‘Helicopter Money’ Helps Algeria Hold Off Economic Collapse, but for How Long?

An Algerian paratrooper jumps by a flag showing Algerian President Abdelaziz Bouteflika during a military show, Algiers, July 5, 2017 (AP photo by Anis Belghoul).
An Algerian paratrooper jumps by a flag showing Algerian President Abdelaziz Bouteflika during a military show, Algiers, July 5, 2017 (AP photo by Anis Belghoul).

When Algeria’s newly appointed prime minister, Ahmed Ouyahia, addressed parliament last month, he ominously declared that his government would be insolvent by November. Three years of low oil prices had rapidly expanded the country’s budget deficit and eroded its reserves, leaving it with little cash to pay public sector employees or invest in the type of projects that would keep the private sector afloat. Ouyahia’s startling admission provided the pretext for unveiling a new, unconventional monetary policy that he argued would buy Algeria some more time to fix its finances and execute reforms. Ouyahia’s policy—known popularly by economists as “helicopter […]

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