Last month, Syrian
President Bashar Al Assad approved a 2023 draft budget of 16.5
trillion Syrian pounds. Official media celebrated the figure, a 24 percent
increase from the previous year. But viewing the budget based on its value in
local currency is misleading.
اضافة اعلان
With inflation
factored in, the 2023 budget proposal is in fact the lowest ever in US dollar value. Even when
calculated using Syria’s official exchange
rate, the draft budget is about $3.6 billion, compared
to $5.3 billion in 2022, $6.8 billion in 2021, and $9 billion in 2020.
In an interview with Syrian
media, Minister of Finance Kenan Yaghi conceded that the drop in the budget’s
real value is the result of high inflation. Keeping pace with inflation would
reportedly require a budget three times higher than the one Al Assad approved.
Spending that much would only exacerbate the state’s financial woes.
It would also
contradict the government’s objective of reining in state spending to reduce the
existing budget deficit.
Slashing subsidies
A closer look at
the budget’s distribution plan reveals that
the government’s intention is to press on with its policy of reducing social
support. Subsidies are a lifeline for much of the Syrian population, 90 percent
of which live below the poverty line. Nonetheless, the poor state of the Syrian
economy prompted a restructuring of the social safety net in 2020, and many residents
have lost subsidies since.
This year’s budget will likely result in a drop in flour and wheat subsidies, which will hurt Syrians who are already struggling.
The new draft budget
approved by Al Assad offers no respite.
Despite the risk of
public outrage, the 2023 budget slashes subsidies by about 12 percent, to 4.9
trillion Syrian pounds. The real value of cuts is closer to 40 percent. Hence, this year’s budget will likely
result in a drop in flour and wheat subsidies, which will hurt Syrians who are
already struggling.
Likewise, the budget
covers only around 30 percent of the country’s fuel
needs, meaning that family allocations of diesel and
cooking gas will continue to be insufficient, pushing people to buy from the
black market at a higher price.
Dwindling hopes for
much-needed salary hikes
A partial solution to
these looming challenges would be to increase salaries or distribute grants
among public sector workers, a strategy the finance minister said is reflected in the
budget. But just because funds are allocated does not mean
they will be spent.
For example, the
government reportedly spent less than 80 percent of what was allocated in the 2022
budget. One reason could be the government’s inability to secure enough revenue
to meet its expenses. The state’s general budget deficit for 2023 is about 30
percent of the total, which is roughly 20 percent higher than last year’s
deficit. In other words, there is a possibility that the growing budget deficit
will prevent the government from issuing much-needed salary increases.
Even if raises are
awarded, public sector salaries will remain insufficient to meet the
skyrocketing prices of basic goods. The average cost
of living for a Syrian family of five exceeded 2.8
million Syrian pounds in March 2022, more than 28 times
what the average civil servant makes.
Given that the gap
between income and living expenses continues to grow,
widespread resignations and absenteeism among public
sector employees is almost certain. That, in turn, will further undermine the
performance of public institutions and the services they provide.
Investment neglect
But rather than dole
out cash, the regime will likely adopt a harsher predatory behavior to make
residents pay more for services received. The free fall of the pound, which is
expected to accelerate this year, will trigger further price inflation, and add
another headache for Syria's long-suffering population.
Despite claims that a
key objective for 2023 is strengthening the economy, the government continues
to prioritize spending over investment. According to published figures, 18
percent of the budget is set aside for investment, a paltry sum that
will do little to improve Syria’s economic health.
The average cost of living for a Syrian family of five exceeded 2.8 million Syrian pounds in March 2022, more than 28 times what the average civil servant makes.
That’s because
sectors that are essential to reviving the economy – particularly electricity –
need a significant infusion of capital. The UN reports that 59 percent of
Syrians have less than eight hours of electricity per day, and 30 percent have
less than two hours per day. Fixing damaged power stations and building new
capacity will cost many billions of dollars, money that isn’t
allocated in the 2023 budget.
Ongoing fuel
shortages, which will almost certainly continue, will further exacerbate
Syria’s economic stagnation.
Amid such
shortcomings, Syrians in government-held areas should be careful not to believe
the regime's false promises and brace themselves for even more belt-tightening
– no matter what currency they count their money in.
Dr Haid Haid is
a Syrian columnist and a consulting associate fellow of Chatham
House’s Middle East and North Africa program. Twitter: @HaidHaid22. Copyright:
Syndication Bureau.
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