The Bank of Algeria has published its monetary statement up to August 31st, 2025. Behind this technical document, a precise image of the real state of the economy emerges: Reserves are still present, dependence on the State’s monetary financing is on the rise and the amount of cash in circulation has surged. This image reveals as much the apparent solidity of the system as its structural weaknesses.
The statement shows that Algeria still enjoys a foundation of financial security. Gold represents over 2,468 billion dinars, foreign currency reserves 1,211 billion and IMF Special Drawing Rights (SDRs) 568 billion. These reserves allow the financing of imports, the support of the dinar and the insurance of a minimal credibility on the international monetary scene. They remain a pillar of the national financial system.
However, these reserves no longer form the central component of the Bank of Algeria’s assets, losing ground to much bigger assets. This evolution marks a change of model: The central bank is no longer a mere manager of reserves, it has become the State’s primary financial backer.
The most spectacular part of the statement focuses on the relationship between the Bank of Algeria and the Public Treasury. Exceptional advances to the State total over 8,164 billion dinars, while public securities issued or guaranteed by the State exceed 8,000 billion. Add nearly 800 billion in overdrafts, and the central bank holds more than 16,000 billion dinars in claims on the State.
This means that monetary creation is being used extensively to finance the public budget. This mechanism, close to a monetization of debt or to “money printing”, allows the State to finance itself quickly without resorting to foreign markets. It reduces reliance on international borrowing but increases the money supply and adds inflationary pressure. This choice reflects a deliberate strategy: Favoring domestic borrowing to support public spending, even if it means deepening dependence on the central bank.
Record levels of circulating cash and a balance growing ever more fragile
On the liabilities side, another figure stands out: 9,619 billion dinars of bills and coins in circulation. This exceptional volume translates the dominance of cash in the economy. It reveals a strong informality, a weak trust in the banking system and a lack of financial intermediation. The more cash circulates, the harder it becomes to control the prices and to apply an efficient monetary policy.
The Public Treasury still holds 2,537 billion dinars in its account at the Bank of Algeria, indicating a cash buffer. Commercial banks have also deposited 1,253 billion dinars, signaling a certain stability in the banking system. In addition, the Bank of Algeria shows a combined total of over 2,300 billion dinars in capital, reserves, and provisions, providing it with a solid financial base. The total of assets and liabilities, at 21,338 billion dinars, is perfectly balanced, as required for central bank accounting. But it is the internal structure of this balance sheet that raises questions: Strategic reserves exist, yet monetary financing of the State dominates, while the volume of cash in circulation reaches record highs.
This statement as of August 31st, 2025, tells the story of a country that relies on its own levers to sustain its economy, without resorting heavily to external borrowing. The Bank of Algeria acts as a buffer, financier and stabilizer. But this strategy comes at a cost: The more money creation fuels the State, the more the system’s structure becomes dependent on a fragile balance between inflation, confidence, and liquidity.
Today, the model holds. The question is for how long.
