(MENAFN) Syrian central bank issued new money to finance its fiscal deficit, risking putting more inflationary pressure after violence and sanctions erased revenues heavily damaging its economic status, Reuters quoted from local bankers.
Four Damascus-based bankers said that new banknotes printed in Russia were circulating in trial amounts in the capital and Aleppo.
They also said that the notes were being used not just to replace worn out currency but to ensure that salaries and other government expenses were paid.
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.
Economists say the move may lead to higher inflation and worsen the economic crisis.
Syria was previously printing its notes in Austria until it was suspended in 2011 following the European Union sanctions, an Austrian central bank spokesman said.
Russia, however, is one of Syria's major political supporters and a major trading and economic partner, and there are no sanctions in place that would bar a Russian firm from printing money for Syria.
Syria put a surprising USD27 billion 2012 budget, the largest in its history, in a move driven by a desire to create more state jobs and maintain subsidies to help ward off wider discontent, the bankers said.