While official discourse in Algeria continues to highlight a nominal GDP surge, the International Monetary Fund’s latest assessment paints a more cautious picture of the country’s economic fundamentals amid a widening budget deficit.
In its 2026 Article IV Consultation report, the IMF warns that large fiscal deficits have depleted fiscal buffers and external buffers have eroded.
According to the Fund’s projections, the overall budget deficit stood at 10.5 percent of GDP in 2025 and is expected to remain high at 9.6 percent of GDP in 2026.
Gross official reserves fell from $68.9 billion at the end of 2024 to $51.0 billion in 2025, and are projected to decline further to $46.5 billion in 2026 and as low as $19.8 billion by 2031.
Public debt is set to rise from 52.1 percent of GDP in 2025 to 53.2 percent in 2026 and reach 79.0 percent of GDP by 2031 under the baseline scenario.
The parallel exchange rate premium widened further, remaining around 80 percent in early 2026 after peaking at 84 percent at the end of 2025.
Higher hydrocarbon prices are expected to provide temporary relief and an opportunity to rebuild buffers, but the Fund stresses that reducing vulnerabilities requires fiscal consolidation, monetary policy focused on price stability, and greater exchange rate flexibility.
Algeria’s nominal GDP is projected at 43,024 billion dinars in 2026, which converts to roughly $317 billion when calculated at the official exchange rate. This conversion, however, has little connection to the real value of the dinar, given the large and persistent parallel market premium of around 80 percent.
