IMF Executive Board Concludes 2025 Article IV Consultation with Algeria

IMF News, September 18, 2025

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Real GDP eased to 3.6 percent in 2024 from 4.1 percent in 2023.
Hydrocarbon sector contracted in 2024 due to OPEC+ cuts; nonhydrocarbon activity remained strong, supported by public investment and consumed demand.
Inflation eased significantly in 2024, largely due to lower food prices; headline inflation expected to remain moderate.
Easing of OPEC+ production cuts is expected to stabilize hydrocarbon activity, supporting 3.4 percent growth in 2025.
Risks to the outlook: declining hydrocarbon prices, global uncertainty, and potential constraints on public investment and exports that could put pressure on fiscal revenues.

Declining hydrocarbon revenues combined with increased public spending significantly widened the fiscal deficit in 2024 and depleted fiscal buffers.
Fiscal deficit profile and risks:
- Double-digit fiscal deficits projected for 2025-26 risk straining the banking sector and crowding out private sector credit.
- Increased risk of recourse to unconventional monetary financing schemes if vulnerabilities persist.
- Absent concerted policy adjustment, large financing needs and deficits would significantly increase public debt over the medium term.
- Algeria’s overall risk of sovereign stress increased to “high” based on the SR-DSA.
Fiscal consolidation requirement:
- Staff analysis suggests stabilizing public debt by 2028 would require additional fiscal consolidation measures of 5 percent of GDP over 2025-28 relative to the baseline.
Recommended fiscal reforms and revenue measures:
- Rationalize inefficient spending.
- Boost nonhydrocarbon revenue.
- Strengthen public financial and investment management.
- Energy subsidy reform could yield substantial additional annual revenues over the medium-term.
- Close the nonhydrocarbon tax gap, estimated at of 2-4 percent of GDP.
- Advance tax policy reform guided by a Medium-Term Revenue Strategy.
- Incorporate a credible financing plan in the budget to strengthen cash management.
- Strengthen SOE oversight and governance to mitigate fiscal risks.

With inflation receding, the current accommodative monetary policy stance to counter tight banking sector liquidity is judged adequate.
Policy recommendations for the Bank of Algeria (BA):
- Continue vigilant monitoring of banks’ liquidity and actual and expected inflation developments.
- Use all available tools to attain price stability.
- Refrain from any monetary financing, whether direct or indirect.
- Clearly establish price stability as the primary objective of monetary policy in the MBL and identify a nominal anchor to help anchor expectations, credibility and transparency.
Exchange rate recommendations:
- Enhanced exchange rate flexibility would facilitate its role as an automatic stabilizer.
- Widen the BA’s official daily buy/sell nominal exchange rate band as a first step.
- Prioritize measures to reduce the parallel market premium, such as increasing the foreign exchange allowance for travel.

Vigilant enforcement of financial sector regulatory requirements is needed to secure macro-financial stability.
The BA has made progress in risk-based supervision, crisis management, and ensuring independent operation of supervisory entities.
Continued vigilance is critical given entrenched interlinkages between the government, SOBs, and SOEs.
Authorities have shown commitment to addressing AML-CFT deficiencies identified by FATF and should complete remaining recommendations to facilitate exit from the list of jurisdictions under enhanced monitoring.

Initiatives to improve the business climate, boost private sector development, and diversify the economy are critical.
Progress noted:
- 2022-23 Investment and Land Laws.
- Launch of a one-stop digital platform.
- New Procurement Law expected in 2025.
- July 2023 national strategy to prevent and counter corruption.
- June 2023 new MBL.
- Creation of a centralized beneficial ownership registry.
- Digitalization initiatives to enhance fiscal monitoring and revenue collection.
Further reforms needed:
- Deeper product and labor market reforms to enhance flexibility and limit price distortions.
- Increase transparency, especially in the hydrocarbon and SOE sectors.
- Expand and strengthen regional trade amid geoeconomic fragmentation risks.

Current account reversed to a deficit in 2024, projected to widen in 2025-26 before narrowing thereafter.
Gross official reserves (in US$ billions): 69.0 in 2023; 67.8 in 2024; projected 59.4 in 2025; 49.7 in 2026; 41.3 in 2027; 32.8 in 2028; 25.4 in 2029; 18.6 in 2030.
Gross official reserves in months of next year's imports of goods and services: 15.2 in 2023; 12.3 in 2024; 4.5 in 2025.
Exchange rate (DA per US$): 126.9 in 2020; 135.3 in 2021; 142.0 in 2022; 135.8 in 2023; 134.1 in 2024.
Crude oil export unit value (US$/bbl): 41.9 in 2020; 72.3 in 2021; 103.9 in 2022; 83.9 in 2023; 82.0 in 2024; 71.1 in 2025; 67.2 in 2026; 67.7 in 2027; 68.4 in 2028; 69.2 in 2029.

Real GDP (annual percent change): 2020: -5.0; 2021: 3.8; 2022: 3.6; 2023: 4.1; 2024: 3.4; 2025: 2.9; 2026: 2.8; 2027: 2.7; 2028: 2.5.
Hydrocarbon sector (annual percent change): 2020: -13.9; 2021: 17.1; 2022: -0.2; 2023: -1.4; 2024: 0.1; 2025: 0.2; 2026: 1.5; 2027: 2.2; 2028: 1.6; 2029: 1.2.
Consumer price index (period average): 2020: 2.4; 2021: 7.2; 2022: 9.3; 2023: 4.0; 2024: 3.9; 2025: 3.7; 2026: 3.3.
Central government finances (percent of GDP) — Revenue: 2020: 27.0; 2021: 26.2; 2022: 29.7; 2023: 31.9; 2024: 23.2; 2025: 24.4; 2026: 22.3; 2027: 22.5; 2028: 22.1; 2029: 22.6.
Central government finances (percent of GDP) — Expenditure (incl. net lending): 2020: 37.5; 2021: 32.5; 2022: 32.7; 2023: 37.4; 2024: 37.1; 2025: 35.9; 2026: 34.7; 2027: 33.4; 2028: 32.6; 2029: 31.8.
Overall budget balance (percent of GDP): 2020: -10.5; 2021: -6.3; 2022: -3.0; 2023: -5.5; 2024: -11.5; 2025: -12.4; 2026: -10.9; 2027: -9.3.
Gross government debt (excluding guarantees) (percent of GDP): 2020: 46.0; 2021: 55.1; 2022: 48.1; 2023: 47.7; 2024: 48.5; 2025: 52.5; 2026: 61.1; 2027: 67.3; 2028: 72.8; 2029: 76.6; 2030: 80.6.
Current account balance (percent of GDP) — Exports, f.o.b. (percent of GDP): 2020: 13.3; 2021: 20.8; 2022: 22.4; 2023: 18.4; 2024: 16.1; 2025: 15.7; 2026: 16.3; 2027: 16.6; 2028: 17.7; 2029: 18.5.
Gross external debt (percent of GDP): 2020: 1.1; 2021: 1.0; 2022: 0.8; 2023: 0.7; 2024: 0.6.

Source: IMF press release, September 18, 2025.