2025 increase in the foreign exchange allowance for travel (from EUR 100 to EUR 750 per person, effective July 20, 2025) is cited as a prioritized measure; travel allowance for the hajj pilgrimage already increased to USD 1000. - BA should ensure sufficient foreign exchange is available for current international transactions, in line with IMF Article VIII obligations. - Operational and framework improvements: - BA has strengthened liquidity management, absorbed excess liquidity, and repaid PSR loans during 2024 and early 2025, helping to reactivate the interbank market. - BA has strengthened capacity in macroeconomic forecasting and policy analysis with the Forecasting and Policy Analysis System (FPAS) developed with IMF TA and aims to start regular communication on monetary policy decisions. - Recommendation to establish a clear primary objective and nominal anchor for monetary policy—explicitly prioritizing price stability as the foremost objective in any future MBL revisions or implementation texts—to anchor expectations, enhance credibility, and improve transparency. - Monetary policy transmission through interest rates is currently weak; BA targets monetary aggregates and the policy rate plays a limited role. - Suggested reforms: narrow the interest rate corridor; consider gradually and transparently unwinding government bond holdings by avoiding new purchases and allowing existing bonds to mature; foster development of a domestic bond market to establish a yield curve and diversify investor base. *Source: IMF staff analysis and Algerian authorities’ submissions as presented in the referenced IMF chapter.* ### 29. The authorities agreed with staff’s findings on monetary policy transmission and ### 29. The authorities agreed with staff’s findings on monetary policy transmission and ### Monetary policy transmission - Authorities and staff found monetary policy in Algeria has a stronger impact on inflation than on growth, with nonhydrocarbon growth—particularly agriculture—being heavily influenced by weather rather than monetary conditions. - Key frictions undermining transmission: - Limited competition in the banking sector weakens pass-through of interest rate cuts to bank lending rates. - Limited interbank market activity: banks prefer to hold excess liquidity at the central bank despite more attractive interbank rates. - Challenges in reducing government bond holdings on the Banque d’Algérie (BA) balance sheet because bonds issued in 2017 are non-marketable, have a low interest rate and long maturities. ### Financial sector policies — findings and risks - Close monitoring and enforcement of regulatory requirements are essential to contain emerging financial sector risks given strong links between banks, SOEs, and the central government. - As of end 2024: - Nonperforming loans (NPLs) remained high, at 20.7 percent—22.5 percent in public banks and 9.3 percent in private banks—with about half provisioned. - Risks and vulnerabilities: - Declining hydrocarbon revenues, global uncertainty, and growing public financing needs could challenge system resilience. - Uneven liquidity distribution and a shallow interbank market require the BA to closely monitor individual banks’ liquidity positions and address imbalances. - Rising exposure of banks to the public sector increases macro-financial risks and crowds out private sector credit. - Past practices (debt exchanges, monetary financing, public support for SOEs) could amplify risks during shocks (for example, falling hydrocarbon prices) and create feedback loops jeopardizing debt sustainability and complicating monetary policy. ### AML/CFT and supervisory reforms - Ongoing priorities to facilitate Algeria’s removal from the FATF’s list of jurisdictions under increased monitoring: - IMF TA provided to revamp the AML/CFT regulatory framework for banks, design a risk-based supervision strategy, and update offsite and onsite supervision manuals. - Progress on broader AML/CFT gaps and a national assessment of money laundering and terrorist financing risks. - Key priorities ahead: improve risk-based supervision of non-bank financial institutions and high-risk non-financial professions; improve accuracy of beneficial ownership information in the new centralized registry; enhance enforcement of terrorism-related targeted financial sanctions. - Implementation of 2020 FSAP recommendations and the new MBL would reinforce financial stability and financial inclusion: - Progress made on risk-based supervision, crisis management, greater independence of the monetary and credit council and banking commission, and differentiated capital requirements for conventional, digital, and Islamic banks. - Next priorities: finalize the collateral framework and the emergency liquidity assistance (ELA) mechanism; level the playing field for public and private banks; phase out subsidized lending; strengthen NPL resolution; improve stress testing and risk monitoring; publish financial stability reports. ### Authorities’ views (financial sector, AML/CFT, and reforms) - Authorities acknowledged the importance of vigilant supervision and highlighted progress on FSAP and FATF recommendations. - As of September 2024: - Thirteen recommended actions by FATF were outstanding; one was completed and steady progress was underway on the twelve remaining. - Published materials and draft regulations: - Authorities published guidelines on targeted financial sanctions, beneficial ownership, due diligence and self-assessments. - Draft regulatory procedures for the foreign exchange market, PSPs and digital banks were prepared and pending legislative approval. ### Structural reforms to promote growth - Authorities and staff priorities to unlock growth potential: - Improve the business environment, attract investment, diversify the economy, and boost private sector development. - The 2022-23 Investment and Land Laws are important steps; additional initiatives include a one-stop digital shop for investors’ real estate access, aligning exports with international standards, and advancing digitalization for online trade. - Remaining constraints: - Widespread trade restrictions and price controls limit competition. - Limited access to credit, low productivity, high informality and youth unemployment hinder private sector growth. - Extensive use of fiscal incentives to support investment requires careful review to contain fiscal costs. - Diversification and regulatory priorities: - Ongoing efforts have focused on energy-intensive and natural resource-based industries (cement, fertilizer and steel) and exploring new markets for SOBs. - A new mining code was being drafted to ease FDI restrictions and encourage investment in renewable energy (Annex X). - Further measures: reduce trade barriers and FDI restrictions for some sectors; address bureaucratic bottlenecks and administrative delays; limit regulatory changes; build regional networks and enhance regional trade and integration amid rising geoeconomic fragmentation. ### Governance, transparency, and statistics - Reforms undertaken: - July 2023 national anti-corruption strategy. - June 2023 new MBL. - New Procurement Law. - Establishment of a centralized beneficial ownership registry. - Digitalization initiatives to improve fiscal oversight and revenue collection. - Remaining needs: - Enhance transparency and independence of the judiciary and anticorruption agencies; exit FATF’s list of jurisdictions under increased monitoring. - Improve coverage, timeliness and quality of statistics: - Update CPI basket weights. - Restart the labor market survey (unemployment and labor market participation data have not been published since 2019). - Address long delays in some data (budget execution report) and frequent revisions (historical data on GDP sectoral growth and deflators). - Expand institutional coverage of government statistics and provide more granular Financial Soundness indicators. ### Staff appraisal — outlook, risks, and policy recommendations - Near-term outlook: - Algeria’s economic prospects for the near term are broadly positive but clouded by growing fiscal vulnerabilities. - The 2024 fiscal impulse supported growth into 2025 but, alongside falling hydrocarbon prices, led to a wider fiscal deficit and depleted fiscal buffers. - Headline inflation eased in 2024 and is expected to remain moderate. - The current account reversed to a deficit in 2024, projected to widen in 2025-26 before narrowing. - Over the medium term, growth is expected to slow due to moderating hydrocarbon output, financing constraints capping