Algeria’s Oil Revenue Builds Fiscal Fortress
Algeria’s SONATRACH revenue hits US $45 bn as CL = F averages US $82 and gas $11.4 /mmbtu. Reserves rise above US $68 bn, bond yields fall 35 bps, inflation 6.7 %. Fiscal surplus 2.1 % of GDP anchors 2026 growth near 3.8 %.
Algeria enters 2025 with its strongest fiscal position in a decade, as rising hydrocarbon earnings and restrained spending deliver a rare combination of surplus and stability. State energy giant SONATRACH generated export revenues of roughly US $45 billion in the first nine months of the year, lifted by a 5 percent increase in gas volumes and an average Brent (CL=F) price of US $82 per barrel. Contracted natural-gas prices climbed 12 percent year-on-year to about US $11.4 per mmbtu, supported by resilient European demand and slow global LNG supply growth.
Hydrocarbons still account for 92 percent of Algeria’s export receipts, yet fiscal discipline has converted this windfall into measurable gains. The Treasury recorded a surplus equivalent to 2.1 percent of GDP, while foreign-exchange reserves rose above US $68 billion—the highest since 2014. Domestic bond yields compressed by roughly 35 basis points as investor confidence improved, and the dinar strengthened 1.8 percent to around DZD 133 per USD. Headline inflation eased to 6.7 percent as fuel-subsidy reforms filtered through the retail economy. The government is rebuilding energy-stabilisation funds to cushion the budget from future commodity swings.
Revenue strength is also funding diversification. New solar tenders, refinery upgrades, and petrochemical projects are advancing alongside a pilot green-hydrogen corridor linking Algeria to Italy. Public-investment spending remains disciplined at about 17 percent of GDP, ensuring capital is channelled into productive energy infrastructure rather than recurrent costs. Should Brent prices stay near US $80 and European gas contracts remain oil-indexed, growth in 2026 could reach 3.8 percent with fiscal buffers intact.
Downside risks persist. A slowdown in Europe could trim up to one percentage point from GDP and push Brent toward US $75, softening royalties and current-account inflows. Still, Algeria’s macro fundamentals have rarely looked stronger: a current-account surplus near 1.5 percent of GDP, public debt below 55 percent, and import-cover levels exceeding 19 months. Maintaining policy consistency, accelerating renewables integration, and sustaining investment execution would consolidate this energy-backed phase of fiscal resilience and external stability.
