Algeria's financial outlook has taken a concerning turn as the government projects a significant increase in its budget deficit for 2025, exacerbated by the ongoing depreciation of the dinar.
For the upcoming year, the state budget anticipates expenditures of 16,794.61 billion DA (approximately $125.34 billion) against revenues of 8,523.06 billion DA (about $63.60 billion), leading to a projected deficit of 61.72 billion dollars. This marks an increase from the 2024 deficit, which is estimated at around $46 billion.
The budgetary framework for 2025 is based on a fiscal reference price of $60 per barrel of oil, with a market price set at $70. Despite a projected economic growth of 4.5% and a 1.9% increase in hydrocarbon export volumes, the reliance on oil revenues remains high, with 92% of foreign currency income stemming from hydrocarbons.
The official dinar depreciation, which shows a discrepancy of over 65% compared to the parallel market, has led to artificially inflated tax revenues from hydrocarbon exports. This situation is expected to further drive inflation on imported goods, significantly impacting consumers.
In response to the rising deficit, the government has earmarked substantial funds for social transfers, amounting to approximately $37.31 billion in 2023, aimed at maintaining social cohesion amidst economic challenges.
Overall, while Algeria’s macroeconomic stability is supported by hydrocarbon revenues and modest external debt, the escalating inflation and unemployment rates pose serious risks to long-term economic stability.