Syrian economy resumes activity… Poverty and bankruptcy outweigh Coronavirus
Enab Baladi – Murad Abdul Jalil
“The virus of poverty, hunger, and bankruptcy is more dangerous than any other virus.”
With these words, the Chairperson of the Syrian regime’s Federation of Industry and a member of the Syrian parliament, Fares al-Shihabi, has responded to the preventive economic measures taken by the Syrian regime’s government in the past few weeks to prevent the spread of the novel coronavirus (COVID-19) pandemic.
These measures did not last long before the regime’s government decided to relaunch the Syrian economy partially, for the measures have weakened the economy, which is already seeing a state of deflation owing to the past nine years of war in Syria.
The regime’s decision conformed with what al-Shihabi expressed in a Facebook post on 23 April. He said, “the move of re-opening markets and easing the coronavirus lockdown came to rescue the economy.”
Even though no precise official figures are available to show the repercussions of the coronavirus on the Syrian economy, the Syrian government’s reduction of procedures is a clear indication of the losses that severely affected various economic sectors.
These economic losses have directly affected citizens adversely, especially entrepreneurs.
Easing Coronavirus lockdown measures despite increasing infections
Last week, the Syrian regime’s government began easing preventive economic lockdown measures by re-opening all professional and business services and shops, according to a working schedule that is to be distributed among these occupations.
The work schedule provided by the government allocated one or two days of work for each occupation, from 8 a.m. to 3 p.m., on condition of adherence and compliance with the precautionary measures to stem the spread of the coronavirus.
Later, the regime’s government agreed in a meeting held on 23 April to extend the opening hours of shops, trade, and service occupations’ centers until 5 p.m. to secure the citizens’ needs for Ramadan.
Besides, the regime modified the curfew times imposed in all provinces to be from 7:30 p.m. till 6:00 a.m.
It also allowed the restaurants to be open outside the daily curfew hours, and citizens to move between the provinces on Monday and Tuesday of each week after their movement was previously suspended.
The Ministry of Transport is permitted to gradually operate the transport directorates in the Syrian provinces, as transportation was one of the most adversely affected sectors.
In mid- March, the regime’s government undertook measures that almost completely shut down the economic activity in the days before the official announcement of the first confirmed case of the coronavirus infection on 22 March.
As of 24 April, the number of confirmed coronavirus cases reached 42 while the number of recovered cases amounted to six. The number of deaths linked to the novel coronavirus was three.
The numbers mentioned above indicate that the government’s decision to re-open parts of the state’s economy partially was not because of its ability to contain the coronavirus outbreak, but following a significant disruption in the economic activity and for fear of a disaster that could hit the county’s economic weakness and the already existing stagflation phase, according to the financial analyst, Manaf Quman.
Quman confirmed to Enab Baladi that the economic indicators show that the rates of inflation, unemployment, and poverty are high, and are offset by stagnant economic growth rates, as well as weak productivity and spending capacity.
Quman added that most of the world’s governments took measures against the coronavirus, which led to an adverse impact on their economy. This impact was relatively different between one country and another, depending on the nature of the measures.
The Syrian government, on the other hand, resorted to implementing drastic measures; it enforced curfews, closed markets and business places, which are considered the primary platform for consumer-producer interaction, for it is well known that the regime’s government lacks the technical infrastructure for online shopping or home delivery of products.
Estimates warn of bankruptcy
While there are no official figures for the coronavirus effects on the Syrian economy, experts’ estimates show losses in some sectors, most importantly, the sectors of industry, trade, and transport.
This loss was due to the complete suspension of movement inside cities and rural areas or between the provinces. The tourism sector was also affected negatively by hindering visits, especially people coming from Iran and Iraq to religious sacred places in Syria.
It is worth noting that tourism is an essential sector for the regime’s government, for it is a source of foreign-exchange income to Syria.
On his part, the Chairperson of the Syrian Commission on Financial Markets and Securities, Abed Fadlia, estimated that 60 percent of the public sector’s facilities had been entirely out of service.
At the same time, the Secretary of the Tartous Chamber of Commerce and Industry, Kifah Qaddour, assured that the industrialists’ losses are very large and heavy, which could lead to the collapse of some companies.
According to the pro-government local newspaper al-Watan, Qaddour mentioned that “the losses of the traders are significant, especially for those dealing in the garment and footwear trade due to the seasonality of goods and the change of models in the next year.
