The Bank of Algeria's 2023 annual report, published recently, highlights that despite the positive overall performance of the national economy in 2023, the significant challenge lies in the widening budget deficit and the increasing public debt-to-GDP ratio.
Quoting the central bank's report, it acknowledges the favorable performance of the national economy in 2023, citing notable achievements such as a marked slowdown in inflation, substantial GDP growth, consecutive balance of payments surpluses, enhanced accumulation of foreign exchange reserves, significant growth in loans to the economy, and the robustness, solvency, and profitability of the banking sector as key indicators.
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However, the Bank of Algeria document emphasizes that the persistent issues of the expanding budget deficit and the escalating public debt-to-GDP ratio pose considerable challenges for the national economy. It stresses the importance of diversifying and enhancing budget revenue collection methods and managing the evolution of public spending effectively.
Regarding public finances in 2023, the budget deficit surged to 1,003.48 billion DZD ($7.4 billion), more than doubling from the 2022 deficit of 411.51 billion DZD ($3 billion). Consequently, the budget deficit-to-GDP ratio increased from 1.28% in 2022 to 3.08% in 2023.
The central bank reports that the budget deficit expanded by 143.85%, primarily due to a faster growth in budget expenditure (17.97%) compared to budget revenue (12.54%).
The report further notes a significant rise in total budget revenues by 12.54% in 2023, reaching 10,718.05 billion DZD ($79.7 billion) from 9,524.14 billion DZD ( $70.5 billion) in 2022.
Moreover, non-hydrocarbon revenues witnessed a substantial 28% growth in 2023 compared to 2022, while hydrocarbon revenues remained relatively stable with a slight increase of 1.26%.
On the expenditure side, total budget expenditure surged by 17.97% in 2023, rising from 9,935.65 billion DZD ($73.6 billion) to 11,721.53 billion DZD ($87.2 billion) compared to 2022.
The report highlights that the significant increase in budget expenditure was primarily driven by the surge in capital expenditure, which rose by 49.28% in 2023 compared to 2022.
Current expenditure also increased by 9.68% in 2023, reaching 8,615.69 billion DZD ($64.1 billion) compared to 7,855.04 billion DZD ($57.4 billion) in 2022, according to the Bank of Algeria report.
Lastly, the Bank of Algeria states that Algeria's public debt, predominantly internal, escalated from 47.6% of GDP in 2022 to 48.9% of GDP in 2023.
*USD/DZD rate used above was 134.41 from 14/08/2024, data from Refinitiv.
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