spending, and structural bottlenecks inhibiting private sector growth. - Fiscal sustainability and debt: - With fiscal buffers depleted, large fiscal deficits pose significant financing and debt challenges and warrant urgent policy adjustment. - Double-digit fiscal deficits projected for 2025-26 risk straining the banking sector and crowding out private credit, increasing the risk of recourse to unconventional monetary financing schemes. - Absent concerted policy adjustment, large financing needs and deficits would significantly increase public debt over the medium term. - The sharp deterioration of the fiscal situation in 2024 has heightened near-term risks and increased Algeria’s overall risk of sovereign stress to “high” based on the SR-DSA. - Stabilizing the debt trajectory by 2028 would require immediate and more ambitious fiscal consolidation: - Staff analysis suggests additional fiscal consolidation measures of 5 percent of GDP over 2025-28 relative to the baseline. - Recommendations: adopt a rules-based framework with a fiscal anchor to guide medium-term projections. - Revenue and spending reforms: - Energy subsidy reform could yield substantial additional annual revenues over the medium term. - Closing the nonhydrocarbon tax gap, estimated at of 2-4 percent of GDP, offers further revenue potential. - Authorities have progressed in tax collection through digitalization, improved PFM via program budgeting, and procurement transparency with the new Procurement Law expected in 2025. - Staff recommends advancing tax policy reform guided by a Medium-Term Revenue Strategy, incorporating a credible financing plan in the budget to strengthen cash management, and strengthening SOE oversight and governance to mitigate fiscal risks. - Monetary and exchange rate policy: - With inflation receding, the current accommodative monetary policy stance to counter tight banking sector liquidity is adequate. - The BA should continue vigilant monitoring of banks’ liquidity, actual and expected inflation developments, and use all available tools to attain price stability; it should refrain from any monetary financing, whether direct or indirect. - Clearly establishing price stability as the primary objective of monetary policy in the MBL and identifying a nominal anchor would help anchor expectations, credibility and transparency. - Enhanced exchange rate flexibility would facilitate its role as an automatic stabilizer: - Widening the BA’s official daily buy/sell nominal exchange rate band would be a first step. - Measures to reduce the parallel market premium, such as increasing the foreign exchange allowance for travel, should be prioritized. - Financial sector and governance recommendations: - Vigilant enforcement of financial sector regulatory requirements is critical given interlinkages between the government, SOBs, and SOEs. - Complete remaining FATF recommendations to facilitate exit from the list of jurisdictions under enhanced monitoring. - Continue initiatives to improve the business climate, deepen product and labor market reforms to enhance flexibility, limit price distortions, expand regional trade, and spur private sector development. - Data and capacity: - Improving coverage, timeliness and quality of statistics would better inform policymaking; the IMF stands ready to offer technical assistance to support ongoing improvements. *Source: IMF staff report excerpt (content unit provided).* ### 50. It is expected that the next Article IV consultation will take place on the standard 12- ### It is expected that the next Article IV consultation will take place on the standard 12- ### Real Sector Developments - Real GDP growth has been robust in the post-Covid period, but OPEC production cuts weighed on hydrocarbon production in 2024. - With fast growing population, GDP per capita growth remains modest. - Consumption remained robust and the rise in public spending supported growth. - Inflation declined essentially due to lower food prices. - The contribution from high-import content goods kept diminishing. - Key historical and recent datapoints (figures shown in source): - Real GDP growth by component (percentage change, yoy) series covering 2014–2024 including Hydrocarbon GDP, Nonhydrocarbon GDP, and Overall. - Real GDP and growth of real GDP per capita (Constant 2015 USD billion LHS, percentage change RHS) series from 2000–2024. - Contributions to Real GDP (demand side, y-o-y percent change) series 2012–2024 showing Consumption, Public Investment, Private Investment, Change in Stocks, Net Exports. - Investment (Percent of GDP) series 2017–2024 distinguishing Public investment, Private Investment excluding FDI, FDI. - Contributions to Inflation (12-m average yoy percent change) series Apr-19–Apr-25 distinguishing Core inflation, Fresh Food, Regulated food prices, Regulated non-food prices, Total CPI. - Contributions to Inflation (12-m average yoy percent change) series Apr-19–Apr-25 distinguishing Low Import Content and High Import Content. ### External Sector Developments - The current account balance returned to a small deficit of 1.1 percent of GDP in 2024. - Export performance remained strong driven by the hydrocarbon sector. - Falling oil prices and the growth in food and non-food imports contributed to the deficit in 2024. - FX reserves experienced a small drop after two years of accumulation. - The real and nominal effective exchange rates continued to appreciate in 2024. - Total external debt remains very low. - Key datapoints and series: - Current Account Balance Decomposition (Percent of GDP) 2011–2024. - Import of Goods (Fob, USD bn) 2014–2024 split Food, Non-Food, Total. - Total Reserves (Excl. Gold, USD bn) series 2016–2024 with IMF reserve position, SDR assets, FX reserves, and Reserve Assets (in months of imports) (RHS). - Nominal and Real Effective Exchange Rates series May-15–May-25. - External Debt (Percent of GDP) 2014–2024 with Total External Debt and Official Debt. - Export of Goods (Fob, USD bn) 2014–2024 split Nonhydrocarbon, Hydrocarbon, Total. ### Fiscal Developments - With lower hydrocarbon prices, government revenues declined in 2024 while public spending remained elevated. - The rise in capital expenditures and wages compensated the decline in transfers. - As a result, the overall deficit significantly widened and its financing depleted the FRR, limiting the increase in public debt. - Key historical and series datapoints: - Oil and Non-Oil Revenue (Percent of GDP) 2012–2024. - Revenue and Expenditure (Percent of GDP) 2012–2024 (Total Revenue; Total Expenditure and Net Lending). - Expenditure Components (Percent of GDP) 2012–2024 showing Capital Spending, Goods and Services, Other, Compensation of Employees. - Fiscal Balance (Percent of GDP) series 2014–2024 showing Overall Balance (percent of GDP) (RHS). - Revenue Regulation Fund Balance (Percent of GDP) 2014–2024. - Debt and Interest Expense (Percent of GDP) 2014–2024 showing Interest Expense and Total Public Debt (RHS). - Table 1 (Selected Economic and Financial Indicators, 2020–2030) highlights (selected figures preserved exactly): - Real GDP: -5.0 3.8 3.6 4.1 3.6 3.4 2.9 2.8 2.7 2.5 2.5 (2020–2030). - Hydrocarbon sector: -13.9 17.1 -0.2 3.6 -1.4 0.1 0.2 1.5 2.2 1.6 1.2. - Nonhydrocarbon sector: -3.8 2.2 4.1 4.2 4.2 3.8 3.2 2.9 2.8 2.6 2.6. - Per capita: -5.9 2.1 2.0 2.6 2.1 2.0 1.6 1.5 1.5 1.3 0.3. - Consumer price index (period average): 2.4 7.2 9.3 9.3 4.0 3.9 3.9 3.7 3.4 3.3 3.3. - Central government finances (percent of GDP): Revenue 27.0 26.2 29.7 31.9 23.2 24.4 22.3 22.5 22.1 22.6 22.5; Expenditure (incl. net lending) 37.5 32.5 32.7 37.4 37.1 35.9 34.7 33.4 32.6 31.9 31.8; Overall budget balance -10.5 -6.3 -3.0 -5.5 -13.9 -11.5 -12.4 -10.9 -10.5 -9.3 -9.3. - Gross government debt (excluding guarantees) 46.0 55.1 48.1 47.7 48.5 54.3 62.8 68.9 74.2 77.9 81.9 (percent of GDP). - Gross official reserves (In US$ billions): 48.2 45.3 61.0 69.0 67.8 59.4 49.7 41.3 32.8 25.4 18.6. - In months of next year's imports: 13.0 11.6 14.2 15.2 14.0 12.3 10.0 8.0 6.0 4.5 3.2. ### Monetary Developments - Broad money growth stabilized driven by a strong rise in domestic assets while NFA fell slightly in 2024. - A strong rise in credit to the central government is contributing to the growth in the NDA. - With a low reserve requirement ratio, most reserves are held as excess reserves and overall reserves have dropped in 2024. - Reserves are largely determined by oil price developments. - Policy rates have been unchanged over the last years, while market interest rates indicate a tightening of liquidity