Bouteflika Gives The Green Light To Print Money

President Bouteflika gives the green light to the government of Ahmed Ouyahia to begin printing banknotes, only 72 hours after the parliament approved the amendment of Article 45 bis of the loan and cash law, which authorizes the treasury to borrow money from the Central Bank for 5 years.

Proposed amendment to the loan and cash law was formally adopted, and Bouteflika signed the decree of entry into force in issue No. 57 of the Official Gazette.
Bank of Algeria, starting from the entry into force of this provision exceptionally for 5 years, will buy the financial bonds from this bank in order to contribute in particular to covering the needs of treasury financing, internal public debt financing, and financing of the National Investment Fund.
According to the amendment of the law, this mechanism is implemented to accompany the implementation of the program of structural and economic reforms and budget which should lead, at the end of the period, to balances in the state treasury, balance of payments and determine the mechanism of implementing this provision by the treasury and the Bank of Algeria through regulation.
Although the government’s decision to resort to unconventional funding has sparked widespread controversy and resistance by the opposition in the National People’s Assembly, the government ultimately succeeded in passing it through both chambers, thanks to the help of pro-government party deputies.
MPs failed to pass their six proposed amendments to the law, whether those related to the cancellation of conventional financing or the reduction of the duration of its application to one year that is renewable only once, or legal and legislative supervision of Islamic banks.
Government refuses to disclose the amount of money that will be printed, and the Finance Minister, Abderrahmane Raoui, said in his last press conference that the executive body has not yet determined the size of the mass of cash that will be printed by the Central Bank, asserting:  “Determination of the value is not possible now because the financial year is not over yet, and all the steps will be announced in a timely manner”, pointing out that the talk about the printing of DZD 570 billion over five years, is incorrect, explaining that this figure represents the budget deficit for 2017.
Government pledged that its recourse to non-traditional funding will not be for consumption, and this decision is not related to the purchase of social peace or the presidency of 2019, but for the creation of new non-traditional sources of funding for the treasury, which has prevented Algeria from resorting to external borrowing.
In the justifications that are given by the executive chamber, to review the loan and cash law, all the contributions that are made by Algeria to cope with the severe external shock that is caused by the decline in prices in the global oil market, the treasury remains for the year 2017 in need of funding with more than DZD 500 billion.
Despite the efforts f the Prime Minister, Ahmed Ouyahia, to justify this exit and to alleviate the impact of the printing of banknotes, this decision did not achieve the desired response of experts and even the political class, and expressed their fears of its repercussions on the high volume of inflation and another collapse of the value of the dinar which lost its value, as it will have negative effects in the future, according to some economists, given the difficult economic situation of the country.