IMF Staff Completes 2026 Article IV Mission to Algeria

IMF News, July 6, 2026

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IMF mission led by Mr. Charalambos Tsangarides visited Algiers during June 16–30 to conduct the 2026 Article IV consultation with Algeria.
End-of-mission press release 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.
The mission “expresses its gratitude and appreciation to the authorities and all interlocutors for their warm hospitality and the open and constructive discussions.”

Growth remained robust in 2025 and is estimated to have reached 3.9 percent, supported by important investment; growth in the hydrocarbon sector remained subdued.
Headline inflation increased in September 2025, due to a significant increase in jewelry prices and a moderate increase in food prices.
The fiscal deficit narrowed in 2025 to 10.5 percent of GDP, supported by large one-off dividends from state-owned enterprises (SOEs) and the Bank of Algeria (BA), as well as stronger nonhydrocarbon revenues, but it remained very large.
Public debt rose to 52.1 percent of GDP in 2025, driven by large financing needs.
Monetary conditions eased in 2025, alongside increased central bank financing of the government.
The current account balance deteriorated significantly in 2025 as imports surged, boosted by large public investments, and hydrocarbon exports declined; this led to a large decline in international reserves.
The parallel exchange rate premium remained elevated in 2025, despite measures introduced by the BA.

The near-term outlook remains broadly positive, as higher hydrocarbon prices are expected to boost export and fiscal revenues.
GDP growth is projected to remain robust at 3.8 percent in 2026.
Inflation is projected to increase temporarily.
The current account deficit is projected to narrow due to higher hydrocarbon prices and lower imports.
The fiscal deficit is projected to remain high.
Over the medium term, growth is expected to moderate; continued high deficits would continue to increase public debt and gradually reduce reserves.
The outlook depends on reforms to strengthen fiscal sustainability, diversify the economy, and boost private investment.

Hydrocarbon-price volatility.
Persistently large fiscal deficits.
Deep financial linkages between the government, SOEs and public banks (SOBs).
Continued reliance on monetary financing, which could undermine price stability and policy credibility.

Implement a sizable fiscal consolidation in the near term, particularly given the widening current account deficit partly due to public investment.
Focus the fiscal consolidation strategy on mobilizing further nonhydrocarbon revenue and streamlining spending. Specific measures include:
- Broadening the tax base.
- Reducing tax expenditures.
- Strengthening tax administration efforts to improve compliance and reduce informality through digitalization and stronger controls.
- Reforming subsidies and social benefits.
- Limiting transfers to SOEs.
- Creating space for priority expenditures, including targeted support for vulnerable households.
Enhance public investment efficiency to support economic diversification goals.
Support the consolidation effort with stronger public financial management, fiscal risk management, and anchoring within a rule-based framework.
Diversify financing sources; mission welcomes initial steps including the first sovereign Sukuk issuance and expected financing from a regional development bank.

Avoid monetary financing of the government; strengthen regulatory safeguards for any exceptional monetary financing to protect the central bank’s operational independence.
Strengthen the monetary policy framework by establishing low inflation as the primary objective and nominal anchor.
Tighten monetary policy if the inflation acceleration continues.
Improve liquidity management to align the interbank rate more closely with the policy rate and strengthen monetary policy transmission.
Increase exchange rate flexibility to enhance the economy’s ability to absorb external shocks.
Continue improving the functioning of the formal FX market, supported by a more consistent macroeconomic policy mix, to strengthen confidence and support private-sector activity.
Improve financial sector oversight to mitigate risks arising from strong financial linkages between the central government, SOEs, and SOBs.

Continue reforms to support stronger, more resilient, private sector-led growth. Priority areas include:
- Improving the business climate.
- Leveling the playing field between SOEs and the private sector.
- Reducing trade restrictions and regulatory barriers.
- Enhancing goods and labor market flexibility.
- Reducing informality through digitalization and tax-regime reform.
Leverage Algeria’s geographical position and wealth of energy resources to strengthen its role in the energy market, especially with Europe and Africa.
Mission welcomes diversification efforts, including in mining and agriculture, and encourages continued reforms to strengthen competitiveness and private investment.

Strengthening resilience is urgent due to eroded fiscal and external buffers.
The mission welcomes Algeria’s removal from the AML/CFT grey list as an important achievement and encourages authorities to sustain the reform effort.

IMF Communications Department, End-of-Mission press release dated July 6, 2026.