How Does The Reduction Of Import Lists Affect Syrian Citizens?

Inspection visit by Damascus Chamber of Commerce delegates in Souk el Midan in Damascus - May 25, 2019 (SANA)

Inspection visit by Damascus Chamber of Commerce delegates in Souk el Midan in Damascus - May 25, 2019 (SANA)


The impact of the depreciation of the Syrian pound on import regulations, which are a priority for Syria and whose funding is approved by the Central Bank in foreign exchange, has been reduced to nearly a quarter, which may negatively affect the citizen’s life, especially with weak local production and the damage of industrial facilities.

The reduction of the import list came as part of a set of “precautionary” measures taken by the government of the Syrian regime to stop the decline of the Syrian currency against foreign currencies and put an end to the demand for foreign exchange in the market and limit it to state institutions. This may affect local traders who are subject to the provisions of the Syrian economy, in addition to its negative impact on the market and therefore on the citizen directly.


“Precautionary” measures to control the market

After the decline in the value of the Syrian currency and the fluctuation of its exchange rate, the government has approved a set of measures, and the Council of Ministers held a meeting, on September 16, to discuss and secure the basic goods and the citizens’ requirements. In addition, the Prime Minister announced the reduction of lists of priority imports in the market.

The measures included tightening market controls, combating monopoly and smuggling, opening illegal warehouses, and confiscating smuggled and monopolized goods and selling them in the Syrian Trade Organization, according to the government newspaper Tishreen.

Prime Minister Imad Khamis announced, on September 17, the suspension of funding for most priority import items, and keeping seven items relating to necessities for low-income people.

Among the measures of the Council of Ministers, the Ministry of Economy and the Foreign Trade Organization were tasked with direct importation of non-locally produced commodities and basic materials, the provision of the requirements of the Syrian Trade Organization, the abolition of intermediary circles and the direct resort to producers.

The Council instructed the Ministry of Social Affairs to activate the role of the Social Aid Fund to provide services to citizens, as part of the previous set of measures.


Reducing the import lists is “ineffective”

According to the Syrian academician and Professor at Mardin Artuklu University, Turkey, Abdel Nasser al-Jassem, the procedure of reducing imports is taken when there is a sound monetary and economic system and a balanced government, and it can then be useful because the importation operation is funded with foreign exchange.

Based on statements made by Prime Minister Imad Khamis, acknowledging that foreign exchange resources are less than what is required to import basic materials, al-Jassem added that, because of this, traders have resorted to the black market, which has created a demand for foreign exchange to finance their current or previous contracts with suppliers, resulting in the appreciation of the exchange rate.

The local newspaper al-Watan quoted Khamis’s statements in the People’s Assembly on September 15, saying that “foreign exchange resources are less than what is needed to provide the army’s needs as well as wheat and medicine requirements. Therefore, what we received from foreign exchange is much less than what is needed, especially since about $ 200 million are paid per month to secure oil.”

In a report issued by the World Bank, in April 2016, the bank said that the Syrian Central Bank drained the reserve making it reach $ 700 million, after it used to have in its treasury 17 billion Syrian pounds in 2011. This was denied by the Central Bank of Syria, saying that there is a break with the World Bank, and it is therefore not provided with information.

Academician Abdel Nasser al-Jassem considered that the procedure of reducing import lists “will not significantly affect” the exchange rate, and its impact is extended in the short term only and has far negative effects. This is because there are many factors of the devaluation of the Syrian pound, which are not limited to imported goods. Economic reasons have already been there since the end of 2012, when the gradual depreciation of the currency started, which is a natural consequence of the economy being out of its active state and the decline and regression of GDP by as much as 70 percent.

Al-Jassem said that the government’s “failed” policy pushes forward for funding military operations in foreign exchange, without paying attention to the citizens and their needs.


Depreciation of the Lira

The Syrian pound started to decline at the end of August and early September. The exchange rate reached 600 pounds per dollar, before reaching, on September 8, the lowest exchange rate ever recorded equal to 645, in May 2016.

The lowest value of the Lira has been recorded on 9 September, when the exchange rate of the dollar reached 685 for sale 690 for purchase, according to “Syrian Pound Today”, a website concerned with the value of the Syrian currency in comparison to foreign currencies.

The Lira witnessed a slight improvement after the extraordinary meeting held by the Economic Committee at the Cabinet to adopt measures aiming to provide goods and basic needs at lower prices.

The exchange rate returned to below 600 pounds on September 12, before increasing and remaining stable at the level of 630 buying and 635 purchasing in comparison to the dollar, according to the website.


Goods supported by the Central Bank

On September 17, the government narrowed the list of imports requiring foreign exchange to be imported from 41 to 7 commodities approved by the Central Bank of Syria on April 29. However, the government did not specify the type of goods that represent a priority for the Syrian citizens.

It also restricted the import operation to the Foreign Trade Organization and engaged the Syrian Trade Corporation in the selling process, limiting the role of traders in the local market.

The list of imports used to include 41 commodities, including food, medical, agricultural and other industrial products, mainly wood, wheat, rice, mate, yeast, feed supplements, baby milk and medical supplies.

It also includes raw sugar, refined white sugar, corn starch, hatching eggs, tea, sesame and accessories for the manufacturing of bags and shoes except for leather.

The list includes, within the circular of the Central Bank of Syria, feed yellow corn and barley, in addition to children’s nutrition raw materials, organic solvents and compound diluents and plastic granules.

The bank issued a statement on May 4 to clarify the list, stressing that the aim behind issuing this list is to focus on financing commodities to meet the needs of the local economy, which includes a percentage of imported goods according to the size of domestic demand.

He said that it is possible to change that list depending on the needs and changes in the economic landscape.

The circular aims to control the process of pricing imported goods by following the mechanism of financing goods, regardless of the importer, which limits the manipulation of prices.


The citizen, a victim of short-listing

Syrian academician Abdul Nasser al-Jassem ruled out the regime’s government restricting its actions to the movement of merchants, adding that these measures are blundered decisions through which the government is trying to stop the deterioration of the exchange rate.

He pointed out that traders, who are not among the loyalists, are helpless and do not have any alternative plans, but in practice, the first commerce traders loyal to decision-makers are taking advantage of circulars and decisions issued by the government.”

Referring to the impact of narrowing import lists, al-Jassem said that it will directly affect the market and the citizens, who will assume the cost whether goods went missing or prices increased. In addition, the citizen does not enjoy enough purchasing power to compensate for this shortage in another way.

Al-Jassem explained that a large part of the local industry has been disabled, and the impact of reducing imports will negatively affect the market. He ruled out the hypothesis of the clash between traders and the government because under the current governance mechanisms, local traders have no role, and no economic space has been left to express their opinion.

He predicted that the impact would be a number of traders fleeing, which will negatively affect the citizens in case more investments, which are few already, are lost.


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