Syrian Economic Outlook

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IMF released their survey of the Syrian economy- one of the few Arab countries that publishes the Article IV consultation reports. Some things that caught my eye;

“Over the medium term Syria faces daunting economic challenges. The decline of oil reserves poses a threat to fiscal and external sustainability, and the associated fall in oil revenues will make it harder to preserve, much less expand living standards. A bulge in labor market entrants will strain an already precarious unemployment situation and increase pressure to protect redundant labor in an overstaffed public sector. These challenges are further compounded by political uncertainties and a volatile regional environment. In this context, the surge in international oil prices has provided a short-term windfall but will aggravate the medium-term outlook when Syria becomes a net oil importer around the year 2010 based on current oil price projections. Based on the latest projections for oil output, staff estimates that budgetary oil revenues and net oil exports will deteriorate by more than 10 percentage points of GDP in the next 10 years.”

“Syria faces two interrelated medium-term challenges posed by the prospective decline in its oil reserves:

- The first challenge is to preserve fiscal sustainability and financial stability: with the budget still relying to the tune of 25 percent of GDP on oil revenues to finance public spending, and with these revenues projected to be halved over the next ten years, current fiscal policies are clearly unsustainable and call for a major fiscal adjustment.
- The second challenge is to boost growth in order to: (i) expand and diversify the production and export base of the economy before oil resources are exhausted, and (ii) absorb a bulge in entrants to the labor force arising from decades of very rapid population growth. With the labor force projected to increase at 4 percent a year,1 unemployment could exceed 20 percent by the end of the decade. An average employment growth rate of 4½ percent a year would need to be sustained over the next 10 years to reverse this trend—a daunting challenge.”

Syria’s public finances are headed for challenging times in the coming 10-15 years. Oil revenues, on which the budget relies to the tune of 25 percent of GDP,4 are expected to decline rapidly over the medium term, creating a budgetary gap of some 12 percent of GDP by 2015. Unless addressed through a forward-looking fiscal policy framework (FPF), this imbalance will seriously disrupt the macroeconomic stability Syria has enjoyed in the recent past.”

In addition to their fiscal costs and large deadweight losses, energy subsidies in Syria are very inequitable. The World Bank estimates that the richest population decile benefits 25 times more than the poorest decile, while the poorest half of the population captures less than 20 percent of total benefits.”

IMF Staff Report and Selected Issues
Interview with Bashar Asad
Central of Syria
Links to Government websites
Human Development Indicators
One in 10 Syrians live on less than $2 a day
Syria bids farewell to dollar
Syrian investment climate assessment : unlocking the potential of the private sector- World Bank Report
Doing Business Indicators; for example Dealing with Licenses, it takes 20 steps and 134 days to complete the process, and costs 359.8% of income per capita.
Syria related blogs; SyriaComment, The Damascene Blog, Syria Planet

1 Comment

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This page contains a single entry by Paul published on August 10, 2006 2:15 PM.

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