IMF Staff Completes 2025 Article IV Mission to Algeria

IMF News, June 30, 2025

Source details

Mission dates: June 16–30, 2025.
Mission leader: Mr. Charalambos Tsangarides.
Purpose: 2025 Article IV consultation with Algeria.
End-of-mission statement conveys preliminary findings of IMF staff; views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
International reserves: US$ 67.8 billion, covering about 14 months of imports.

Real GDP growth:
- 2024: 3.6 percent (eased from 4.1 percent in 2023).
- Nonhydrocarbon activity in 2024: expanded by 4.2 percent.
External sector:
- Current account balance: turned to a deficit in 2024 amid lower hydrocarbon output and gas prices.
Inflation:
- 2023 average: 9.3 percent.
- 2024: 4 percent (fell sharply, driven mainly by lower food prices; core inflation also declined).
Fiscal outcomes:
- Budget deficit in 2024: 13.9 percent of GDP (widened significantly due to lower hydrocarbon revenues and higher wage and investment spending).
- Deficit is expected to remain high in 2025.
Monetary policy:
- Remained accommodative in the first half of 2025.

Near-term prospects: broadly positive despite global uncertainty.
Growth drivers:
- Gradual recovery in hydrocarbon production as OPEC+ production cuts ease expected to sustain growth in 2025.
Risks to outlook:
- Continued global uncertainty and volatile hydrocarbon prices likely to dampen exports and investment, contributing to a wider current account deficit in 2025.
- Growing fiscal pressures could increase public debt in the medium term if continued.

Volatile hydrocarbon prices amid shifting trade policies and geopolitical tensions.
Persistent fiscal deficits that strain debt sustainability and deepen financial linkages between the government, SOEs, and public banks (SOBs).
External shocks reducing exports and investment.

Fiscal policy:
- Recommend gradual yet urgent fiscal adjustment to strengthen fiscal resilience and rebuild buffers.
- Fiscal rebalancing to curb rising financing needs driven by large deficits and falling hydrocarbon prices, helping to reduce vulnerabilities, rebuild buffers, and stabilize public debt over the medium term.
Monetary policy:
- Should remain focused on price stability and be guided by economic conditions; continue to target the inflation objective.
Exchange rate:
- Greater exchange rate flexibility recommended to enhance the economy’s ability to absorb external shocks amid heightened hydrocarbon price volatility and global uncertainty.
Financial sector oversight:
- Maintain close oversight of financial sector developments to safeguard macro-financial stability.

Revenue mobilization:
- Revise revenue mobilization strategy to expand the tax base, including by rationalizing tax expenditures, and enhance compliance via digitalization.
Subsidy reform:
- Reforming subsidies would help rebuild fiscal buffers and create space for priority expenditures, including targeted support for vulnerable households.
Public investment:
- Enhance public investment efficiency to support economic diversification goals.
SOE governance:
- Improve oversight, efficiency, and governance of SOEs to contain macro-financial risks.
Institutional progress welcomed:
- Progress in implementing the 2018 Organic Budget Law expected to enhance transparency and accountability in budget execution.
- Establishment of a unit within the Ministry of Finance to oversee SOEs and strengthen fiscal risk management.
- Expected implementation of the new Public Procurement Law.

Monetary framework:
- Clarify the monetary policy framework by defining a clear primary objective and nominal anchor to enhance policy transmission and effectiveness.
Banking and liquidity:
- Commend ongoing implementation of the 2023 Monetary and Banking Law, improvements in liquidity management, and strengthened capacity in macroeconomic forecasting and policy analysis.
Financial oversight:
- Improve financial sector oversight to mitigate risks from strong linkages between the central government, SOEs, and SOBs.

Business climate and private investment:
- Continue efforts to diversify the economy and improve the business climate to boost private investment.
- Key initiatives noted: a one-stop digital shop for real estate access, aligning exports with international standards, and advancing online trade.
Cautions and additional reforms:
- Caution against broad application of fiscal incentives that may create revenue gaps.
- Additional gains from removing administrative restrictions, increasing flexibility in product and labor markets, and ensuring a level playing field between public and private sectors.
Governance and transparency:
- Welcome recent governance reforms and continued efforts to strengthen the AML/CFT framework and enhance transparency and accountability in the public sector.

The mission expresses gratitude to the authorities and interlocutors for their hospitality and open, constructive discussions.
Medium-term prospects would improve with sustained reforms to diversify the economy and effective implementation of the government’s Action Plan and structural reforms.

Source: IMF Staff Completes 2025 Article IV Mission to Algeria, June 30, 2025.