RIYADH: Syria’s economy is showing early signs of recovery, with authorities maintaining a tight fiscal and monetary stance despite multiple constraints, an International Monetary Fund team said following a mission to Damascus.
The delegation, led by Ron van Rooden, visited the Syrian capital from Nov. 10 to 13 to assess the economic situation and discuss reform priorities with officials, according to a press release.
At the end of the visit, the mission said signs of economic recovery are beginning to emerge and confirmed that the IMF had agreed with Syrian authorities on an intensive program of engagement and technical assistance for the period ahead.
In a statement, Van Rooden said: “The authorities have been able to adopt a tight fiscal and monetary stance within the many constraints they face, with a view to ensuring economic and financial stability.”
He pointed to several factors supporting the improvement, including a boost in consumer and investor sentiment under the new regime, the country’s gradual reintegration into the global economy as sanctions are lifted, and the return of more than one million refugees.
The IMF team committed to extensive technical support to strengthen Syria’s fiscal framework, the release stated.
“IMF staff will provide extensive technical assistance to strengthen the fiscal framework by helping to: improve public financial management and revenue administration; finalize new tax legislation; and develop a strategy to address Syria’s legacy debts and strengthen debt management,” it added.
The fund emphasized the need for a new tax regime that is simple, competitive, and easy to administer, while avoiding exemptions that could encourage tax avoidance.
The mission also underscored the importance of good governance as the government restructures state-owned enterprises and pursues private-sector investment projects, noting that the Ministry of Finance must play a central role in controlling associated fiscal risks.
Talks were also initiated on developing a new monetary policy framework aimed at achieving low and stable inflation, with the mission acknowledging the significant challenges facing the financial system.
Technical assistance from the IMF will support the authorities in formulating new financial sector laws and regulations, rehabilitating the payment and banking systems, and rebuilding the central bank’s capacity to effectively implement monetary policy and supervise financial institutions.
This rehabilitation is seen as crucial for allowing banks to resume their role in financial intermediation and support the ongoing economic recovery.
“Reliable economic data remain scarce but are essential for the authorities to be able to formulate, implement, and monitor economic policies,” Van Rooden said, adding that technical assistance will therefore prioritize improving statistics across several areas.