In addition, most of the shops are rented monthly, or through an “investment allowance scheme”, meaning the continuation of the economic lockdown may lead to business breakdown and bankruptcy for some traders.
Ali Kanaan, the head of the Banking Department at the Faculty of Economics at Damascus University, estimated economic losses with one thousand billion Syrian Pounds per month (SYP-775,193,000 USD), on average of more than 33.3 billion SYP per day (25,813,000 USD), according to al-Watan.
Kanaan also estimated the economic losses during March and April, to be about two trillion SYP (1,550,386,000 USD), which may double to four trillion SYP (3,100,772,000 USD) in case the lockdown continues till next June.
The Damascus Center For Research and Studies (DCRS), also published a study in which it reported that the Syrian economy is heading to a severe recession following the cessation of production.
The DCRS underlined that the measures taken by the regime’s government to prevent the spread of the coronavirus have contributed to the disruption of most sectors and social components.
These measures also led to a reduction in the state’s revenues secured from taxes, fees, and surpluses of public-sector economic institutions and the payments of renting and investing the state’s properties.
DCRS’s study pointed out that “continued economic inactivity will bring the Syrian economy into a severe economic downturn, with potentially overwhelming political, economic, and social consequences, leading to unsettling possibilities.”
The continuing decline in the state’s revenue will put the regime’s government in the face of very serious financial, living, and financing entitlements, which will take a heavy toll on the country and society, with consequences that cannot be ignored or contained.
On the other hand, al-Shihabi has called through his Facebook page for the re-opening of clothing, textile, and leather shops partly and gradually, and under strict regulations before “the traditional textile industry goes bankrupt in its entirety, leaving tens of thousands unemployed with no income or clear future,” as per his expression.
Back on 23 April, al-Shihabi published another post on Facebook in which he said that “the problem is no longer how to protect ourselves and control the disease, but instead how to protect ourselves, our economy, our living while controlling the disease.”
He added in the same post, “the virus of poverty, hunger and bankruptcy is much more dangerous than any other virus.”
Syrian citizens are most affected
Syrian citizens, of whom 83 percent live below the poverty line, according to the UN statistics, were not far from the coronavirus’ effects, which have increased poverty and food insecurity.
A Syrian employee, who depends on other sources of income to patch his salary of 50 thousand SYP (38 USD) at best, by either resorting to a second job or establishing a small business, can no longer continue doing so after these sources had a relapse with the imposition of the quarantine measures.
Meanwhile, day-workers were the most affected by the measures as they lost their main source of income, and ended up being unemployed with no financial support, according to Quman.
Moreover, the gap between expenses and income widened as the purchasing price for essential consumables of a family of five members rose to 430,000 SYP (334 USD), according to Quman.
He added, only food and beverages cost 230,000 SYP (178 USD), while the higher ceiling of an employee’s income is set at 50,000 SYP (38 USD); thus, more Syrian people are to face growing levels of poverty and food insecurity. Millions of Syrian will become food insecure.
According to the international database website for living conditions worldwide, Numbeo, the average salary in Syria is 92.93 USD (approximately 120,000 SYP), in both the private and the public sectors.
Last March, the Finance Minister in the Syrian regime’s government, Mamoun Hamdan, announced that 100 billion SYP (77,821,011 USD) would be allocated to finance the measures taken against the coronavirus.
Nevertheless, Osama al-Qadi, the head of the “Syria Economy” working group, considered that the spending and managing of these allocated funds would be manipulated thanks to the widespread corruption in the government institutions.
Al-Qadi indicated to Enab Baladi that 100 billion SYP is considered a small sum, which is equivalent to approximately 80 million USD. He added if this sum of money is equally distributed among the citizens living in the regime controlled-areas (around 13 million persons), each individual’s share would be only 6 USD as a support during the coronavirus crisis.
However, now and more than ever, Syrian citizens are in dire need of support to buy their basic needs that are barely available such as sugar, rice, and diesel oil.
Regarding the employment issue, al-Qadi clarified that there are two million and 600 thousand governmental employees according to official figures, and the remaining two-thirds of Syrian labor are working in the private and joint sectors, not related to the government.
Al-Qadi considered that two-thirds of Syrian citizens are adversely affected by the lockdown measures, and the most affected are those who do not work in the public sector, for they do not receive a regular paycheck or financial aid.
Meanwhile, unemployment risk threatens the Syrian labor force in all sectors, according to al-Qadi.
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