By Zana Ali
RAQQA, Syria (North Press) – The Autonomous Administration of North and East Syria (AANES) spends its investment and current budgets in a complex environment due to the weakness of its administrative system.
According to a report from the Finance Board of the AANES for the year 2022, obtained by North Press, it was concluded that the weaknesses in the region include a complex working environment due to the weakness of the administrative system, and a lack of vertical and horizontal communication networks.
The report clearly shows the financial problems facing the AANES which include the lack of development in investment spending and deficits in the general budget. Addressing these deficits through a policy of significant expenditure control is also a threat as it has repercussions on development policies.
The general budget for the previous year was allocated as follows: 42 percent for lands, 29 percent for buildings, 16 percent for machinery and equipment, 6 percent for transportation, 4 percent for furniture, 2 percent for computers and their accessories, and 1 percent for other projects, according to the report.
After analyzing the figures, it becomes evident that the investment allocations have a consuming nature and do not achieve economic or social development in AANES. The investment allocations are not only low but are also characterized by poor distribution among projects.
The report also outlines that the budget of the previous year was spent on projects of a consuming nature, which included non-productive activities such as purchasing furniture, cars, computers, and building maintenance.
The expenditures in 2022 did not include any major strategic projects such as addressing the electricity energy issue, industrial development, or rural development.
The AANES region has been suffering from significant infrastructure damage, particularly in the education, healthcare, agriculture, and economic sectors. As stated earlier by North Press, there are still 488 schools that are either completely or partially destroyed. Additionally, irrigation channels in the agricultural sector, as well as factories and laboratories, have been destroyed in the region due to the war. These problems highlight the urgent need for support and reconstruction efforts in these areas.
According to the report, the Finance Board has presented proposals to activate the investment spending, which links all projects proposed by the AANES institutions to socio-economic feasibility studies conducted by the Planning Office. These projects should also be subject to conditions set forth by the Planning Office. The aim is to ensure that investment projects are not driven solely by the desires of requesting entities but are instead required to be submitted to the Planning Office or its branches for inclusion in the plan.
Additionally, the General Council and legislative councils of the AANES are requested to play their role in cost-cutting policy regarding investment projects and establishing a connection between those projects and the shared social and economic objectives of the administration and the community, as stated in the report.
The report suggests the formulation of an economic strategy for the AANES based on distinguishing between the main developmental institutions such as the economy, agriculture, local administration, energy, education, and health, and other institutions. Therefore, priority should be given to investment spending.
Ahmad Youssef, Co-chair of the AANES Finance Board, said part of the investment budget is supposed to be allocated for providing services to the community, while the other portion should be dedicated to developing the productive system of AANES, such as large-scale companies and productive institutions, in order to achieve incomes.
Youssef added that the service sector generates a social income, while the other sector generates an economic income that also serves the social income.
In 2021, the investment budget was $40 million. However, in the years 2022-2023, it increased to a range of $80-90 million per year.
He told North Press that in order to improve budget performance, they have identified the developmental institutions, which include education and higher education, local administration and municipalities, health, economy, and agriculture. However, it is required that 85 percent of the investment expenditures are allocated to these mentioned institutions.
“The objective of supporting these institutions is to maximize the scale of healthcare and educational services and to develop infrastructure. However, these results were almost achieved. Therefore, we should resort to a revenue maximization policy to maximize expenditures.”
Insufficient policy
Youssef pointed out that the cost-cutting policy is insufficient, and in order to enhance our service in the investment budget, the only option is to maximize the revenues of the AANES. The recent increase in fuel prices, was a part of which was aimed at maximizing revenue.
“We have other policies to address this aspect, which is to allocate 20 percent of tax revenues to each area, to be used for services.” This policy was implemented in 2022, but the modest tax revenues resulted in the modest 20-percent-share that goes back to the areas.
Youssef indicated that “the areas did not make benefit of the amounts we returned to them outside the budget in service projects. Instead, they used them to solve their own problems and financial deficits they are facing.”
“We are working on developing tax revenues and improving the budget structure to jump to a goal-oriented budget. For example, if we have $100 million, 40 percent of it will be distributed to the areas in a regular manner, while 60 percent will be allocated as an investment plan for major projects such as hospitals, schools, and others.”
The Finance Board is primarily working on implementing the goal-oriented budgeting system, and maximizing revenue is a noble and necessary goal. Additionally, issuing the primary financial law to regulate the functioning of the AANES institutions is also part of their efforts.
“We are working on rationalizing customs and tax policies to prevent the doors from opening to administrative and financial corruption and to improve revenues from both sides,” Youssef noted.
Reasons behind crippling investment spending
Several reasons have led to the AANES’ inability to maximize the volume of investment spending, as its value exceeded $80 million in the 2022 budget and remained around that figure in the draft budget of 2023. The following are the reasons according to the report of the Finance Board:
- The lagging of the productive sector and the increasing volume of responsibilities on the AANES have been a result of the destruction inflicted on the infrastructure during the battles that took place in the region since its establishment.
- AANES provided free and subsidized services, such as healthcare and education, as well as offering certain goods at prices lower than their cost, like bread and fuel.
- AANES workforce has experienced a significant increase, with an annual cost ranging between $120 and $130 million.
- The increase in current expenditures, particularly spending on transportation vehicles, constitutes a significant portion of the total monthly expenses. However, it is possible to streamline these expenses with the provision of determination and willpower.