The International Monetary Fund warned Algeria that its economy is weakening, urging authorities to tighten fiscal policy, avoid printing money to finance government deficits and stand ready to tighten monetary policy if inflation persists.
The unusually stark warning came in the IMF’s 2026 Article IV consultation, which said rising oil and gas prices were helping support growth and government revenues but masking deepening structural vulnerabilities.
“The strengthening of economic resilience has become more urgent because of the erosion of fiscal and external buffers,” the Fund said, calling for significant fiscal consolidation and warning against continued reliance on central bank financing of the state.
Algeria’s economy grew an estimated 3.9% in 2025 and is projected to expand by 3.8% this year, supported by public investment and higher hydrocarbon prices. But the IMF said headline growth figures concealed growing imbalances that could weigh on the economy over the medium term.
The Fund noted that although the budget deficit narrowed to 10.5% of gross domestic product last year, it remained “very high”.
High financing needs pushed public debt to 52.1% of GDP in 2025, while the government continued to benefit from easier monetary conditions and increased financing from the Bank of Algeria, the IMF said.
The Fund also raised concerns over Algeria’s external position after the current account deficit deteriorated sharply last year as imports surged on the back of large public investment programs while hydrocarbon exports declined. The resulting external deficit contributed to a substantial depletion of international reserves.
The Fund highlighted inflation risks, saying price pressures had accelerated since late 2025 and could require a tighter monetary stance. It warned that continued monetary financing of government spending risked undermining both price stability and the credibility of economic policy.
