Oil
Algeria urged to accelerate economic diversification
The International Monetary Fund has advised Algeria to deepen structural reforms and prioritize high-return investments to reduce its reliance on hydrocarbons.
Key points
- Hydrocarbons remain the dominant source of Algeria's export earnings and government revenue.
- The IMF notes that while the nonhydrocarbon sector is growing, the export base remains narrow.
- Large infrastructure investments have increased pressure on public finances and budget deficits.
What happened
According to Channel Africa reporting, the International Monetary Fund (IMF) has cautioned that Algeria must quicken the pace of its economic diversification away from oil and gas to secure long-term stability. While hydrocarbons continue to drive government revenue and export earnings, authorities are investing in mining, transport, trade, and food and water security to broaden productive capacity.
IMF economists Haris Tsangarides, François Painchaud, and Véronique Salins observed that the country's export base is broadening only slowly. Although nonhydrocarbon real gross domestic product and goods exports have increased over the past decade, export revenue remains concentrated in a small number of products.
Authorities have introduced land, investment, and mining reforms alongside a digital one-stop platform for investors. However, large infrastructure projects designed to improve connectivity have required substantial financing, raising imports and straining public finances. The IMF warned that persistent budget deficits could make the ongoing investment programme difficult to sustain without careful fiscal management.
Policy and fiscal adjustments
To maintain macroeconomic stability, the IMF recommended that Algerian authorities prioritise projects that deliver strong economic returns, enhance productivity, and generate sustainable employment. The Washington-based institution also called for gradual fiscal consolidation, stronger nonhydrocarbon revenue collection, and improved public spending efficiency to safeguard priority initiatives and vulnerable households.
Furthermore, the Fund suggested that accumulating greater fiscal buffers during periods of high commodity prices would protect public investment when global markets decline. Private sector development is seen as critical for expanding exports into less carbon-intensive products. Achieving this requires efficient infrastructure, predictable regulations, fair competition with state-owned enterprises, and improved access to finance and skills.
Why it matters
For energy exporters across the African continent, Algeria's fiscal challenges highlight the vulnerabilities associated with heavy reliance on oil and gas revenues. World Bank data for 2024 shows that fuel exports accounted for 93.1 percent of Algeria's merchandise exports, underscoring an exposure to commodity price volatility that contrasts sharply with a global average of 9.5 percent in 2025. With Brent crude trading at 123.1 US dollars per barrel and WTI at 103.37 US dollars per barrel in late October 2026, according to US Energy Information Administration figures, current price environments provide temporary fiscal relief. Yet, as global energy markets gradually shift toward lower-carbon alternatives, African energy producers face mounting pressure to foster competitive private sectors, diversify revenue streams, and ensure that public investments deliver sustainable, long-term economic growth.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Crude benchmarks move budgets, currencies and inflation in producer and importer countries alike. For economies such as Nigeria, where fuels dominate exports, production and refining decisions move the whole economy.
93.1% of Algeria’s merchandise exports were fuels in 2024Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
