In its latest annual report, the International Monetary Fund (IMF) painted an optimistic picture of Algeria’s economy, highlighting “robust non-hydrocarbon growth” and a “comfortable” level of foreign exchange reserves.
However, the report also warned that the country’s economic model remains fragile due to persistent structural weaknesses and its heavy reliance on energy revenues.
The 99-page document welcomes the country’s economic recovery since the pandemic, noting a drop in inflation from 9.3% in 2023 to 4% in 2024. This growth, estimated at 4.2% for the non-hydrocarbon sector, is primarily fueled by public investment and increased private consumption. The IMF also pointed to the nation’s healthy financial cushion, with international reserves at $67.8 billion and no external debt.
Despite the positive indicators, the IMF report raises concerns that Algeria’s economic vitality is still closely tied to fluctuations in global oil and gas prices. This dependence on hydrocarbons remains the economy’s “Achilles’ heel,” making it vulnerable to external shocks.
To address this, the IMF recommends that Algeria diversify its tax base, digitize its public financial management, and develop alternative financing tools, such as Islamic financing. The report also notes that the country’s economic growth is still driven by public spending rather than a robust, independent private sector. The IMF concluded that Algeria’s unattractive business climate and slow pace of structural reforms continue to hinder private and foreign investment.
MK/ac/fss/abj/APA