conditions. - Key series and datapoints: - Policy Rate and the Reserve Requirement Ratio series Apr-17–Apr-25. - Broad Money, Foreign and Domestic Assets (Net Foreign Assets (DZD billion), Net Domestic Assets (DZD billion), Broad Money Growth (yoy, percent) (RHS)) Jan-21–Apr-25. - NDA, claims on the Government, Private and Public Sector (Percent of GDP) series 2010–2024 showing NDA (DZD billion) (RHS), Claims on Private Sector, Claims on Public Non-financial Corporations, Net Claims on Central Government. - Required and Excess Reserves (DZD bn) series Apr-17–Apr-25. - Oil Price and Reserves (DZD bn) series Dec-15–Sep-24 with Total Reserves, Required Reserves, Oil prices (rhs). - Interbank and Government Bonds Rate series 2010–2024 showing 1 year Bond, 10 years Bond, Interbank Rate (rhs). - Table highlights (from Monetary Survey, 2020–2030): - Net foreign assets (in billions of DZD): 6,321 5,994 8,119 8,905 8,780 7,725 6,725 5,808 4,744 3,735 2,732 (2020–2030). - Net domestic assets: 11,419 14,085 14,836 15,426 17,749 20,452 23,951 27,741 32,025 36,451 41,399. - Money and quasi-money (M2): 17,740 20,079 22,955 24,331 26,529 28,177 30,676 33,549 36,769 40,186 44,131. - Reserve money: 6,879 8,143 9,219 9,478 10,291 10,910 12,006 13,053 14,710 16,017 17,506. - Credit to the economy (annual percent change): 3.0 -12.1 3.2 6.0 5.9 5.1 1.9 2.9 3.5 4.2 4.9. - Credit to the economy/GDP: 54.2 39.6 32.1 32.4 32.2 31.9 30.6 29.3 28.3 27.5 27.0. ### Financial Sector Developments - Banks are well capitalized. - Capital Adequacy Ratio series 2012–2024: overall levels shown (e.g., 23.6 in 2012, 22.8 in 2024). - Non-performing loans remain high, especially among public banks. - Non Performing Loans to Gross Loans (Percent) series 2012–2024: overall and by Public banks / Private banks. - Profitability decreased in recent years, but is still healthy, particularly among private banks. - Profitability and Sources of Income series 2012–2024 showing ROE and ROA by bank type. - Interest rate margins remained stable at attractive levels over the past years. - Interest Margin to Gross Revenues (Percent) series 2012–2024. - The liquidity profile improved over the last 4 years, with a healthy liquid asset to short-term debt ratio. - Liquid Assets to Total Assets (Percent) and Liquid Assets to Short-term Debt (Percent) series 2012–2024. - Financial Soundness Indicators (Table 5, 2012–2024) selected figures (exact values preserved): - Capital adequacy ratio: 23.6 21.5 15.8 18.4 18.8 19.5 19.0 18.0 19.2 21.6 21.5 22.9 22.8 (2012–2024 series). - NPLs/total loans: 11.7 10.6 9.9 9.8 12.1 13.0 12.7 14.8 16.4 19.6 19.9 20.9 20.7. - Return on equity: 22.7 19.0 23.7 21.3 17.8 18.8 22.4 13.7 8.3 14.4 13.5 14.1 14.2. - Liquid assets/short-term debt: 107.5 93.5 83.5 82.1 61.6 58.4 53.7 47.4 44.2 37.1 102.1 108.5 117.0 (2012–2024 series). ### Balance of Payments and Projections - Table 2a (Balance of Payments, 2020–2030, in billions of US dollars) key figures preserved exactly: - Current account (US$ bn): -18.7 -4.5 19.1 6.0 -2.9 -10.3 -11.4 -10.3 -10.5 -9.7 -9.0 (2020–2030). - Exports, f.o.b. (US$ bn): 21.9 38.6 65.5 55.6 49.1 45.4 44.4 47.0 48.8 53.2 56.6. - Hydrocarbons (US$ bn): 20.0 34.1 59.5 50.5 45.2 41.7 40.2 41.1 40.5 41.5 41.7. - Imports, f.o.b. (US$ bn): 35.5 37.5 38.9 43.0 45.3 48.3 48.3 50.6 52.2 55.1 57.6. - Gross official reserves (in billions of US$): 48.2 45.3 61.0 69.0 67.8 59.4 49.7 41.3 32.8 25.4 18.6. - Algerian crude oil price (US$/barrel): 41.9 72.3 103.9 83.9 82.0 71.1 67.2 67.7 68.4 69.0 69.2. - Table 2b (Balance of Payments, percent of GDP) highlights: - Current account (percent of GDP): -11.3 -2.4 8.4 2.4 -1.1 -3.7 -4.1 -3.6 -3.6 -3.2 -2.9. - Exports, f.o.b. (percent of GDP): 13.3 20.8 29.0 22.4 18.4 16.1 15.7 16.3 16.6 17.7 18.5. - Imports, f.o.b. (percent of GDP): 21.6 20.2 17.2 17.3 17.0 17.1 17.1 17.6 17.7 18.3 18.8. *Sources: Algerian authorities; and IMF staff calculations and projections.* ### Annex I. Implementation of Past IMF Recommendations ### Annex I. Implementation of Past IMF Recommendations ### Monetary/Exchange Rate and Financial Policies and Operations - Tighten monetary policy to reduce high inflation. - Implementation status: The required reserve ratio and the policy rate has remained unchanged since 2023 but inflation significantly receded in 2024 primarily due to lower food inflation. - Enhance BA’s independence and ability to defend price stability by adopting the implementation text of the Loi Monétaire et Bancaire (LMB) that defines price stability as the primary objective of monetary objective and specifies the modalities and safeguards for monetary financing which should be exceptional. - Implementation status: The regulatory framework has not been updated. The BA has nevertheless clarified its communication regarding its inflation target. - Allow for greater flexibility of the exchange rate (to enhance its role as a shock absorber) and develop the interbank FX market (that would also help reducing the parallel exchange rate premium). - Implementation/status details: - The BA targets a real effective exchange rate that is derived from an econometric model that considers various variables (e.g., oil price, budget deficit, etc.) - The buy/sell spread of the BA’s transactions in FX is very narrow (e.g., 0.015 DZD on U.S. dollar transactions). - The authorities plan to increase the FX allocation for international travel this year to reduce FX demand on the parallel market. - Implement reforms to improve financial inclusion including through (i) preparing a financial inclusion strategy, (ii) improving financial literacy, (iii) strengthening the credit market infrastructure, and (iv) developing long-term savings products. - Implementation status: Regarding financial inclusion, authorities have so far focused their efforts in developing regulatory frameworks for Islamic and digital banking. Efforts are also ongoing to develop the payment infrastructure and oversight frameworks. - Given the strong economic and financial interlinkages between the central government, SOBs and SOEs, posing systemic risks, use all available tools to monitor the solvency and the liquidity risks of the banking sector, ensure that prudential rules are followed and assess risks regularly. Closely follow financial conditions of SOEs and strengthen their governance. - Implementation status: The authorities are pursuing efforts to strengthen SOEs oversight and governance. They are working on establishing performance contracts for SOE management and the professionalization of SOEs’ board. ### Fiscal Policies and Operations - Proceed with gradual fiscal rebalancing, anchoring it on stabilizing public debt by 2026. - Implementation status: The authorities implemented a fiscal expansion in 2024 and envisaged continuation in 2025 to support the purchasing power of civil servants and households and increase investment spending. - Over the medium term, adopt a fiscal framework guided by a rules-based fiscal framework, to enhance the resilience of public finances and safeguard macroeconomic stability. - Implementation status: The authorities include three-year projections in their budget documents, but without a clear anchor. - Implement gradual phase-out of universal subsidies, part of which could finance targeted support to low-income households and climate adaption investment. - Implementation status: The 2020 budget law envisaged gradually phasing out universal subsidies and replacing those with a targeted compensation mechanism to support households. The authorities are collaborating with the World Bank on identifying appropriate compensatory measures, building on a household survey. - Strengthen the role of the ‘Haut Comité d’Evaluation et D’Alerte des Risques Budgétaires’ (HCEARB) to implement a comprehensive assessment of fiscal risks (including from climate change) and prepare contingency plans. - Implementation status: The role of the HCEARB remains limited and its meetings sporadic. - Strengthen the fiscal framework with PFM reforms, including by (i) finalizing the ‘Etat D’ by including a credible financing plan of the budget as prescribed in the Organic Budget Law; (ii) developing a medium-term debt strategy; (iii) strengthening cash management and transparency on budget execution; and (iv) building climate considerations in PFM processes. - Implementation/status details: - Implementation of the Organic Budget Law is well advanced, especially with the adoption of program budgeting and the gradual move toward performance-based budgeting. - The 2025 budget law, as the 2025 budget law