JEDDAH: Syria’s economic recovery is gaining momentum as reforms advance and confidence improves, the International Monetary Fund said, while urging authorities to sustain progress through continued fiscal, banking, and structural reforms.
The assessment followed a July 19-23 visit to Damascus by an IMF staff team led by Ron van Rooden, the fund's mission chief for Syria, to review progress on reforms and discuss priorities for further technical assistance.
Syria’s economic recovery follows more than a decade of conflict, with a World Bank assessment estimating reconstruction needs at $216 billion, including $108 billion in direct physical damage to infrastructure, residential buildings and non-residential structures.
The report also found that Syria’s real gross domestic product contracted by nearly 53 percent between 2010 and 2022, underscoring the scale of the country’s reconstruction and recovery challenge.
Speaking at the conclusion of the IMF mission, Rooden said: “Syria’s economic recovery is accelerating. In 2025, the economy started to recover with improved consumer and investor sentiment following the regime change, the return of about 1.5 million refugees, and Syria’s gradual re-integration with the regional and global economy, which helped offset the dampening effect on growth of a major drought that adversely affected agriculture.”
Growth outlook strengthens despite regional challenges
The IMF expects Syria’s economy to record double-digit growth in 2026 despite continued regional conflict, supported by a recovery in agriculture following improved rainfall, expanding hydrocarbon production, higher electricity supply, and continued growth in trade and services.
Rooden said economic activity is also being supported by the return of refugees, increased visitor arrivals, and government policies aimed at restoring macroeconomic stability and encouraging a private-sector-led recovery.
However, he cautioned that the recovery remains uneven across regions and that poverty, despite some improvement, remains widespread.
The IMF mission chief also highlighted inflation risks, saying price pressures have accelerated this year due to higher fuel and food import costs linked to regional conflict, stronger domestic demand, higher utility prices, and rising housing costs.
Inflation had slowed to low double digits in 2025, Rooden said, adding that “inflation is expected to slow in 2027, provided import price pressures ease and sound fiscal and monetary policies are pursued.”
Fiscal and banking reforms key to sustaining recovery
Rooden said Syria’s fiscal position has improved, with the central government recording a small budget surplus in 2025 after aligning spending with available resources and prioritizing essential needs.
Government revenues are expected to rise substantially this year, supported by stronger tax and customs collections, higher hydrocarbon revenues, and one-off income from telecom licenses and fuel transit fees.
He stressed the need to maintain prudent fiscal policies, improve public financial management, strengthen tax and customs administration, limit tax exemptions, and better prioritize spending to create room for development projects and social protection.
“The authorities are also rightly focusing on further improving revenue mobilization, through tax reform and strengthening tax and customs administration, while tax exemptions should be limited,” he said.
The IMF also identified banking sector reform as a critical priority, saying the Central Bank of Syria’s ability to conduct monetary policy remains constrained by weaknesses in the financial system.
“The Central Bank of Syria has successfully managed the introduction of the new currency. Monetary policy, however, remains severely constrained by a highly dysfunctional banking system and a lack of monetary policy instruments,” Rooden said.
He called for accelerating efforts to rehabilitate banks, adopt new central bank and banking laws, strengthen supervision and resolution powers, and assess banks’ financial health in line with international standards.
Rooden also stressed the importance of strengthening Syria’s anti-money laundering and counter-terrorist financing framework to support its reintegration into the international financial system and facilitate investment flows.
International financing crucial for reconstruction
The IMF mission chief said Syria will continue to require strong and timely international financial support to address humanitarian and development needs.
He said the sustainable reintegration of returning refugees and internally displaced people will require support beyond humanitarian assistance, including efforts to create jobs, improve public services, and restore housing and infrastructure.
Rooden added that Syria’s ability to secure development financing will depend on progress in addressing legacy debt, developing a domestic securities market, and improving the availability and quality of economic data.
The IMF said it has agreed on an extensive technical assistance program covering fiscal management, revenue mobilization, public debt management, banking sector reform, monetary policy frameworks and economic statistics.
The IMF’s double-digit growth outlook is broadly in line with expectations from Syria’s Finance Minister Mohamed Yisr Barnieh, who said in February that economic growth could accelerate to close to 10 percent this year, citing greater stability, the lifting of US sanctions and the gradual return of skilled Syrians who had fled during years of conflict, according to Bloomberg.
