Algeria’s parliament has approved a record-breaking defense budget of $25.1 billion (3.35 trillion dinars) for 2025, a 16% increase from the previous year, Bloomberg reports.
This substantial allocation, one of the highest in the Middle East and North Africa (MENA) region, reflects the country’s growing concerns about regional instability and security threats.
The budget, which constitutes about a fifth of Algeria’s total 2025 budget of $125.7 billion, places the North African nation amongst the world’s top 20 defense spenders, according to the Stockholm International Peace Research Institute (SIPRI). This makes Algeria the highest defense spender in Africa and second only to Saudi Arabia and Israel in the MENA region.
The surge in defense spending comes amidst a volatile regional landscape. Algeria shares borders with war-torn Libya, the disputed Western Sahara territory, and parts of West Africa plagued by coups and Islamist insurgencies. Recent years have witnessed a series of military coups in neighboring countries, raising concerns about potential spillover effects.
The ongoing dispute with Morocco over Western Sahara further contributes to the heightened security concerns. While Morocco’s claim to the territory has gained support from several Western nations, Algeria remains a staunch backer of the Polisario Front, the pro-independence movement. Sporadic clashes between Moroccan and Polisario forces since 2020 have fueled fears of escalating conflict.
Algeria’s robust energy sector, primarily oil and gas, has provided the financial means for this significant defense investment. The country has become a crucial alternative energy supplier to Europe following Russia’s invasion of Ukraine, boosting its revenue. However, the 2025 budget, while projecting a 1.9% increase in oil and gas exports and a 4.5% economic growth for 2025 and 2026, also anticipates a widening budget deficit to $62 billion from $43 billion in 2024. The budget does not detail how this deficit, in a country with virtually no external debt, will be financed.
The International Monetary Fund (IMF) has expressed concerns about Algeria’s large projected fiscal deficit and potential vulnerabilities. While the IMF forecasts 3.8% economic growth for Algeria in 2024, it warned in March that the country’s financial situation requires careful management.