included an of Etat D (“Annex D”), but without specifying the financing side of the budget. - Further efforts are needed to strengthen cash and public debt management and transparency on budget execution. ### Structural reforms - Create an economic environment conducive for the private sector, enhance competitiveness, and stimulate economic diversification, including through more trade openness, avoiding generalized import compression policies, and reforms in product and labor markets; and reducing the size of the public sector by shedding non-strategic and loss-making SOEs. - Implementation/status details: - The authorities adopted a Land Management Law (Loi sur le Foncier) in November 2023 that facilitates property access for private investors and a new Procurement Law in 2023 to enhance transparency and competition. - They are pursuing diversification of (nonhydrocarbon) exports and are exploring new export markets. - A new law on the “auto-entrepreneur” creates a legal statute for self-employed individuals and aims at reducing informality. ### Governance and Vulnerabilities to Corruption - Pursue efforts to reinforce the legal AML/CFT framework. - Implementation/status details: - In October 2024, Algeria has been put on the list of jurisdictions under increased monitoring by the FATF due to weaknesses in the AML/CFT framework. - A national assessment committee has been established to coordinate the necessary reforms. - With the support of LEG TA the authorities have actively pursuing efforts to improve risk-based supervision and legal entity transparency (through the establishment of a central registry of “beneficial ownership”). ### Data Provision - Prioritize actions to improve the quality and availability of macroeconomic data, including efforts to improve the timely provision of data to the IMF such as data on budget outturns. - Assessment: Although data provision remains broadly adequate for surveillance, there is ample room for improvement. Key data are either missing (unemployment rate), outdated (CPI), or transmitted with long delays (budget execution). The authorities have rebased the national accounts in 2021 and have since then regularly published quarterly national accounts. *Source: Annex I. Implementation of Past IMF Recommendations (from the provided IMF content)* ### 3.6 percent in 2024 year on year. The appreciating REER reduces Algeria’s export competitiveness in the ### 3.6 percent in 2024 year on year. The appreciating REER reduces Algeria’s export competitiveness in the ### REER, Competitiveness, and External Balance - The appreciating REER reduces Algeria’s export competitiveness in the nonhydrocarbon sector, undermines its efforts for diversification and contributes to the widening current account deficit. - Assessment: - The EBA REER model estimates a medium-term overvaluation of the Dinar REER by 2.2 percent. - The CA model estimated a larger 6.3 percent overvaluation. - Staff’s assessment gives more weight to the EBA-lite CA model, which has often proven to be more informative and reliable than the REER model. The latter tends to be a poor fit for many countries as it does not adequately capture country-specific characteristics (IMF, 2019). ### Capital and Financial Accounts: Flows and Policy Measures - Background: - Algeria’s economy remains mostly closed to external capital flows. - Inward FDI averaged 0.4 percent of GDP over the last five years and was mostly concentrated in the energy sector. - In 2024, there was FDI inflow of 0.4 percent. - There are no portfolio flows. - Assessment and policy-relevant measures: - The elimination of the 49 percent limit on foreign ownership in Algerian investment projects (the ‘51/49’ rule), except for strategic sectors, removes an important constraint on inward FDI and, if accompanied by reforms to improve the business climate, could attract FDI in the medium term. - The liberalization of the surrender requirements, except for hydrocarbon and mineral exports, could help ease supply bottlenecks by facilitating imports of raw materials and inputs. ### FX Intervention and Reserves Level - Exchange rate regime and operations: - Algeria’s de jure exchange rate arrangement is “managed floating”, while the de facto exchange rate arrangement is craw-like. - Since December 2024, the exchange rate has “crawled” within a 2 percent band against the U.S. dollar. - Based on these developments, the exchange rate regime was reclassified to crawl-like from stabilized (effective December 20, 2024). - The Banque of Algeria (BA) sets the official exchange rate on daily basis and makes foreign exchange available to banks at that rate on their request. - The BA sets the buying and selling rates of the dinar against the US dollar in this market within a narrow margin of 0.015 dinar. - Reserves trajectory and projections: - The pattern of financing current account deficit with official reserves was the norm in Algeria between 2015 and 2021, before the spike in hydrocarbon led to a surplus and reserve accumulation in 2022 and 2023. - Algeria’s official reserves in 2024 stood at USD 67.8bn or 14 months of next year’s imports. - Official reserves are projected to fall to USD 18.6 or 3.2 months of next year’s imports in 2030. - Assessment: - Exchange reserves of the Bank of Algeria are projected to fall from current 14 months of imports end of 2024 or 20 2.4 percent of ARA metric in 2025 to 3.2 months of imports or 37.9 percent of ARA metric in 2030. - Reserves are expected to fall below the100 percent of the ARA metric starting in 2028. ### Sovereign Risk and Debt Sustainability (SR-DSA) — Key Findings - Overall risk: - Algeria faces a “High” risk of sovereign stress. - The public debt ratio is projected to increase over the medium term and beyond, on the back of projected large primary deficits, including those estimated for 2025-26. - Large uncertainty, especially from volatile hydrocarbon revenue, adds to medium-to-long term risks of sovereign stress. - Financing and domestic banking risks: - In the absence of alternative sources of financing, significant gross public financing needs could put pressure on the domestic banking system, crowd out private activity, and potentially aggravate the sovereign-bank nexus. - Data and debt management recommendations: - Staff recommends additional fiscal rebalancing to stabilize the debt ratio over the medium term, considering external financing and urges the Algerian authorities to expand the perimeter of available debt data, prepare a debt management strategy, and develop domestic debt markets. ### Public Debt Structure and Dynamics - Denomination and marketability: - Public debt is almost entirely denominated in dinars, and a large share is non-marketable. - As of 2024, nearly all central government debt was held domestically and about 42 percent by the central bank. - The data used for the SR-DSA underestimates central government debt as it does not include some intra-government claims and does not consider contingent liabilities, such as from future social security deficits. - Debt trajectory and primary balance: - Algeria’s central government debt-to-GDP ratio is projected to increase over the medium to long term, in the absence of additional fiscal rebalancing. - The primary deficit increased in 2024 to 12.8 percent of GDP (from 4.3 percent in 2023). - Use of all the funds accumulated on the Revenue Regulation Fund (FRR) to finance the deficit and negative real interest rates limited the increase in the public debt ratio to 48.5 percent of GDP (from 47.7 percent in 2023). - Nonetheless, the large primary deficit projected for 2025 would significantly push up public debt. With the balances in the FRR depleted, a gradual reduction in fiscal deficits the following year would not be sufficient to stabilize the debt ratio. - Stress-test findings and long-run risks: - Staff assesses Algeria’s overall risk of sovereign stress as “High”. - The decline in hydrocarbon revenues and the depletion of the FRR led to a sharp reduction in fiscal buffers, but the large share of non-marketable debt and the near absence of external public debt keep mitigating risks of sovereign stress. - Stress tests suggest that an (illustrative) banking crisis shock would worsen public debt and gross financing needs, underscoring the risks of large reliance on domestic bank financing and the sovereign-SOB “nexus”. - Two illustrative long-run risk modules were triggered: - Significant gross financing needs in the next years would push large amortizations falling due over the long term; these would need to