The International Monetary Fund (IMF) highlighted on Monday the “significant risks” weighing on the Algerian economy, which is facing galloping inflation at its highest in 25 years and a strong dependence on hydrocarbons.
“The continued heavy dependence on hydrocarbon revenues and the significant increase in spending planned in 2023 pose significant risks to the outlook for public finances in a context of high volatility in commodity prices and of exceptional global uncertainty”, indicates the international institution in a press release published Monday in Washington.
At the end of its mission in this country under Article IV, the IMF team notes that the acceleration of inflation and the vulnerability to the volatility of hydrocarbon prices constitute “major challenges” to macroeconomic stability .
In Algeria, the average annual inflation rate has been around 9.4% in recent months, its highest level in 25 years. Core inflation is also on the rise, it says.
Referring to the country’s banking system, the IMF expresses concerns about its “financial health”. “The tightening of links between the balance sheets of the State, public enterprises and public banks could pose risks to financial stability and debt sustainability”, worries the international financial institution.