The Syrian government on 6 December approved a S£322bn ($7bn) FY2001 balanced budget which contains a 16.9% rise in spending over the previous year and aims to create 65,939 jobs during the year. After approving three consecutive budgets in the past 10 months (for additional information on the previous two budgets see MEES, 24 April and 26 June 2000), the early 2001 budget release underscores President Bashar al-Asad’s campaign to transform the economy, which has focused on monetary and industrial reform and the liberalization of the private banking sector (MEES, 11 December 2000).

Syrian Budgets: 1996-2000

(SR £Mn)

The new budget differs little from the preceding two, although the increase in expenditure is significantly higher than the 7.87% rise in 2000. Expenditures on government services, including justice, national security and education increased 14.2% to S£171.33bn ($3.7bn), up from the 4.4% increase in the previous year. Local news sources on 6 December quoted parliamentarian Riad Seif as attributing higher expenditures to higher oil prices – Syrian oil production averages around 540,000 b/d, of which 220,000 b/d is normally used for domestic consumption and 320,000 b/d exported (MEES, 24 April, 2000). No details were given on projected 2001 oil revenues, but the budget is based on an oil price assumption of $24/B, somewhat higher than other countries’ projections (MEES, 8 January). Higher oil prices in 1999 and 2000 helped the government realize a combined surplus of $1.19bn, which has been rolled over into the 2001 budget as part of estimated revenues.

Buoyant oil receipts have also helped offset the prolonged drought that has affected Syria’s agricultural sector and slowed the economy’s economic expansion, which was preliminarily reported at 1.5% in 2000 by ESCWA (see story on page B9). According to the official daily newspaper Tishrin on 10 January, Syria’s GDP rose by 1.7-2% at current prices during 2000 and is expected to grow by 3.5% this year.

Although Syria does not officially report expenditures on servicing debt, Minister of State for Planning 'Isam Al-Za'im has said that this year’s budget allocates around S£27bn ($586mn) to foreign debt service, according to Lebanon Invest’s weekly newsletter of 16 December. This is lower than the reported $1.52bn spent in 1999 to service debt, according to the International Monetary Fund figure in the International Financial Statistics of November 2000. Overall, debt servicing expenditures are expected to decline as European countries reach arrears agreements with Syria. Mr Za'im said that Syria settled a portion of its debt with Germany in November by writing off loans, while another part was diverted to cover social and environmental projects. According to the debt rescheduling agreements with Germany, Syria will repay $572mn in installments over a 20-year period in addition to a five-year grace period (MEES, 6 November 2000). Similar agreements have been reached with France, Italy and Belgium. Mr Za'im also said the country’s total debt to Arab and foreign governments and international funds stood at $3.384bn at end-1H 2000. This figure excludes World Bank loans, which are managed by the Ministry of Finance and total around $145mn.

© Copyright MEES 2004.