be rolled over and their costs would further fuel the increase in the public debt ratio. - In the absence of significant discoveries of new hydrocarbon fields, and possibly because of shifting global demand during the energy transition, a gradual decline in hydrocarbon production (and associated fiscal revenue) would increase public deficits and result in additional debt build-up. - Recommended policy actions: - Implement an urgent and more ambitious fiscal consolidation. - Expand the perimeter of available debt data. - Prepare a comprehensive debt management strategy. - Consider external financing and develop domestic debt markets. ### Specific Data Points and Indicators (selected) - Inward FDI: averaged 0.4 percent of GDP over the last five years; FDI inflow of 0.4 percent in 2024. - Exchange rate band since December 2024: 2 percent band against the U.S. dollar. - BA intra-market margin for buying and selling rates: 0.015 dinar. - Official reserves: - 2024: USD 67.8bn or 14 months of next year’s imports. - 2030 projection: USD 18.6 or 3.2 months of next year’s imports. - Public finances: - Primary deficit 2024: 12.8 percent of GDP (from 4.3 percent in 2023). - Public debt ratio 2024: 48.5 percent of GDP (from 47.7 percent in 2023). - Central bank share of central government debt as of 2024: about 42 percent. - External debt: - External debt fell to 1.1 percent in 2024 from 2.1 percent in 2020. - Staff expect external debt to decline further and remain at 0.6 percent to GDP in 2030. - External reserves are used to finance the current account deficits. - Gross external financing need (in percent of GDP) examples: 12.8 (2020), 3.6 (2021), -7.5 (2022), -1.5 (2023), 1.7 (2024), 4.3 (2025), 4.7 (2026), 4.1 (2027), 4.1 (2028), 3.7 (2029), 3.4 (2030). - Key macro assumptions (selected): - Real GDP growth (in percent): -5.0 (2020), 3.8 (2021), 3.6 (2022), 4.1 (2023), 3.6 (2024), 3.4 (2025), 2.9 (2026), 2.8 (2027), 2.7 (2028), 2.5 (2029), 2.5 (2030). - GDP deflator in US dollars (change in percent): -10.3 (2020), 8.7 (2021), 17.2 (2022), 5.5 (2023), 3.9 (2024), 2.2 (2025), -2.7 (2026), -0.6 (2027), -0.6 (2028), -0.3 (2029), -0.8 (2030). - Nominal external interest rate (in percent): 1.1 (2020), 3.8 (2021), 5.9 (2022), 9.8 (2023), 8.5 (2024), 0.9 (2025), 0.8 (2026), 0.9 (2027), 0.9 (2028), 0.9 (2029), 0.8 (2030). - Current account balance, excluding interest payments (in percent of GDP): -11.3 (2020), -2.4 (2021), 8.5 (2022), 2.5 (2023), -1.0 (2024), -3.6 (2025), -4.0 (2026), -3.6 (2027), -3.6 (2028), -3.2 (2029), -2.9 (2030). *Source: IMF staff, Algeria country note (selected excerpts).* ### Annex VI. Strengthening Economic Governance to Unlock Growth ### Annex VI. Strengthening Economic Governance to Unlock Growth ### A. Introduction - Weak institutions and ineffective governance processes can be a source of vulnerability to rent seeking and corruption, which in turn can undermine confidence, investment, and growth. - The authorities have taken notable steps in recent years to address governance vulnerabilities in key sectors, and should continue to build on these efforts. - Opportunities exist to strengthen governance in hydrocarbons, SOEs, fiscal revenue and expenditure management, monetary/financial sectors, and AML-CFT. - Key governance shortcomings identified: limited transparency, constrained institutional independence, gaps in enforcement of rules, and uneven application of legal and regulatory frameworks. ### B. Hydrocarbon Transparency Findings - Disclosure and transparency requirements in hydrocarbon contracting are limited. - Contracts can be granted through direct negotiation without a competitive process based on legally established criteria. - No requirement to disclose the terms and conditions of awarded contracts nor to collect and publish beneficial ownership information of awardees. - Information on hydrocarbon revenue management is scarce due to limited reporting and audits. Recommendation highlights - Legal and regulatory reforms should focus on disclosure requirements in the bidding and awarding of contracts, including publication of beneficial ownership information of companies awarded. - Reforms should also target collection and use of hydrocarbon revenues in line with international best practices. - Joining the Extractive Industry Transparency Initiative (EITI) is recommended as an important step toward improved transparency. ### C. SOE Governance Findings - SOEs play a prominent role in Algeria’s economy with complex fiscal and financial linkages to the government. - A dedicated SOE oversight unit in the Ministry of Finance was recently created. - Information on fiscal risks related to SOEs and the extent of their quasi-fiscal activities is not readily available. - SOEs are expected to prepare internally audited financial statements and submit them to the CNRC, but these documents are not currently made publicly available and information on compliance is limited. - Oversight of procurement practices within SOEs is limited. - SOE Boards often include multiple government representatives, raising governance challenges and potential conflicts of interest. Recommendations - Publish a complete official inventory of SOEs, including key statistics. - Enact a new SOE Law in line with international standards and adopt a common transparency policy for all SOEs. - Task the SOE unit at the Ministry of Finance with regularly publishing financial reports of individual SOEs and consolidated reports on the SOE sector. - Strengthen oversight of procurement practices within SOEs. ### D. Fiscal Governance Findings - Fiscal governance challenges exist on both revenue and expenditure sides. - High levels of tax evasion and fraud have historically contributed to revenue shortfalls. - Contributing factors include limited enforcement capacity and a complex tax system with numerous exemptions. - Algeria loses about US$0.5 billion in tax revenue annually to corporate tax abuse and offshore tax evasion (Tax Justice Network, 2020). - Public financial management (PFM) has an established tradition of budget control and audit practices, but there is room to enhance regularity and transparency of budget data reporting and publication. - Oversight and integration of extrabudgetary funds into the overall fiscal framework need improvement. - Public investment management lacks systematic criteria for project selection, yielding low investment efficiency. - Procurement practices have historically relied on non-competitive contracting methods. Recent measures and progress - Digitalization has improved tax compliance: digital filing of tax returns became mandatory for large companies since 2018 and is being gradually extended regionally and locally. - In 2024, the MoF rolled out the Algerian Electronic Customs System (AECS), scheduled to be fully deployed by July 2025, aiming to increase collection, efficiency, transparency, and reduce economic costs from holding goods at customs. - Implementation of the 2018 Organic Budget Law has modernized budget preparation, management and control. - Progress has been made in deployment of the integrated budget management software (SIGB). - Implementation of the new Public Procurement Law is pending parliamentary approval expected before end-2025. - A public beneficial ownership registry has recently been established. Recommendations - Timely publication of draft budget laws, intra-year budget execution reports, and information on public investment projects and off-budget operations. - Establish a treasury single account (TSA). - Rationalize tax expenditures and discontinue discretionary tax exemptions while stepping up controls and enforcement mechanisms. - Adopt legal reforms to enhance transparency and disclosure requirements for public procurement, including in SOEs. - Regular reporting of revenue and expenditure of major extrabudgetary entities. ### E. Central Bank Governance and Financial Sector Supervision Findings - The legal framework previously allowed the Banque d’Algérie (BA) to finance the central government through direct purchase of government debt securities, often at below market yields. - The BA’s balance sheet was used to address liquidity challenges in SOBs through the Programme Spécial de Financement (PSR), introduced in 2021. - Such uses of the BA’s balance sheet compromise the central bank’s credibility and its ability to deliver on price and financial stability mandates. - The Banking Commission (BC) is responsible for financial sector supervision; strengthening its independence would support effective supervision and