Enab Baladi – Zeinab Masri
While the Syrian regime enforces a policy consisting of draining local markets of cash and limiting it to banks in order to sustain the current rate of the Syrian pound, it raises the limits of daily bank withdrawals.
Despite laws prohibiting dealing in foreign currencies, citizens are allowed to withdraw their transfers in foreign currency when complying with certain conditions, in a contradictory financial policy that baffles citizens and enables the regime to have a tighter security grip on them.
Quoting sources in the Central Bank of Syria (CBS), the Syrian Al-Iqtisadi business website revealed a decision to allow willing citizens, traders, and industrialists to withdraw their money transfers in US dollars, on the condition that the amount exceeds 5000 US dollars, despite two presidential decrees criminalizing dealing in currencies other than the Syrian pound.
Discussing this decision is not supported by an official announcement. In addition, pro-regime media outlets previously reported similar decisions to allow dealing in foreign exchange for traders and industrialists, with the aim of providing foreign exchange in the local market, especially for aforementioned traders and industrialists. It also spares them from resorting to the black market to secure their needs, which consequently relieves the pressure and the increase in demand for foreign currency.
Money transfer withdrawal in US dollars
In a report published on 24 February, the Central Bank told “Al-Iqtisadi” website that a remittance of more than 5000 US dollars, or the equivalent in accepted foreign currencies, is received either in the same currency or its equivalent in Syrian pounds according to the beneficiary’s desire, and at remittance delivery rates.
Delivering personal remittances of more than 5000 US dollars in foreign currency to citizens only requires the presentation of a personal identification card, according to the Central Bank. However, commercial remittances involve presenting a commercial or industrial register certificate.
The Central Bank added that there are two options to receive remittances, the first of which is to receive the amount in cash in Syrian pounds or foreign currencies, and the second is to deposit the amount in Syrian pounds or foreign currencies in an account in any operating bank.
Incoming remittances of a value of 5000 US dollars or less, or its equivalent in other foreign currencies, are delivered in Syrian pounds exclusively and at the delivery rate of remittances in the bank’s Official Exchange Rate Bulletin on the date the remittance was received.
Although there was no official announcement, the regime’s government allowed licensed exchange companies in April 2021 to deliver remittances to merchants and industrialists in dollars. It also green-lighted citizens to receive their remittances at a price of 2,825 SYP, which is higher than the official exchange rate set by the government.
Economic expert and researcher Khaled Turkawi told Enab Baladi that the central bank and various government agencies are “confusing” citizens with decisions that are strenuous to analyze. Ever since their issuance, decrees N. 3 and No. 4 have contradicted with other decrees; the regime obliges citizens to pay the military conscription exemption fee in foreign currency, while it criminalizes dealing in currencies other than the Syrian pound.
What are decrees No. 3 and No. 4 of 2020?On 18 January 2020, the head of the Syrian regime, Bashar al-Assad, issued decrees No. 3 and No. 4 stipulating an increase of penalties for those dealing in currencies other than the Syrian pound. Decree No. 3 imposes a prison sentence and a fine for those dealing in currencies other than the Syrian pound. This decree came as an amendment to Article 2 of Legislative Decree No. 54 of 2013, which used to punish those dealing with currencies other than the pound with three months to three years in prison. Decree No. 4 imposes a penalty of temporary detention and a fine of one to five million Syrian pounds for those who “publish or circulate fabricated facts or false or fictitious allegations by any means that aim to cause decline or instability in national banknotes or their exchange rates specified in official bulletins and to undermine confidence in the strength of the state’s currency and bonds. |
Turkawi pointed out that a citizen’s possession of money in foreign currency with the aim of paying the recruitment division via a bank contradicts the two decrees dealing with foreign currencies. He also considered that the regime did not properly organize these matters in the first place, at least from a legal point of view, because the practices on the ground are very different.
The researcher figures that the regime’s government is taking such decisions because it realized citizens’ ability to evade the processes of receiving and paying remittances through its institutions, over which it claims to control. These decisions are also due to the government’s realization of the traders’ ability to secure foreign exchange in ways that are beyond the government itself, which is what prompts it to approve these exceptions to determine the amount of foreign exchange that enters the country.
