In the Maghreb, as in emerging countries, foreign exchange reserves, mainly in US dollars or euros – true barometers of a country’s economic health – serve to stabilize the national currency, facilitate international trade, and ensure liquidity in the event of an economic crisis. In addition, in the event of depreciation of the local currency, they allow intervention in the market to maintain its value. They also play a key role in managing external debt. Finally, solid foreign exchange reserves are often seen as a guarantee of financial stability for developing countries.
And it is undoubtedly Algeria that boasts the most comfortable foreign currency safety cushion, with reserves almost double those of Morocco. Our western neighbor is closely followed by Libya, while Tunisia brings up the rear.
Algeria distances itself from its neighbors
Thus, according to figures from the Algerian Central Bank (BA) published last June, Algeria’s foreign exchange reserves reached $68.9 billion at the end of 2023; compared to $60.9 billion at the end of 2022. This amount excludes gold reserves, according to a report from the Central Bank published last June.
“This level of foreign exchange reserves, well above the minimum recommended by international standards, demonstrates the solidity of Algeria’s external position,” the same report rejoices.
The BA lists in particular the “sharp slowdown in inflation, the appreciable growth rate of GDP, the surpluses of the balance of payments”; as well as the “increased accumulation of foreign exchange reserves”.
According to observers, this accumulation of foreign currency is similar to a financial safety net that offers the country considerable room for maneuvering to finance its imports and support its national currency. While giving it a certain independence from international financial markets.
Morocco’s resilience
With official reserve assets of 359.4 billion dirhams, or about 36.6 billion dollars, an increase mainly due to net external financing of the Treasury of 35 billion dirhams, Morocco rises to second place with an increase in its foreign exchange reserves of 6.4% in 2023 compared to the previous year. This is revealed in the annual report of Bank Al-Maghrib published on July 31.
This 6.4% increase is explained by prudent management of public finances and a bold economic diversification strategy. Thus, thanks to its tourist and industrial assets, the Cherifian kingdom has succeeded in consolidating its financial position and strengthening its capacity to attract foreign investment and finance its development projects.
Libya’s foreign exchange reserves are driven by the oil sector
Despite the political and security challenges it faces, Libya ranks third in foreign exchange reserves among Maghreb countries thanks to the oil sector, the country’s main source of foreign currency. According to the governor of the Central Bank of Libya (CBL), Libya’s foreign exchange reserves amounted to approximately $29 billion as of March 1, 2024. But he notes that this figure “is lower than the needs of the Libyan economy.”
Tunisia: a breath of fresh air
And Tunisia in all this?
Like Algeria and Morocco, Tunisia’s foreign exchange reserves in 2024 have also increased compared to the previous year, reaching 24.3 billion Tunisian dinars, equivalent to 7.8 billion dollars. A very modest amount compared to its rich neighbors but which still offers a breath of fresh air in a context of stifling financial pressures.
The BCT report published in early July 2024, underlines that this increase, of around 1.4 billion dinars (452 million dollars) compared to the previous year, makes it possible to cover 111 days of imports, one day more than previously.
Finally, let us point out that according to World Bank data, transfers from Tunisians abroad in foreign currency – the Tunisian community abroad is estimated at more than one million 800 thousand Tunisians, which represents 15% of the total population of Tunisia – reached 2.7 billion dollars in 2023. These transfers increased by 3.5% year-on-year from the beginning of 2024 until the end of June 10, according to the governor of the Central Bank of Tunisia.
Tourism revenues, for their part, reached 4.1 billion dinars, as of August 10, 2024, against 3.9 billion dinars, on the same date last year.
It should also be noted that these revenues recorded a significant increase during the first five months of 2024, reaching 2.1 billion dinars, an increase of 7.8% compared to the same period of the previous year.
Should we interpret this increase in reserves as the beginning of a revival in the Tunisian economy? Let’s keep our fingers crossed!
