Algeria takes on foreign debt: a stinging rebuke for Tebboune’s sovereignist rhetoric
An embarrassing U-turn The Islamic Development Bank (IDB) recently announced a major loan program for Algeria, totaling $3 billion over three years.
This announcement directly contradicts the repeatedly stated position of President Abdelmadjid Tebboune, who has always insisted that Algeria would never resort to foreign debt. This decision rightly raises many questions.
In a statement to the Algerian channel Al-Nahar, IDB President Muhammad Sulaiman Al Jasser said that the financing would be used to support major development projects, particularly in the railway sector, as part of the presidential plan to connect the country’s economic zones.
These projects include the 2,000-kilometer Algiers-Tamanrasset railway line, which was first mentioned by Tebboune himself, in an impromptu speech in Tamanrasset during the election campaign in December 2019. This was an election promise that was never seriously studied from a technical or economic standpoint.
Taken at his word and often questioned about this commitment, the president has since attempted to justify the feasibility of the project, going so far as to claim, at one point, that Qatar would cover the cost. Now he is forced to resort to a loan from the IDB, thereby reneging on his own red lines.
An incongruous loan for a fanciful project Seeking external financing of $3 billion in a context of mistrust toward international debt is incongruous, to say the least, for more than one reason.
Firstly, no serious impact study seems to have been carried out to determine the profitability, timetable or technical resources required to build this railway line—presented as a high-speed train in a country that is already struggling to maintain its existing tracks.
Secondly, what is the strategic or economic value of connecting the capital to a sparsely populated desert area at such a staggering cost?
This project seems more like an electoral whim than a development priority in a country where basic infrastructure is sorely lacking.
Promises contradicted by facts This recourse to foreign credit comes at a time when President Tebboune has consistently presented the rejection of foreign debt as an intangible principle. In May 2024, speaking to army officers, he declared: “This problem is being blocked by those who are blocking it,” referring to domestic debt, before adding: “Those who believe we owe them a debt should come forward and collect what is owed to them.” He concluded with a phrase that has become famous: “To go into debt is to renounce your sovereignty.”
This rhetoric, which made financial autonomy a symbol of national power, is now being undermined by the facts. Algeria is indeed preparing to borrow from an international institution, despite years of sovereignist posturing.
A massive but invisible domestic debt The president likes to point out that Algeria is not crippled by foreign debt, which is partially true. What he fails to mention is that Algeria’s public debt is mainly domestic, and considerable.
According to the 2025 Finance Bill, domestic debt stood at 15,795.66 billion dinars on June 30, 2024, or 99.32% of total public debt, set at 16,841.09 billion DA. This represents $117.9 billion at the official rate (134 DA/USD), but only $68.7 billion at the parallel market rate (approximately 230 DA/USD), which is closer to the economic reality.
The structure of this debt reflects the profound imbalances in the Algerian economy: 71.71% consists of debt restructuring, linked to the deficits of public enterprises, and 28.29% is current debt, intended to finance the state’s operating budget.
At the end of 2024, this debt was equivalent to nearly 50% of GDP, a level still considered sustainable, but which masks a worrying trend, especially since the country has no credible debt reduction or productive recovery mechanism.
An increasingly incoherent economic discourse This reversal on external debt is not simply a political contradiction: it undermines the credibility of the official discourse. By linking foreign debt to submission to international powers, Tebboune has constructed a sovereignist rhetoric that has now been emptied of its substance.
By borrowing from the IDB, the Algerian government is invalidating its moralizing narrative toward African countries dependent on international donors. Algeria is now joining this club, without fully embracing the shift.
A turning point dictated by the economic situation This shift comes at a critical economic juncture, exacerbated by falling oil prices. On May 3, 2025, OPEC+ announced an increase in production of 411,000 barrels per day, causing prices to plummet immediately. Brent fell to $59.10 and WTI to $55.68, well below Algeria’s budget balance threshold, estimated at around $80 per barrel.
In an undiversified economy that is more than 90% dependent on hydrocarbons, fiscal room for maneuver is rapidly shrinking. Algeria finds itself in a stranglehold, forced to resort to external financing that it condemned only yesterday.
Sovereignty undermined by energy dependence The decline in oil revenues is revealing a structural vulnerability. All the economic diversification plans announced over the past 20 years have failed. Algeria remains incapable of producing value outside oil and gas, making it highly sensitive to external shocks.
Rather than anticipating these risks, the government seems to be discovering them belatedly, giving in to budgetary panic instead of implementing fundamental reforms.
The end of a sovereignist illusion
The announcement of the IDB loan marks a major turning point in Algeria’s economic management. It seals the collapse of an ideological stance that made the rejection of debt a political totem.
In the short term, this loan could help finance certain infrastructure projects. But in the medium and long term, it paves the way for growing dependence in the absence of a genuine economic recovery plan. Because sovereignty is not proclaimed in speeches—it is built through actions.
By Hichem ABOUD
