A walk through Port-Saïd Square, in the heart of Algiers, is enough to gauge the health of the national currency. On November 4, money changers there were buying dollars at 243 dinars and selling them at 246, according to local media. The euro was trading at around 278 dinars. At the same time, the Bank of Algeria officially valued the dollar at 135.91 dinars and the euro at 152.07. The same dollar bill is therefore worth 136 dinars at a bank counter and 246 on the pavement across the street.
This gap is no technical footnote. It shows that nobody in Algeria—not households, not traders, not importers—believes the price the state assigns to its own currency. The official rate is a shop-window rate: useful for statistics, balance sheets and press releases. The dinar’s real value, the rate at which people buy plane tickets, spare parts or medical treatment abroad, is determined on the black market. And it continues to fall: as recently as October 31, the dollar was selling there for 242 dinars.
It is against this backdrop that the government has drawn up its 2027 budget. The assumptions presented to lawmakers put the dollar at an average of 131 dinars over 2027–2029. The official rate has already moved beyond that, to nearly 136. The real rate is almost twice as high. Building public finances around a dollar worth 131 dinars is rather like calculating your rent against last year’s salary: the figures add up on paper, and nowhere else.
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The IMF has put its finger on the wound. In a statement issued on September 21, it noted that “the parallel exchange rate premium has increased,” alongside central bank financing of the government. The two developments go hand in hand. When the Bank of Algeria lends to the Treasury to plug the deficit, it puts dinars into circulation without anything to back them. Those dinars seek a safe haven, and in Algeria that haven is the dollar and the euro traded in the square. The printing presses, officially switched off in 2019, have never stopped running. The black market is the thermometer that registers their effects.
The authorities know the remedy. The IMF repeats it every year: allow the official exchange rate to adjust, bring the two markets closer together and stop financing the state by creating money. They will do none of it. An official devaluation of the dinar would send the prices of imported goods soaring, from wheat to powdered milk, just weeks before local elections and with a budget promising to double wages. So the authorities preserve the shop-window rate and leave the street to do the real work.
Ordinary Algerians pay the difference every day. The pensioner living on a pension denominated in dinars, the civil servant whose salary is supposed to double on paper, the student leaving to study abroad, and the patient seeking treatment in Tunisia or France—all must exchange their dinars in the square, at a steep price. The regime talks of monetary sovereignty. The population measures it in the number of 2,000-dinar notes that must be piled up to obtain a single €20 bill.
The government promises wage increases in dinars. Port-Saïd Square, meanwhile, has already set the value of those dinars: little more than half what the Bank of Algeria says they are worth.
