While official statements continue to highlight economic recovery and improving financial indicators, data published in Algeria\u2019s Official Gazette(Issue No. 39)<\/a>tells a different story\u2014one that deserves closer scrutiny. A careful reading of the monthly balance sheet of the Bank of Algeria reveals a striking figure that sheds light on the scale of government debt embedded within the central bank\u2019s assets.<\/p>\n\n\n\n Under the category of \u201csecurities issued or guaranteed by the State,\u201d the total reaches approximately 8.16 trillion Algerian dinars, equivalent to around US$61.1 billion at the official exchange rate. This single item accounts for nearly 38 percent of the Bank of Algeria\u2019s total assets<\/p>\n\n\n\n These are neither foreign-exchange reserves nor strategic investments. Rather, they represent claims held by the central bank against the public treasury\u2014obligations accumulated over years of exceptional financing measures and treasury borrowing used to cover government budget deficits.<\/p>\n\n\n\n The significance of this figure lies not only in its size but in what it represents.\n\nThese assets are not productive investments capable of generating new wealth or sustainable returns. Instead, they consist largely of liabilities owed by the State itself. In practical terms, a substantial share of the central bank\u2019s balance sheet depends on the government\u2019s future ability to repay its obligations.<\/p>\n\n\n\n This is where a fundamental issue emerges. The larger the share of government debt within a central bank\u2019s assets, the more closely the country\u2019s monetary stability becomes tied to the health of public finances. If the treasury encounters financial difficulties in the future, the consequences are likely to extend directly to the central bank itself.<\/p>\n\n\n\n Over the past several years, Algerian authorities have increasingly relied on non-conventional financing, commonly referred to as money creation, to address budget deficits driven by lower hydrocarbon revenues and rising public expenditures. While this approach helped the government avoid external borrowing and temporarily maintain spending levels, it did little to address the structural causes of the imbalance\u2014namely, limited economic diversification and the continued dependence on hydrocarbons as the primary source of public revenue.<\/p>\n\n\n\n Economically, the strategy resembles using one pocket to pay off another. The debt does not disappear; it is merely shifted elsewhere within the same system.\n\nFor this reason, the accumulation of government securities on the central bank\u2019s balance sheet does not represent the creation of new wealth. Instead, it reflects the postponement of underlying fiscal adjustments and structural reforms.<\/p>\n\n\n\n More importantly, this situation places monetary policy under constant pressure. A central bank whose assets are heavily concentrated in government debt becomes less capable of fulfilling its traditional mission of safeguarding price stability and containing inflation. When the objectives of monetary stability conflict with the government\u2019s financing needs, authorities typically place fiscal financing requirements ahead of monetary discipline. The result can be higher inflation, a weaker currency, and increasing pressure on household purchasing power.<\/p>\n\n\n\n The fact that nearly 40 percent of the Bank of Algeria\u2019s assets consist of claims on the government also highlights the fragility of current financial balances. In well-diversified economies, central banks typically build their balance sheets around foreign-exchange reserves, gold holdings, and highly liquid low-risk assets. When government debt becomes one of the dominant components of those assets, it signals a growing reliance on administrative financing mechanisms rather than genuine economic growth.<\/p>\n\n\n\n These figures also raise broader questions about long-term sustainability. If fiscal deficits continue to be financed through additional securities absorbed by the central bank, public liabilities will inevitably grow faster than the real economy itself. Under such conditions, preserving price stability and protecting purchasing power become increasingly difficult\u2014particularly in an economy that remains heavily dependent on imports for both consumption and production.<\/p>\n\n\n\n Ultimately, the issue is not merely the existence of US$61 billion in government debt. More importantly, it reveals an economic model that continues to rely on exceptional monetary and financial mechanisms to fund public spending, while the underlying challenge remains unresolved: creating sustainable sources of wealth beyond the hydrocarbon sector.<\/p>\n\n\n\n These figures are far more than accounting entries buried in official financial reports. Their consequences are felt directly in the daily lives of ordinary citizens.\n\nThe greater the reliance on monetary financing and domestic debt, the greater the pressure on the national currency and the higher the risk of inflation. Inevitably, this translates into declining purchasing power and a lower standard of living.<\/p>\n\n\n\n At the same time, the growing stock of government securities held by the central bank reduces the room for maneuver available to monetary policymakers. Instead of focusing primarily on maintaining price stability and preserving the value of the currency, the institution becomes increasingly tied to the financing needs of the government.<\/p>\n\n\n\n The data published in the Official Gazette therefore reveal more than a simple accounting reality. They expose a structural challenge confronting the Algerian economy. The central question is no longer merely the size of the debt. It is whether the current economic model can generate sufficient wealth to meet these obligations in the future without repeatedly resorting to temporary measures that postpone, rather than resolve, the underlying problem.<\/p>\n\n\n\n The real challenge lies in moving away from an economy driven by administrative financing and rent-based revenues toward a productive and diversified model capable of creating value, sustaining growth, and preserving financial stability for future generations.<\/p>\n\n\n\n Hamza Kharoubi<\/a> is an Algerian trade union leader, President of the National Union of the Industrial Sector(SNSI)<\/a>, and a senior member of the Trade Union Confederation of Productive Forces (COSYFOP). He is widely recognized for his advocacy of trade union freedoms and labour rights in Algeria and has represented independent Algerian trade unionists before international institutions, including the International Labour Organization (ILO). He regularly writes on economic, social, and labour issues, with a particular focus on development, social justice, and workers\u2019 rights.<\/p>\n\n\n\n <\/p>\n\n\n\nThe Economic Meaning Behind the Numbers<\/h3>\n\n\n\n
What This Means for Workers and Households<\/h3>\n\n\n\n
By Hamza Kharoubi<\/h4>\n\n\n\n