enforcement. - Oversight of SOBs presents additional complexities due to state-sponsored loans to SOEs on SOB balance sheets, potentially affecting asset quality and supervisory assessments. Progress and recommendations - The 2023 Loi Monétaire et Bancaire (LMB) was implemented to strengthen central bank governance and financial sector supervision. - The LMB restricts monetary financing conditions (Article 48) to truly exceptional and unforeseen crisis situations as declared by the President. - The LMB introduces strengthened financial surveillance and crisis management, new monetary policy instruments, governance bodies, and control functions. - Notable progress since implementation: modernization of central bank operations; strengthened supervision including risk-based banking supervision, crisis management, and independent operation of monetary and credit councils and BC. - Continued steadfast implementation of the LMB is recommended. ### F. Anti-Money Laundering/Combating the Financing of Terrorism (AML-CFT) Findings - In October 2024, Algeria was added to the FATF’s list of jurisdictions under increased monitoring (the “grey list”). - The MENAFATF mutual evaluation report (MER), concluded in May 2023, identified strengths (ability to confiscate proceeds of crime; successful investigation and prosecution of terrorist financing) and weaknesses. - Key weaknesses included measures to prevent misuse of legal persons for ML/TF, low understanding of ML/TF risks by competent authorities, and gaps in the AML/CFT legal framework. Technical assistance and progress - In June 2023, a Fund technical assistance (TA) project was initiated focusing on: (i) reinforcing the BA’s AML/CFT-related supervision of banks and other financial institutions by designing a risk-based supervision framework and revamping offsite and onsite procedures; and (ii) setting up the legal and institutional framework for a registry of beneficial ownership of legal persons. - With Fund TA, authorities drafted a new banking regulation covering AML/CFT obligations for banks and subsequent instructions on customer due diligence and wire transfers. - A risk matrix for classifying banks by risk level and calibrating supervisory frequency/intensity was designed. - Offsite and onsite inspection procedures were updated. - The Ministry of Commerce worked to update and refine the legal and operational framework for collecting and maintaining beneficial ownership information. - These reforms led to re-ratings to passing grades on eight recommendations since the MER. Remaining needs and timeline - Further reforms, including additional legislative amendments, are needed for upgrades on other recommendations. - Algeria must demonstrate a track record of effective implementation of the AML/CFT regime, including risk-based supervision, to exit the FATF grey list. - As of October 2024, of 13 outstanding FATF recommended actions, one has been completed and progress is underway on the remainder. - Key guidelines have been published on targeted financial sanctions, beneficial ownership, due diligence and self-assessments. - Regulatory procedures for the foreign exchange market, PSPs and digital banks await legislative approval ahead of publication. - A detailed mid-term report will be published by the authorities in July 2025, ahead of the next FATF meeting in September 2025. ### G. Annex VI. Table 1 — Key Priority Actions for Strengthening the AML/CFT Regime - Area: AML/CFT Supervision - Adopt necessary legislative and regulatory amendments, including to Law 05-01, to address remaining legal framework gaps (politically exposed persons, high-risk countries, cross-border transportation of cash, correspondent banking, virtual asset service providers). — Short-term - Design fit and proper verification procedures for all administrators and control shareholders of financial institutions and high-risk non-financial professions. — Short-term - Elaborate sectoral risk assessments and risk-based supervision manuals for all supervisors of high-risk sectors and conduct effective risk-based offsite and onsite supervision. — Medium-term - Demonstrate that proportionate and dissuasive remedial sanctions are taken for breaches of AML/CFT obligations by banks, other financial institutions and high-risk non-financial professions. — Long-term - Area: Entity Transparency - Finalize operationalization of the centralized beneficial ownership register. — Short-term - Adopt legal/regulatory amendments to provide the Ministry of Commerce (or other agency tasked with maintaining the register) with powers to verify information, obtain further information, and issue proportionate sanctions to non-compliant entities. — Medium-term - Design and implement procedures for verifying the accuracy and completeness of information provided by covered entities, including through interconnection with other databases. — Medium-term - Area: Combating the Financing of Terrorism - Strengthen implementation framework of UN terrorism-related targeted financial sanctions. — Short-term - Elaborate and apply a risk-based monitoring framework for non-profit organizations at risk of misuse for terrorist financing purposes. — Short-term - Area: Use of Financial Intelligence to Prevent ML/TF and Support Financial Investigations - Improve UCREF’s ability to conduct timely and high-quality analysis of suspicious transaction reports and disseminate useful financial intelligence to prosecutorial authorities. — Medium-term *Annex VI. Strengthening Economic Governance to Unlock Growth — Algeria (IMF).* ### 2. Under this scenario, the current account deficit would widen, but import compression ### 2. Under this scenario, the current account deficit would widen, but import compression ### Downside scenario: external and growth impacts - Current account deficit: - Larger relative to the baseline by 1.2 percent per GDP in 2025. - Larger relative to the baseline by 1.4 percent per GDP in 2026. - Reserves and import compression: - Reserves drop 1.2 months below the baseline. - Reserves fall from 3.2 months of next year import to 2 months of next year’s imports by 2030. - Growth and sectoral impacts: - Real growth reduced by 0.5 percent in 2025 relative to the baseline. - Real growth reduced by 0.1 percent in 2026 relative to the baseline. - Hydrocarbon sector: 1.9 percent below baseline in 2025. - Nonhydrocarbon sector: 0.3 percent below baseline (2025). ### Fiscal and debt implications under the downside scenario - Fiscal balance: - Fiscal deficit is 1.3 percent larger than the baseline in 2025. - Fiscal deficit remains 0.6 percent below the baseline by the end of 2030. - Government financing: - Government expected to increase domestic borrowing to offset lost hydrocarbon revenues, leading to higher government debt. - Policy takeaway: - The scenario underscores the urgent need for fiscal consolidation to protect debt stability and external reserves. ### Policy Reform Scenario: Fiscal Consolidation (Annex VIII) — design and targets - Overall proposal: - Additional fiscal adjustment of five percentage points of GDP over 2025–28. - Aim: stabilize public debt to GDP ratio at about 64 percent of GDP by 2028. - Any additional windfall would accumulate in the FRR. - Expected effect: reduce public borrowing from the banking sector, leaving more space for private sector borrowing. - Rationale and context: - Earlier staff advice proposed stabilizing public debt at about 47 percent of GDP with fiscal measures of 3 pp of GDP over 2024-26. - Given the deterioration in 2024–26 and FRR depletion, a more rapid consolidation is needed over 2025-28. - Complementary strategy: move to a rule-based framework guided by a dual-pillar approach (public debt margin and a savings floor held in the FRR). - Estimated cushion to avoid breaching a 70 percent debt limit in 95 percent of cases: 36 percent of GDP. - Implementation sequencing: first anchor public debt below the proposed debt limit; second, implement an asset floor and build asset-liability management capacities. ### Composition of proposed fiscal measures (Annex VIII) - Adjustment composition: - Revenue mobilization: 1.5 pp of GDP (over three years). - Spending adjustments: 3.5 pp of GDP (spread over 4 years). - Revenue measures (examples listed): - Eliminating inefficient VAT exemptions. - Reforming mining sector taxation. - Improving tax compliance. - Strengthening procedures for tax debt recovery. - Note: A partial list of tax expenditures included in the “Etat H” of the 2025 budget law amounts to DZD 616.5 billion, 1.6 percent of GDP. - Spending