Algeria

Despite elevated hydrocarbon revenues, especially from gas, the Algerian government continues to struggle to balance out its budget and is heading towards a similar path that preceded the 2014-16 crisis, demonstrating the failures of the economic model of the current regime. Algeria’s fiscal balance stood at –11.5% in 2025, the largest of any oil exporter in the MENA region, and it is expected to increase closer to -12% in 2026. The debt-to-GDP ratio is projected to have increased by 12% y/y in 2025, and it expected to reach 80% of GDP by 2030.

On the external front, Algeria’s current account balance has gone down to negative levels at -3.7% of GDP in 2025, and it is projected to slightly improve in 2026 to -3.5%. Imports surged by 25% in H1 2025 from the previous year, especially from greater food, machinery and transport equipment imports and the depreciation of the Dinar. Export earnings slowed due to lower oil prices. As a result, Algeria introduced new import restrictions in the summer of 2025 as FX from the central bank began declining again after having increased from 2021 lows. While non-hydrocarbon exports increased by 12% y/y they remain too small at around 4% of total exports.

In an unusual move amid low liquidity, Algeria tapped the African Development Bank to finance the construction of a new railway line that should connect the capital Algiers to southern regions with potential for mineral extraction, part of the diversification push. Algerian external debt only equals 3% of GDP (with a large part being IMF SDRs allocation). This opens the door to potential agreements with other international lenders, both multilateral — especially from the BRIC’s development bank as the latest IMF financing program dates back to 1995 — and bilateral, as Algeris enjoys strong links with Beijing. In September 2025, Algeria also announced the issuance of its first sukuk bond, aiming to raise USD2.3bn with domestic investors.

In September 2025 Prime Minister Sifi Ghrieb was appointed forming a new government, after elections took place in the Upper House in the spring of 2025. These developments are not expected to bring change to the regime, especially after the 2024 election reappointed President Tebboune with 94% of the electorate. Social dissent was crackdown in 2025, especially after youth-oriented movement attempted to mobilize protests, a movement that has been experienced across countries in Africa and South Asia, calling for better economic opportunities, corruption fight and youth prosperity.

While macroeconomic growth has been strong, GDO growth has been around 4% since 2021, inequalities in Algeria remain. Latest official unemployment figures were reported at 11%, yet between 30 and 40% of total labor force is estimated to be informal. Women participation in the labor force is even lower, and large disparities exist between rural and urban areas. Youth frustration remain high due to lack of opportunities, and also higher unemployment, which drives high levels of brain drain considering high literacy rates levels.

Relations with France remain complex.  Throughout 2025, relations experienced significant strain, with diplomatic spats, reciprocal expulsions of diplomatic staff, and disputes over issues like migration cooperation and the 1968 migration agreement that had historically governed mobility between the two countries. In 2026 this complex dynamics are expected to continue. Internationally, Algeria positions itself as an autonomous regional power, with strong historical ties to the global south. In recent years, Algeria’s ties with China have grown significantly, imports exceed USD11bn, and strategic partnership was signed encompassing trade, infrastructure and industrial investment. Algeria’s large and rich geography could offer great opportunities in the mining space, especially in the needed commodities for the energy transition and AI race, however concerns of foreign firms to participate given business environment concerns could go against economic activity in the country.