Algeria has approved a four percent nominal reduction in its 2026 defence budget to 3.21 trillion dinars, threatening to alter North Africa's military balance.
The expenditure cut equates to a real decline of 10 percent when adjusted for inflation, according to a recent analysis published by the International Institute for Strategic Studies. Will Harvey-Powell, an analyst at the institute, noted that Algeria may have obtained a technological advantage over Morocco through the arrival of the Su-57 fighter jet.
The International Institute for Strategic Studies is a London based research organization specializing in military capabilities and defense analysis. The Sukhoi Su-57 is Russia's fifth generation stealth multirole fighter aircraft, built for air superiority and attack missions.
North African military spending
The allocation for the Algerian Ministry of Defence sets overall spending at approximately $24.5 billion, placing military expenditure at 7.7 percent of national gross domestic product. For years, the government in Algiers had maintained a dominant lead in regional weapons procurement, doubling its defence budget in 2023 to consolidate a military edge over neighbouring Morocco.
Diplomatic relations between Algeria and Morocco have been marked by mutual distrust since both nations achieved independence in the mid twentieth century. The continuous rearmament in the Maghreb region has been driven primarily by the ongoing dispute over sovereignty in Western Sahara, a territory on the Atlantic coast bordering both countries.
The budget reduction highlights growing vulnerability in Algeria's state finances, which remain heavily dependent on hydrocarbon exports. Revenue from crude oil and natural gas accounts for up to two thirds of total government tax collection, leaving public finances vulnerable to fluctuations in energy markets.
Data from the International Monetary Fund indicates that Algerian economic growth will stagnate at 3.8 percent this year before slowing to 2.6 percent by 2030. The Washington based financial institution also projects that Algeria's public deficit could rise to 10 percent of gross domestic product.
Moroccan fiscal health
In contrast to its neighbour, Morocco exhibits a more stable financial position following deep structural economic reforms. The Alawite kingdom has diversified its national economy beyond primary commodities, granting government officials in Rabat greater fiscal flexibility than Algiers.
Fiscal consolidation efforts by the Moroccan government have succeeded in reducing the national deficit to 3.5 percent of gross domestic product, restoring public accounts to levels seen before the coronavirus pandemic. With an economic growth projection of 4.9 percent for 2026, Rabat is positioned to maintain strategic medium term investments and military modernization without threatening fiscal stability.
Long term military contracts
Despite immediate fiscal pressure, Algeria continues attempts to maintain its standing as a dominant regional military force. The Algerian executive has increased official authorizations for new weapons contracts, an accounting procedure that commits financial disbursements to future years rather than immediate budgets.
The accounting approach indicates a determination in Algiers to sustain military competition even if it requires substantial budget cuts in other domestic public sectors. Experts monitoring the rivalry note that future developments will depend on Algiers' willingness to enforce fiscal austerity alongside broader geopolitical shifts in North Africa.
