The International Monetary Fund expects Algeria’s official foreign-exchange reserves to decline by about 61% over six years, from $51 billion at the end of 2025 to $19.8 billion by 2031, as the current-account deficit persists and external buffers narrow, according to the IMF’s Article IV consultation statement on Algeria.
The fund expects reserves to decline to $46.5 billion in 2026, then $41 billion in 2027 and $33.4 billion in 2028, before reaching $19.8 billion in 2031.
Reserves’ capacity to cover imports of goods and services is expected to decline from 8.6 months in 2025 to 8.1 months in 2026, then 5.8 months in 2028 and 3.3 months in 2031.
Reserves stood at $70.6 billion in 2023 before falling to $68.9 billion in 2024 and then $51 billion in 2025. This would imply a possible decline of about 71% between 2024 and 2031 if the IMF’s projected path materializes.
Current-account deficit and hydrocarbon pressures
The IMF attributed the sharp decline in 2025 to a widening current-account deficit caused by higher imports and lower oil and gas exports, as the current-account balance shifted from a surplus equivalent to 2.6% of GDP in 2023 to a deficit of 8.9% in 2025.
The fund expects the current-account deficit to narrow to 1.9% of GDP in 2026, supported by higher hydrocarbon prices and lower imports, while the deficit is expected to persist in subsequent years at between 2% and 3.1% of GDP through 2031.
The fund projects the average value of Algeria’s exported oil to rise from $69.4 per barrel in 2025 to $92.6 per barrel in 2026, before gradually declining to $71.8 per barrel by 2031, potentially providing short-term support for exports and public revenues.
Continued declines in hydrocarbon export volumes could limit the impact of improved prices. In its 2026 budget proposal report, Algeria’s Finance Ministry assumed that oil and gas export volumes would fall 2% in 2026, followed by declines of 0.5% in 2027 and 2.7% in 2028.
The ministry attributed this trajectory to rising domestic demand alongside weak growth in the hydrocarbon sector, expecting its value added to grow by no more than an average of 0.3% annually from 2026 to 2028.
Budget deficit and Bank of Algeria financing
The IMF warned that keeping the budget deficit at high levels would increase public debt and deepen banks’ ties to the state, while continued reliance on monetary financing could undermine price stability and the credibility of economic policy.
The fund estimated the budget deficit at about 10.5% of GDP in 2025, expecting it to narrow to 9.6% in 2026 before rising to 10.2% in 2027 and remaining between 8.7% and 10% through 2031.
It also expects gross government debt to rise from 52.1% of GDP in 2025 to 53.2% in 2026, then 60.4% in 2027, reaching 79% by 2031 if the current fiscal-policy trajectory continues.
The fund expects financing provided by the Bank of Algeria to the government to equal 5.5% of GDP in 2026, up from 3.7% in 2025, warning that expanded monetary financing could increase liquidity and intensify inflationary pressures and pressure on the parallel foreign-exchange market.
The fund urged Algeria to gradually consolidate public finances, increase non-oil revenues, improve the efficiency of public investment and rationalize spending, including gradually reforming energy subsidies while providing targeted support to the most vulnerable households.
Growth and inflation outlook
The fund expects the Algerian economy to grow 3.8% in 2026, after 3.9% in 2025, slowing to 3.1% in 2027, 3% in 2028 and 2029, and then 2.9% in 2030 and 2031.
It also expects average inflation to rise from 1.4% in 2025 to 5.5% in 2026, before falling to 3.5% in 2027 and stabilizing at around 3.8% for the remainder of the projection period.
The fund said higher hydrocarbon revenues would give Algeria an opportunity to rebuild its fiscal and external reserves, linking this to reduced central-bank financing of the government, greater exchange-rate flexibility, faster economic diversification, an improved business environment and support for private-sector-led growth.
