The ongoing civil war in Syria has had a major impact on the financial status of the country, lending its currency much weaker, expanding recession and wrecking the country’s tourism industry. Estimated to amount to over 2000 billion Syrian pounds, which is almost $30 billion, these losses have led to a deeper crisis. Amid an array of dreary economic policies and various international sanctions, investors are wary of the market while households are indisposed to spending.
At the start of this uprising, the government assumed to have solutions ready for the assumed reasons behind the protests. Soon after, salary hikes and an increase in state-given subsidies were announced. This led to an increase of 20-30 % in the salaries of civil servants that comprise almost a quarter of the country’s work force. On the other hand, the prices of heating oil were decreased by as much as 25 %.
However, these were considered as mere baits by the protestors while the conflict continued to take an enormous toll on the country. The government, in its effort to appease, continued to implement more such measures, such as increase in the procurement prices of agricultural products, debt repayment rescheduling for farmers and the setting up of funds for drought-inflicted areas. Informal housing areas were provided finance for development, while the import duties and consumption tax on food items were reduced.
These decisions based on the current political scenario of the country were mere alarmed reactions by the government, rather than a rational and logical analysis of the situation. While such measures did work to benefit the masses, they had a negative impact on the country’s long-term economical policies of preceding years and also increased the fiscal deficit.
Moreover, these policies have also led to the development of distrust towards the government among the business community. Realising that the government has no concrete measures or solutions to resolve the gravely battered economic condition of the country, investors pulled out from the markets. The Syrian Investment Agency had reported a huge decline of 43% earlier in June this year in the number of licensed projects. The lack of confidence along with the economical slump has also added to the woes of the country.
On the other hand, sanctions imposed by the international community have also contributed adversely to the situation. The European Union imposed an import ban on the oil sector, which is one of the most significant sanctions. The oil sector of Syria is a key contributor towards its fiscal revenues, national Gross Domestic Product and the country’s foreign currency earnings. Added to this, the ban inflicted on financing, insurance and transport of oil exports has made it exceptionally difficult to find new markets.
There are other restrictions imposed on the country such as that on US dollar transactions by the US government that have affected the Syrian government, people as well as businessmen. Travel bans have also been imposed on several Syrian individuals and entities, which have amounted to unrecorded losses.
If only there was an end to the Syrian conflict in sight, there would have been a limited impact of all these sanctions; however, as time is progressing, these are only leading to dire consequences for Syria.