measures (examples listed): - Gradually phasing out fuel and energy subsidies closer to cost-recovery level over five years (partially compensated by targeted cash transfers to vulnerable households). - Limiting transfers to SOEs including strict enforcement of performance contracts. - Improving efficiency of public investment to limit capital expenditures without largely impacting real GDP growth. ### Macroeconomic effects of the fiscal consolidation - Growth effects: - Staff estimates the proposed fiscal measures would reduce, on average, real GDP growth by 0.2 pp of GDP per year over the period 2025-2028. - Rationale: Algeria’s fiscal multipliers are estimated to be low. - Debt and credit effects: - Public debt to GDP stabilizes at about 64 percent of GDP by 2028 under the scenario. - Lower government gross financing requirements would reduce public borrowing from the banking sector and provide more space for private sector borrowing. ### Capacity development priorities (Annex IX) — selected activities and status - Macroeconomic frameworks: - Developing a forecasting and Policy Analysis System (FPAS) at the BA — ICD — Ongoing. - Revenue administration and tax policy: - Development of strategies to improve on-time payments — METAC — Completed. - Improving tax compliance in mining sector — FAD — Completed. - Improving VAT legal drafting — LEG — Completed. - STX Customs missions in 2026 and 2027 — METAC — Planned. - Assist tax administration in development of risk management framework in the oil and gas industries — METAC — Planned. - Public financial management: - Implementation of Organic Budget Law: Medium- and program-based budgeting — FAD/METAC — Completed. - Cash management — FAD — Completed; METAC — Planned. - Implementation of program budgeting and medium-term budget framework — METAC — Planned. - Financial supervision and regulation: - Finalizing risk rating framework and developing early intervention measures — METAC — Completed. - Enhancing onsite inspection manual — METAC — Ongoing. - Developing regulation on cyber risk — METAC — Planned. - Central bank operations and payments: - Development of an in-house credit assessment system (follow up) — METAC — Ongoing. - Liquidity forecasting — FAD/METAC — Ongoing. - Payment service providers and payment systems supervision and oversight — MCM — Completed / In execution. - Debt management and AML/CFT: - Training on Sukuk — METAC — Planned. - Implementing key recommendations of the MENAFATF report — LEG — Ongoing. - Statistics and other CD topics: - Compilation of Energy & Air Emission Accounts — STA — Planned. - Additional topics for consideration include CPI update, adoption of e-GDDS, public finance statistics, and medium-term revenue strategy. ### Export diversification: current structure, risks, and policy priorities (Annex X) - Current export concentration (2023): - Hydrocarbons accounted for 84 percent of total exports of goods and services. - Hydrocarbons accounted for 91 percent of goods exports. - Nonhydrocarbon exports of goods increased from 1.1 percent of GDP in 2013 to 2 percent in 2023. - Nonhydrocarbon exports remain concentrated on hydrocarbon-intensive products such as fertilizers, cement, and iron and steel. - Fiscal dependence: - Hydrocarbons revenue accounted for about 60 percent of total fiscal revenues in 2023, declining to 50 percent in 2024. - Proven reserves (as reported): - About 12.2 billion barrels of proven crude oil reserves. - 159 trillion cubic feet of proven natural gas reserves. - Diversification targets and measures: - Nonhydrocarbon exports reached $5.1 billion in 2023 with targets of $15 billion by 2027 and $29 billion by 2030. - Renewable energy targets: 15 GW of solar by 2035; 30–40 percent of electricity from renewables by 2030. - Algeria seeks to become a key green hydrogen supplier to Europe. - Reforms: free trade areas, logistics platforms, simplification of administrative procedures, one-stop digital shop for investors (AAPI), 2022 Investment Law, 2023 Monetary and Banking Law, 2023 Land Law, 2023 Procurement Law. - Structural challenges and policy actions recommended: - Reduce trade barriers: Algeria maintains substantial tariff and nontariff barriers relative to peers; import substitution approach has led to restrictions that increase production costs and market distortions. - Increase trade integration: Algeria joined AfCFTA but has not yet reached an agreement with the EU on review of their Association Agreement; Algeria has yet to become a WTO member. - Reduce impediments to FDI: FDI inflows amounted to 0.5 percent of GDP in 2023 (half of the 1 percent average for EMDEs). OECD FDI restrictiveness index score: 0.35 for Algeria versus 0.16 average for non-OECD countries. - Enhance the business environment: persistent red tape and complex, frequently changing regulations; need for a more predictable and simplified regulatory environment. - Phase out fuel subsidies: universal fuel subsidies keep domestic energy prices well below cost-recovery level, impose heavy fiscal burdens, encourage energy-intensive industries, and undermine feasibility of renewable projects. *Source: IMF staff estimates, projections, and annexes (Annex VII–X).* ### Annex XI. Data Issues ### Annex XI. Data Issues ### Data Adequacy Assessment (Annex XI. Table 1) - National Accounts: BCCBBCC - Prices: CoverageCDDAB - Government Finance Statistics: BCBB - External Sector Statistics: CC - Monetary and Financial Statistics: ConsistencyCBC - Inter-sectoral Consistency: Frequency and TimelinessBADAA - Median Rating: A B C D (table headers present in source) - Granularity: 3/ - Data Adequacy Assessment Rating: 1/ - Questionnaire Results: 2/ - Assessment: C ### Use of data and other data gaps - Use of data and/or estimates in Article IV consultations in lieu of official statistics available to staff. Staff does not use any data and/or estimates in the staff report in lieu of official statistics. - Other data gaps. Other important data gaps remain, including on wages (last survey was published in 2021) and on informal sector activities. On climate, authorities plan to step up data collection to better monitor climate-related risks. ### Changes since the last Article IV consultation - Quarterly national accounts have been published in the new base year (up to 2001), and the granularity of sectors covered as been expanded in the last report. - On GFS, the transition to program budgeting is well advanced (2023 and 2024 were transition years) but the amount of unallocated expenditure in the budget is significant and budget execution reports include a new line of unspecified "other expenditure" which reported amount can turn out to be significant as well. ### Corrective actions and capacity development priorities - Updating the CPI basket and improving the coverage and timeliness of government financial statistics remain key priorities. - The gradual deployment of a new integrated IT sytem covering the full expediture chain should improve the quality and timeliness of government finance statistics in the coming years. - The IMF Statistic Department stands ready to provide technical assistance on price and national accounts and labor market statistics. ### Rationale for staff assessment — key weaknesses (detailed questionnaire results) - Price data. CPI weights are based on a 2000 household survey and severely outdated, which could lead to errors in the measurement of inflation. - GFS. Institutional coverage of government statistics remain limited to central government. Data on budget execution are transmitted with significant delay and not published. Some government expenditures remain unallocated even in budget execution report. In addition there is lack of reconciliation of financing with the monetary accounts. - Financial statistics lack granularity (especially regarding the Financial Soundness Indicators), that , given the specificities of the Algerian banking sector, can hamper the assessment of liquidity risks. - Unemployment and labor market participation data have not been published since 2019, hampering analysis of employment trends and the assessment of social vulnerabilities. - The lack of reconciliation between fiscal and monetary statistics can hamper the assessement of fiscal risks given the strong financial interlinkages between the government, SOEs and SOBs. - On the other hand, national accounts have been rebased in December 2023 with 2001 as a base year, and now follow the 2008 SNA recommendations. Quarterly data in the new base are now available and the granularity of sector covered has