Syria suffers from economic stagnation, soaring inflation after quakes

DAMASCUS, Syria (North Press) Prices in Syria have been rising since the February 6 earthquake – as much as 40 percent, say some estimates.

The price hike was accompanied by a rise in inflation rates, despite the friendlier international outlook towards Syria after the earthquake, including the partial and temporary lifting of sanctions by the US, and tons of humanitarian aid, both financial and in-kind.

Faulty economic policy

Sami Hassan (name changed), an economist, explained that those who guide the current economic policy are not efficient and care little for the consequences of their policies on the local economy.

Hassan told North Press that businessmen participate in the management of the state’s resources. Their role goes way beyond advisory, which he deems “illogical”.

Hassan accused the Central Bank of raising the inflation rates through its arbitrary and unstudied exchange rate increases.

He expects inflation rates to keep rising due to the lack of a balanced monetary policy or clear economic policy.

Kept in the bank

A banking expert, who preferred to speak not for attribution, told North Press that foreign monetary aid did not contribute to improving the exchange rate because all donated funds have been kept in the Central Bank.

After raising the US dollar exchange rate from 4.522 to 6.650 SYP, edging closer to the black market rate, it is expected that it will continue to rise.

On Monday, the Central Bank published its official exchange rates for foreign currencies, showing the value of the US dollar at 7.100 SYP and the euro at 7.488 SYP.

“These economic policies are destroying the national economy. The simplest banking science indicates this. And it is not reasonable to say that the economic experts in the bank do not know that,” the aforementioned source told North Press.

The expert added that the liquidity of the dollar from the black market was stopped in favor of saving the dollar in the central bank, and this led to a decline in the supply of dollars on the black market, which in turn will raise the exchange rate on the black market.

The banker stressed that if the black market did not settle, “the situation will not improve and the dollar exchange rate will not decrease completely.”

Emergency measures

The expert mentioned a set of emergency measures that the Central Bank should follow to save the Syrian pound from devaluation. One of these, he says, is delivering foreign remittances in dollars to their owners so that they sell them on the black market, thereby increasing the supply of dollars and decreasing its price. The Central Bank could take a 3 percent fee, he adds.

Moreover, the Central Bank can re-sell these dollars which it gained from foreign remittances to exchange offices on the black market so the black market can make back what it lost.

The banker added that the Central Bank must deliver 50 percent of foreign remittance in dollars and 50 percent in Syrian pounds, so that Syrians exchange their money on the black market and thereby increase the supply of dollars on the black market, thus lowering its price. Otherwise, the current downward spiral will continue, the banker concluded.

Reporting by Layla al-Gharib