According to Turkawi, this has been the regime’s policy for about a year and a half, as it tries, to the best of its abilities, to govern the local (Syrian pound) or foreign supply of money that is in circulation within its areas of control.
Turkawi reckons that the regime was somewhat successful in controlling the local and foreign currencies (Dollar and Euro) in terms of small transfers. However, it was unable to control large transfers because merchants are either supported by multiple parties, whether it was “Shabiha” or security departments, or are more experienced in the matter than the average citizen.
Turkawi indicated that a citizen would not take risks for 100 or even 200 US dollars and would not devise ways to benefit from the exchange difference. Those who have 500,000 US dollars, on the other hand, will come up with ways to accomplish that; when the exchange difference is that colossal, they are willing to take a little risk for big profits.
Policy for controlling money supply
In addition to allowing the withdrawal of remittances of more than 5000 US dollars, the Central Bank of Syria announced, on 22 February, that it had raised the daily withdrawal limit from bank accounts, previously set at two million Syrian pounds, to five million pounds.
This decision comes amid the regime’s government’s implementation of a policy consisting of draining markets of cash and confiscating the supplies of money (Syrian pounds). This policy has faced criticism for limiting citizens’ ability to freely manage their financial assets.
According to the official in the Directorate of the Government Commission at Banks, Hanan Ailabouni, the regime’s government upholds these decisions as they are not meant to create obstacles but rather to ensure that work and life would go on.
Setting daily withdrawal limits had consequences on general market trends and hindered the buying and selling operations due to depositors’ inability to withdraw their deposits and the sellers’ refusal to transfer funds to bank accounts.
In a statement to the local Melody FM radio station on 20 February, Ailabouni said that the Central Bank is concerned with managing liquidity and the volume of banknotes circulating in the market, and not only managing banks’ liquidity, because of its repercussions on printing more cash on the one hand, and on the circulation of cash and banknotes on the other. The lack of a certain use of liquidity is due to several factors, including the restriction of facilities or the absence of suitable projects.
She also clarified that it is not prohibited for a citizen who owns the funds to make transfers via the same bank for whatever they desire, meaning that it is not prohibited to make a transfer or write a check for any amount they desire, surely within the existing limits of their account. Moreover, she emphasized that only cash withdrawals have been restricted.
For his part, economic researcher Turkawi commented on the decision to raise the limit on daily bank withdrawals by stating that the amount of one or two million Syrian pounds is rather a small amount in light of the increase in prices, which is why the Central Bank raised the limit on withdrawals to five million Syrian pounds.
“People would not run out of tricks, and anything could happen in Syria,” said Turkawi while referring to legal tricks and reminding of the various illegal ruses that citizens resort to in order to withdraw their money. In the meantime, the regime is attempting to prove to the citizens that it is familiar with their tricks, so it issues decisions with the aim of being aware of their movements.
Turkawi pondered upon the extent to which the regime allows economic freedom for citizens by means of the recent decisions, considering that the said freedom will not be largely obtainable, plus, no one can guarantee that the regime would not later arrest the people who received money and hold them accountable according, or not even by referring to, decrees No. 3 and No 4.
Limited impact on exchange rate
The researcher explained that a citizen who brings foreign currencies (large amounts) into Syria would face certain scenarios, the first of which is converting dollars into Syrian pounds, which creates a demand for the pound and leads to its recovery.
The second and more likely scenario, according to Turkawi, is carrying out trading or commercial transactions in foreign currency, as in the case where a citizen buys real estate or gold or invests the amount he has received in importation.
For instance, a citizen who received 10,000 US dollars will not convert it into Syrian pounds, but he should use it in a commercial transaction. Therefore, the impact of the exchange rate, consequently rendering it much lower than the regime’s expectations, according to Turkawi.
The Syrian regime has been seeking for months to preside over the markets by drying them up of cash flow and confiscating large supplies of money in Syrian pounds. This has led a number of small investors and traders to exit the markets due to weak commercial and industrial activity.
For several months now, the value of the Syrian pound has maintained some sort of stability against foreign currencies; 1 USD is equal to 3650 SYP in the black market, while the official exchange rate is 2,512 SYP to 1 USD.