been expanded. ### Staff view on impact for surveillance - The data provided to the Fund have some shortcomings that somewhat hamper surveillance. - The data provided to the Fund have serious shortcomings that significantly hamper surveillance. - The data provided to the Fund are adequate for surveillance. - The data provided to the Fund have some shortcomings but are broadly adequate for surveillance. *Annex XI. Data Issues — Algeria* ### Annex XI. Table 3. Algeria: Table of Common Indicators Required for Surveillance ### Annex XI. Table 3. Algeria: Table of Common Indicators Required for Surveillance (As of July 24, 2025) ### Key institutional and balance-sheet facts - Membership Status: Joined September 26, 1963; Article VIII. - SDR Department: - Net cumulative allocation: 3,076.66 (SDR Million) - Holdings: 3,221.58 (SDR Million) 104.71 (Percent of Quota) - General Resources Account: - Quota: 1,959.90 (SDR Million) 100.00 (Percent of Quota) - Fund holdings of currency: 1,438.42 (SDR Million) 73.39 (Percent of Quota) - Reserve position in Fund: 521.48 (SDR Million) 26.61 (Percent of Quota) - Outstanding Purchases and Loans: None - Projected Obligations to Fund (SDR Million; based on existing use of resources and present holding of SDRs): Principal 0.00 for 2025–2029; Interest/Charges 0.01 for 2025–2028; Total 0.01 for 2025–2028. - Exchange rate arrangement: - De jure: managed floating; de facto: crawl-like. - On July 8, 2024, US$1 = DZD 129.5; SDR 1 = DZD 186.9. - No margin limits on interbank market buying/selling rates, except DA 0.015 margin between Bank of Algeria buying and selling rates for the U.S. dollar. - Article IV consultation cycle: 12-months; last concluded March 29, 2024; 2025 Article IV discussions held June 16–30, 2025. - Resident Representative: None. ### Assessment of data adequacy and statistical shortcomings - General: Data provided to the Fund have some shortcomings that somewhat hamper surveillance. Key shortcomings pertain to data on budget execution and outturns and to the real sector. - National Accounts: - National accounts were rebased in December 2023, to base 2001 and to follow the 2008 SNA recommendations. - New annual national accounts data go back to 2001; volume measures derived at prices of the previous year, then chain-linked. - Quarterly data had substantial delays in recent years but are now available under the new base. - Price Statistics: - CPI index reference period: 2001 with weights from 2000; described as severely outdated and potentially leading to errors in the measurement of inflation. - PPI weight reference period: 1989; outdated and likely not representative of current production. - Government Finance Statistics (GFS): - Key shortcomings: insufficient institutional coverage (limited to central government), classification problems, long lags for production, lack of reconciliation of financing with monetary accounts. - Authorities have not reported GFS data for publication in the Government Finance Statistics Yearbook since 2011. - Root causes: lack of financial resources for compilation, insufficient interagency coordination, concerns about accuracy that lead to reluctance to publish provisional data. - Monetary Statistics: - Bank of Algeria (BA) submits monetary statistics for the central bank, other depository corporations (ODCs), and other financial corporations to STA on a timely basis. - Monetary statistics are published in the International Financial Statistics and based on the Standardized Report Form (SRF) following MFSMG methodology. - BA reports some key series and indicators to the Financial Access Survey, including commercial bank branches per 100,000 adults and ATMs per 100,000 adults. - Financial Sector Surveillance: - BA reports Financial Soundness Indicators (FSI) published on the IMF’s FSI website; periodicity and timeliness need improvement as FSIs are reported only yearly. - Balance of Payments and IIP: - BoP statistics are of relatively good quality; collection system comprehensive for payments but with incomplete coverage of non-settlement transactions (e.g., reinvested earnings) and some position data. - A January 2018 TA mission addressed weak areas: (i) recording construction projects as FDI vs. services; (ii) trade statistics; (iii) FDI position data. - Structure of BoP accounts was adjusted in 2024 to improve readability. BoP and IIP statistics are transmitted to the IMF for dissemination in the IFS. ### Data dissemination, participation in data standards, and Table of Common Indicators (selected entries) - Participation: Algeria began participation in GDDS on April 21, 2009 (replaced by e-GDDS in 2015) and disseminates only metadata; no data ROSC available. - Summary table (As of July 10, 2025) — Date of latest observation / Date received / Frequency of Data / Frequency of Reporting / Frequency of Publication: - Exchange Rates: 05/2025 / 06/2025 / M / M / M - International Reserve Assets and Reserve Liabilities of the Monetary Authorities: 05/2025 / 07/2025 / M / M / M - Reserve/Base Money: 05/2025 / 07/2025 / M / M / M - Broad Money: 05/2025 / 07/2025 / M / M / M - Central Bank Balance Sheet: 05/2025 / 07/2025 / M / M / M - Consolidated Balance Sheet of the Banking System: 05/2025 / 07/2025 / M / M / M - Interest Rates: 05/2025 / 06/2025 / M / M / M - Consumer Price Index: 05/2025 / 06/2025 / M / M / M - Revenue, Expenditure, Balance and Composition of Financing — General Government: NA / NA / - - - - Revenue, Expenditure, Balance and Composition of Financing — Central Government: 03/2025 / 06/2025 / I / I / A - Stocks of Central Government and Central Government-Guaranteed Debt: 12/2024 / 06/2025 / I / I / NA - External Current Account Balance: Q1 2025 / 06/2025 / Q / I / I - Exports and Imports of Goods and Services: Q1 2025 / 06/2025 / Q / I / I - GDP/GNP: Q1 2025 / 07/2025 / Q / I / I - Gross External Debt: Q1 2025 / 06/2025 / Q / I / I - International Investment Position: Q4 2024 / 06/2025 / Q / Q / Q ### Technical assistance, capacity building, and FSAP - Technical Assistance (selection with topics and dates as reported): - MCM: Financial stability and macroprudential policy framework — April 2016 - MCM: Liquidity management — May 2016 - FAD: Public financial management — July 2016 - FAD: Tax administration — October 2016; November 2016; April 2017; November 2017; September 2018; November 2019; January 2020; June 2020; November 2020; subsequent TA items through 2025 - MCM: Debt market development — October 2016; November 2017; August 2021 - MCM: Upgrading banking regulations — March 2017 - METAC and MCM missions on banking supervision, Basel II & III implementation, supervisory review and evaluation process, liquidity forecasting, collateral framework, and other topics across 2017–2025 - METAC: National accounts March 2018; Program budgeting and related missions 2021–2025 - MCM: Monetary policy and risks to financial stability March 2018 - Financial Sector Assessment Program: - Algeria first participated in FSAP in 2003; updated in 2007 and 2013. - A Financial System Stability Assessment was conducted in 2019 and 2020 and concluded by the Executive Board on a lapse-of-time basis in July 2020 (Press Release 20/316). ### Implications and operational priorities (derived from stated shortcomings) - Improve coverage and timeliness of government finance statistics: - Expand institutional coverage beyond central government to general government. - Reconcile financing data with monetary accounts and reduce production lags. - Address resource and interagency coordination constraints to enable provisional data publication. - Modernize price and producer indices: - Update CPI weights (current reference: 2000 with index reference 2001) and PPI weights (reference 1989) to reflect current consumption and production structures. - Strengthen balance of payments and IIP coverage: - Address incomplete coverage of reinvested earnings and other non-settlement transactions. - Improve FDI position compilation and periodicity of position data. - Enhance financial sector statistics: - Increase periodicity and timeliness of Financial Soundness Indicators (from yearly to higher frequency where feasible). - Continue and prioritize TA and capacity-building efforts across PFM, tax administration, national accounts, monetary statistics, and financial sector supervision as documented in the technical assistance listing. *Annex XI. Table 3. Algeria: Table of Common Indicators Required for Surveillance (As of July 24, 2025).* --- _Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1dzaea2025001-source-pdf.pdf_