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A difference, on November 3, 2025, of more than 8O% compared to the official one?
What are the reasons for the depreciation of the dinar on the parallel market and what solutions?
The quotation of the dinar on the parallel market experienced a significant increase being quoted between 02/03 November 2025, 100 euros exchanging at 27,250 Algerian dinars on sale, the difference exceeding 80% compared to the official quotation where the quotation is 150 dinars/one euro. This reflects the real socio-economic situation of the country, which could be accentuated in the event of a drop in foreign exchange reserves between 2025/2026 which keeps the quotation of the office dinar at more than 70% (Several doctoral theses under my direction have been defended having shown this correlation).
And this despite the fact that the application of imports for “self-importers” or “micro-importers” feeding on the parallel market, where since July 2025, a new procedure aimed to regulate imports, not yet operational, the foreign exchange allowance of 750 euros applying to Algerian citizens aged 19 and over and for minors (between 12 and 18 years), 300 euros, for two children per family having had a limited impact although the Minister of Finance announced on July 28, 2025 (source APS) that this measure would cause an outflow of foreign currency of around 3.5 billion dollars per year.
1.- The main reasons for the deviation of the Algerian dinar – official price-price on the parallel market
First: the weakness of production and productivity, the additional costs of projects indirectly influence the quotation of the dinar, including the overbilling of projects in foreign currencies and Algerian dinars. Hydrocarbons directly and indirectly irrigate via public spending approximately 70% of GDP and therefore the majority of public and private economic sectors whose integration rate does not exceed 15% in 2025. Non-hydrocarbon exports (source BM and Bank of Algeria report), not to be confused with the increase of 4% in 2024 whose GDP increased from 6.9 billion dollars in 2022, to 5.01 in 2023 and 4.60 in 2024 and FDI made up mainly of the hydrocarbon sector, far from the potential were in 2024, according to the UNCED for Algeria only 1.4 billion dollars 16th position in Africa.
Second: the drop in transfers with the deaths of retirees abroad, this drop in the supply of currencies having been counterbalanced by the fortunes acquired regularly or irregularly by the Algerian community locally and abroad which irregularly or regularly transit currencies in Algeria
Third: We have witnessed a clear drop in Sonatrach’s foreign exchange revenues which fell from 60 billion dollars in 2022, 50 billion in 2023 and 45 billion dollars in 2024 and which should settle between 41/42 billion dollars in 2025, which has an impact on foreign exchange reserves which increased from 69.5 billion dollars in 2023 to 67 billion dollars. end of 2024 and certainly less end of 2025 which will keep the dinar quotation at more than 70%.
Fourth, the increase in the budget deficit which necessarily leads to an increase in the inflationary process, but artificially compressed by the significant generalizable and non-targeted social transfers, which represents in the 2025 finance law, at the current rate of 130 dinars one euro, 45.17 billion dollars allocated in commitment authorizations and 45.60 billion dollars in payment credits, or 34.79% of the total budget of the State, the total budgetary expenditure being up 9.9% compared to 2024, standing at 129.18 billion dollars in 2025 giving a budget deficit of 63.60 billion dollars against 46.04 billion dollars in 2024 and 30.50 billion dollars in 2022.
Fifth: import operations of new and used cars less than three years old by Algerian residents and the recent measure of integration of self-employed entrepreneurs known as “Casbah” who must self-finance on the parallel market due to the fact that the exchange offices which were to be operational in 2023 have not been set up.
Sixth: the demand comes from ordinary citizens who travel: tourists, those who are receiving treatment abroad and hajis due to the weakness of the derisory foreign exchange allocation of around 100 euros, the foreign exchange allocation having temporarily served as a counter-shock but with a limited impact due to the high demand. To this were added the administrative measures of the Ministry of Commerce ignoring the elementary rules of commerce and management where any entrepreneur acts in real time, time being money, blocking the functioning of part of the productive apparatus and to avoid paralysis, many operators carried in particular for spare parts on the parallel market.
Seventh: travel agencies which, failing to benefit from the right to exchange, also resort to black market currencies being importers of services exporting currencies instead of importing them as tourist logic would dictate.
Eighth: to protect themselves against inflation, and therefore the deterioration of the Algerian dinar, households and certain private operators invest their money capital in real estate, purchase durable goods with high demand such as spare parts, easily storable, the purchase of gold or hard currencies.
Ninth: the lack of strategic vision and therefore visibility of socio-economic policy, increases the lack of confidence in the future, amplifies the anticipation of a creeping devaluation of the dinar which has a negative effect on all economic and social spheres, a high real inflation rate whose interest rate banks should raise by several points, if they want to avoid, as in the past, sanitation via hydrocarbon rents.
2.- What solutions?
I identify several actions that can be combined and coordinated in order to resolve the gap between the price of the official market and that of the parallel market (see study carried out for the 3rd Global Think-Tank – Institute of International Relations IFR Paris. Under the direction of Professor Abderrahmane Mebtoul “The place of the informal sphere in the Maghreb”, December 2013 and conference at the Military Institute of Foresight MDN/IMDEP – Algiers, reproduced in the strategy review October 2019).
First: the government must take into account the fact that the informal sector is above all a substitute for the lack of labor supply but that the unfair competition it leads to the formal sector seriously handicaps the economic development of countries. Also, it will be a question of developing the creation of formal employment in segments with high added value taking into account new technological changes including artificial intelligence. Because its weakness explains the weight of informal employment referring to the low growth rate. This is a factor which explains the evolution of the informal sector where the supply of formal jobs on the labor market can no longer absorb all the demand, because the active population, in particular unskilled labor, is growing at an accelerated rate, furthermore favoring the brain drain.
Second: it will be necessary, above all, to improve the level of education and work to reduce inequalities. Education, in general, is the first step in successfully transitioning to the formal sector. The links between illiteracy and undeclared employment no longer need to be demonstrated. Particular emphasis must be placed on women’s literacy.
Third: reduce taxes because when taxes are numerous and too heavy, businesses are encouraged to hide part of their income. Too many taxes kill the tax, which must broaden the tax base through a new tax policy. The Algerian company is among the most taxed in the world, explaining the difficulty of tax collection. The informal sphere is amplified by tax evasion and corruption through overinvoicing and border trafficking of subsidized goods, which affects the final price of goods and increases the inflationary process.
Abderrahmane Mebtoul
University professor
International expert
(Will follow)