The commendation from the International Monetary Fund is rarely insignificant even more so when it concerns an economy long perceived as rigid, hydrocarbon-dependent and relatively closed to international investment.
By commending the “solid foundations” of Algeria’s economy during her visit to Algiers, IMF Managing Director Kristalina Georgieva offered the authorities a rare endorsement, quickly presented as international
validation of what is portrayed as a sound economic trajectory. Yet behind the flattering rhetoric, the assessment warrants a more nuanced reading.
Speaking at a conference jointly organised with the Bank of Algeria, the IMF chief highlighted structural reforms launched in recent years, including a new investment law, land reform, the establishment of the Algerian Investment Promotion Agency (AAPI) and the gradual digitalisation of public administration. On paper, these measures mark a break with past inertia.
In practice, however, their impact remains limited, as a wide gap persists between the regulatory framework announced and its effective implementation on the ground.
Digitalisation, often cited as a hallmark of modernisation, is progressing unevenly. The dematerialisation of administrative procedures remains partial and fragmented, frequently hindered by entrenched bureaucratic practices. For many investors, domestic and foreign alike, regulatory clarity remains fragile, while legal uncertainty and frequent rule changes continue to weigh on long-term investment decisions.
Another pillar of the IMF’s positive assessment concerns non-hydrocarbon exports, which Georgieva noted have “more than doubled in five years”. While the increase is real, it should be put into perspective. These exports remain marginal within the broader economic structure and are still largely concentrated in low value-added segments. The touted diversification is therefore more quantitative than qualitative, falling short of a deep transformation of the productive base or a significant industrial upgrading.
Strong growth and easing inflation, also highlighted by the IMF, are largely underpinned by favourable energy prices and an expansionary fiscal policy driven by public investment.
While this supports activity in the short term, it raises questions about medium-term sustainability in an economy where the private sector still struggles to play a leading role and where the business environment remains weakly competitive.
Optimistic discourse on renewable energy and green hydrogen reflects a similar ambivalence. The potential is undeniable, but flagship projects remain at an early stage, often announced before being fully financed or operationalised.
Algeria remains, above all, a hydrocarbon-based economy, and the energy transition, though repeatedly proclaimed, is advancing more slowly than official rhetoric suggests.
MK/ak/sf/lb/gik/APA