Algeria foreign reserves projected to fall to $19.8 billion by 2031

The International Monetary Fund (IMF) projects a significant decline in Algeria’s foreign exchange reserves, forecasting a drop from $51 billion in 2025 to $19.8 billion by 2031. This represents an approximate 61% contraction. Consequently, the country’s import coverage is expected to fall from 8.6 months in 2025 to just 3.3 months by 2031.

Following its Article IV consultation, the IMF attributed this erosion to large fiscal and external deficits. While the fiscal deficit narrowed in 2025 due to one-off dividend payments from state-owned enterprises and the Bank of Algeria, the Fund noted that continued large financing needs have increased public debt and reliance on central-bank financing. Additionally, a widening current account deficit, driven by surging imports and declining hydrocarbon exports, has contributed to reserve losses.

The IMF identified several downside risks, including sharp declines in hydrocarbon prices and persistent fiscal deficits that could jeopardize debt sustainability. To rebuild buffers and strengthen economic resilience, the Fund recommended sustained structural reforms, credible fiscal consolidation, and increased diversification to promote private sector-led growth.