Enab Baladi – Muhammed Fansa
Seven months have passed since the last time since the Central Bank of Syria (CBS) raised the exchange rate of foreign currencies against the Syrian pound by 30 percent in the Customs and Aviation trading bulletin, which raises questions about the reasons and effects of this measure.
However, without an official announcement, the Central Bank of Syria raised the exchange rate of the dollar against the Syrian pound in the Customs bulletin on December 7 to 8,500 Syrian pounds instead of 6,500 pounds, and the price of the euro to 9,144 pounds.
The Central Bank usually updates the Customs bulletin every week without change, without publishing it on the official website, while it is circulated by local media.
There are several bulletins in Syria for foreign exchange rates against the pound, including two bulletins that are announced on a daily basis, namely the Official Market bulletin and the Remittance and Exchange bulletin, in addition to an additional unofficial rate, which is the black market rate.
The US dollar is trading at 14,200 SYP according to the S-P Today website, which covers the trading rate of the Syrian pound to the dollar. At the start of the conflict in 2011, the dollar was trading at 47 pounds.
“A recipe for impoverishing people”
Hussein Arnous, the regime’s prime minister, stated last September that the value of Syrian exports amounted to 520 million euros until the end of last August, while the value of imports amounted to 2,161 million euros until the same period, which indicates a deficit in the trade balance of about 1641 million euros.
These numbers reflect the reliance on imported materials, most of which are subject to the impact of customs duties, which in turn affects their cost and final price on the market.
Dr. Firas Shaabo, an expert in financial and banking sciences, told Enab Baladi that raising the exchange rate in the Customs bulletin by 30% is an indication that all prices will “double significantly” and an indication of the deterioration of the economic situation.
One of the effects of this increase, according to Dr. Shaabo, is the reluctance of merchants to work or invest in the country because the issue has become useless, with prices continuing to rise significantly and the purchasing power of the citizen who does not have the income that allows him to consume.
The Damascus Chamber of Commerce revealed that more than 100,000 merchants with a commercial register have left the Syrian market, citing the lack of government support for merchants.
Yasser Akreem, a member of the Board of Directors of the Damascus Chamber of Commerce, told the local newspaper Al-Watan on December 5 that the number of commercial records in the Ministry of Internal Trade and Consumer Protection is about 110,000, while the currently active records within the Damascus Chamber of Commerce are about 7,000 records.
Akreem criticized the decline in the number of merchants due to the loss it represents to the economy, pointing out the existence of laws that contributed to harming merchants.
Akreem described the merchant’s situation in Syria currently as “at its worst” as a result of the government’s failure to support him as required.
He added that the markets are in a state of “stagnation” and are at their “worst state due to the large difference between the employee’s income and the value of the exchange rate, which is not proportional to the income.”
Imad al-Din al-Musabeh, Ph.D. in Economics, told Enab Baladi that the increase in customs duties will be reflected in the form of an increase in the general level of prices, and the problem of inflation is likely to get worse as the sources of the dollar diminish.
Dr. al-Musabeh stated that adjusting the exchange rate, whether through bulletins of the Central Bank of Syria including “Customs,” has negative effects that essentially exacerbate inflation.
Another impact is the rise in import prices as domestic production declines. The rise in import prices results in inflation attributed to imports, or what is called “imported inflation,” according to al-Musabeh.
The economic researcher estimated that “imported inflation” rates would reach about 15 or 20%, which ultimately constitutes “a real recipe for impoverishing people,” he described.
What are the reasons?
During the past years, the Syrian regime has resorted to creating several figures for the exchange rate of the dollar in Syria for a number of reasons, most notably taking advantage of the differences between the prices it imposes and the realistic figures for the value of the Syrian pound against the dollar on the black market.
Since the beginning of the year, the Central Bank of Syria has taken a number of decisions, justifying this as “a step towards reducing the number of exchange rate bulletins issued by it, as part of its effort to unify them.”
Expert Shaabo believes that the regime has been in a state of confusion for several years, represented by imposing decisions and then canceling them. “This has a double impact on the population, and the “chaotic and random” state of decisions indicates that there is no institutional management.”
He stressed that the presence of several exchange rates in the country is in itself a problem, such as the exchange rate of the bulletin of Remittances and Exchange, official market, and “Customs and Aviation,” which leads to a major imbalance.
Dr. al-Musabeh believes that the regime is currently suffering from great pressure regarding the Captagon drug trade, which is the primary source of dollars for it, in addition to other pressures regarding “friendly” countries that are working to recover their money, such as Iran, which is in need of foreign exchange as well, and with the treasury’s unwillingness to pay, the regime compensates Iran by granting investments.
The Customs bulletin’s 30% increase came before talking about a draft decision approved by the Economic Committee to raise the amounts and fines stipulated in Customs Law No. 38 of 2006, as the customs fines were based on the exchange rate at the time, according to what was reported by Al-Watan newspaper on December 6.
Under the new draft government decision, customs fines will be calculated according to the current exchange rate, meaning they will be approximately 250 times greater.
The fines, which range from 1,000 to 2,000 Syrian pounds, will increase with the new decision from 250,000 to 500,000 pounds, and the fines, which range from 5,000 to 10,000, will increase according to the new government decision to be from 750,000 pounds to 1.5 million pounds.
Last May, the Central Bank of Syria raised the exchange rate of the US dollar in the Customs bulletin, which was then called the “Customs and Aviation” bulletin, to 6,500 pounds instead of 4,000 pounds.
At the time, economic expert Ali Mohammad commented, in a statement to the local Majesty News website, that adjusting the exchange rate in the bulletin means an increase in the value (not the percentage) of customs duties paid on imports by about 62%, which may mean an increase in the prices of imported goods in the local market because the importer will raise the value of local market goods to cover the increase in the value of customs duties.