Algeria’s currency crisis deepens amid drop in exports

Algeria is grappling with a deepening currency crisis as the Algerian dinar continues its relentless slide,raising alarm over the country’s economic stability,inflationary pressures,and the sustainability of state finances.

Since late 2019,the dinar has lost significant value against the euro,falling from 204 dinars per euro in December 2019 to over 260 dinars in May 2025 on the black market,a record low.

In Algeria,the black market is a more accurate reflection of the dinar’s value. It shows the real supply and demand for foreign currency in the country,driven by import needs,savings protection,and investor sentiment.

This steep depreciation,analysts say,reflects a broader economic malaise marked by weak domestic production,excessive public spending,and a heavy reliance on hydrocarbon exports.

The black market exchange rate,now hovering between 259 and 262 dinars per euro,underscores the growing demand for foreign currency and the public’s waning confidence in the national currency.

“This is not just a monetary issue,it’s a symptom of a much deeper economic dysfunction,” said Abdou Semmar,a prominent Algerian journalist and economic commentator.

The fiscal outlook for 2025 is equally troubling. Algeria has adopted its largest budget in history,with expenditures exceeding $128 billion. However,revenues are projected at only $64 billion,leaving a gaping deficit of $62 billion — nearly 20% of GDP.

The government has opted not to introduce new taxes,instead relying on increased spending and tax exemptions to maintain social stability.

Inflation,though slightly eased in 2024,remains a pressing concern. Rising food prices and import costs,exacerbated by the dinar’s depreciation,continue to erode purchasing power. The government’s expansive subsidy programs and public sector wage hikes have helped cushion the blow for now,but economists warn that these measures are unsustainable without structural reforms.

The risk is that Algeria could face a perfect storm: a collapsing currency,runaway inflation,and a fiscal crisis.

Social tensions are simmering. While the government has introduced unemployment benefits and expanded subsidies to maintain peace,the economic strain is palpable. Youth unemployment remains high,and the informal economy is swelling as citizens seek refuge from the formal sector’s instability.

Observers warn that unless President Abdelmadjid Tebboune’s administration undertakes urgent reforms,including diversifying the economy,curbing public spending,and stabilizing the currency,Algeria could face a prolonged economic downturn with serious social repercussions.