Algeria: 2022 Article IV Consultation-Press Release; and Staff Report

IMF Staff Country Reports, February 2, 2023

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Bibliographic details

• Published: February 2, 2023
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400233395.002

Near-term outlook and macroeconomic backdrop

• The upswing in hydrocarbon prices has alleviated pressures on public and external finances.
• The post-pandemic recovery has likely gathered pace.
• The prospects for 2023 are favorable but growth is projected to decelerate and inflation to remain high in the medium term.
• The announced sizeable rise in spending under the 2023 budget could:
  • reverse the progress achieved on narrowing the deficit since 2018,
  • weaken the resilience of public finances,
  • add to inflation pressures.

Risks to fiscal and financial stability

• Continued wide fiscal deficits and increasing principal repayments coming due on past monetary financing would result in large fiscal financing needs through the medium term.
• As the authorities have ruled out foreign borrowing, meeting these financing needs would:
  • heap significant pressure on the domestic banking system,
  • pose risks to financial and macroeconomic stability.

Policy guidance and recommendations

• Gradual fiscal rebalancing guided by a rules-based framework is needed to:
  • enhance the resilience of public finances,
  • safeguard macroeconomic stability in the medium term.

Algeria: 2022 Article IV Consultation-Press Release; and Staff Report — February 2, 2023

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