While overall, the national economy recorded positive performances for the year 2023, the widening budget deficit and the increase in the ratio of public debt to GDP remain a major challenge for the national economy, underlines the 2023 annual report of the Bank of Algeria published last week.
“Overall, the national economy recorded positive performances for the year 2023,” said the central bank’s report, which specified that the sharp slowdown in inflation, the appreciable GDP growth rate, the balance of payments surpluses for the second consecutive year, the increased accumulation of foreign exchange reserves, the appreciable growth of credits to the economy and the solidity, solvency and profitability of the banking sector “are all indicators that testify to the good results of the national economy in 2023.”
The BA document underlines: “The widening of the budget deficit as well as the increase in the ratio of public debt to GDP continue, however, to constitute a major challenge for the national economy in terms of diversification and improvement of the collection of budgetary revenues, but also of control of the evolution of public expenditure.”
According to the same source, public finances experienced in 2023, a budget deficit which more than doubled to reach 1,003.48 billion dinars, against a deficit of 411.51 billion dinars in 2022. Compared to GDP, the budget deficit ratio thus increases from 1.28% in 2022 to 3.08% in 2023.
According to the Central Bank, the budget deficit widened by 143.85%. “This result is explained by an increase in budgetary expenditure (17.97%) faster than that of budgetary revenues (12.54%),” the report reads.
“Total budget revenues recorded a significant increase of 12.54% in 2023 compared to 2022, from 9,524.14 billion dinars to 10,718.05 billion dinars,” notes the same report.
“Indeed, the document continues, non-hydrocarbon revenues recorded a significant growth of 28% in 2023 compared to the year 2022, going from 4,016.46 billion dinars to 5,141.07 billion dinars while hydrocarbon revenues experienced a virtual stagnation between 2022 and 2023 (a slight increase of 1.26%).”
“For their part, total budgetary expenditures, which have been rather stable in recent years and even decreased by 10.8% in 2020, have recorded a significant increase in 2023 after that recorded in 2022,” the report notes.
And to specify: “Indeed, budgetary expenditures have increased by 17.97% in 2023 compared to the year 2022, going from 9,935.65 billion dinars to 11,721.53 billion dinars.”
“The analysis of budgetary expenditure reveals that their significant progression is mainly driven by the increase in capital expenditure,” the report underlines, and adds: “Indeed, capital expenditure has increased by 49.28% in 2023 compared to the year 2022, going from 2,080.61 billion dinars to 3,105.85 billion dinars.”
“Current expenditure, for its part, recorded an increase of 9.68% to reach 8,615.69 billion dinars at the end of 2023 against 7,855.04 billion dinars at the end of 2022,” according to the BA report.
According to the Bank of Algeria, Algeria’s public debt, mainly internal, increased from 47.6% of GDP in 2022 to 48.9% of GDP in 2023.
