Syria releases new cash into circulation to finance fiscal deficit

PanARMENIAN.Net - Syria has released new cash into circulation to finance its fiscal deficit, flirting with inflation after violence and sanctions wiped out revenues and led to a severe economic contraction, bankers in Damascus say.

According to Reuters, four Damascus-based bankers said that new banknotes printed in Russia were circulating in trial amounts in the capital and Aleppo, the first such step since a popular revolt against President Bashar al-Assad began in 2011.

The four bankers said the new notes were being used not just to replace worn out currency but to ensure that salaries and other government expenses were paid, a step economists say could increase inflation and worsen the economic crisis.

The four bankers, along with one business leader in touch with officials, said the new money had been printed in Russia, although they were not able to give the name of the firm that printed it. Two of the bankers said they had spoken to officials recently returned from Moscow where the issue was discussed.

“(The Russians) sent sample new banknotes that were approved and the first order has been delivered. I understand some new banknotes have been injected into the market,” said one of the bankers. All requested anonymity.

Two other senior bankers in Damascus said they had heard from officials that a first order of an undisclosed amount of new currency had arrived in Syria from Russia, although they were unable to confirm whether it had entered circulation.

Outgoing Finance Minister Mohammad al-Jleilati said last week that Syria had discussed printing banknotes with Russian officials during economic talks at the end of May in Moscow. He said such a deal was “almost done”, without going into details.

However, the central bank later denied through state media that any new currency had been circulated.

Goznak, the state firm that operates Russia’s mint and has exclusive rights to secure printing technology, regularly prints money for other countries. It declined to comment.