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	Syria		Info-Prod Country Guide
CHARACTERISTICS   INDICATORS   THE ECONOMY   PRINCIPAL SECTORS   PROJECTS   PROSPECTS

The Economy Foreign Aid Between 1977-1994, Syria received cash transfers from Arab Gulf states of almost US$ 17 billion in total, helping the government to sustain a defense establishment budgetary burden that amounted to some 50 percent of its annual budget expenditure. The emphasis of the aid shifted after 1991 to supporting specific projects, allowing Syria to buy power stations, a 1,000,000-line telephone network and a new sewerage system. In early February 1995, the European Union (EU) approved a new aid package of about US$ 50 million to finance development projects in Syria, despite concern about Syria's debt problems at the time (Syria owed some US$ 750 million to European creditors prior to receiving French assistance). The aid package included financing to set up a Syrian export promotion center, responding to one of the EU's concerns that Syria's export revenues are too dependent on oil. Other projects in the package included the upgrading of water and electricity systems, technical assistance to the banking sector and a tourism venture. Foreign Debt As of the beginning of 1997, Syria's external debts stand at about US$ 19 billion, which is owed to Russia and to a number of European countries. France's decision to settle its debt problem with Syria was highly appreciated by Damascus, although not stated publicly, and could open the way to an EU-Syrian trade agreement. Syria hopes that it will be in line for substantial debt relief once a peace agreement is reached with Israel. Exchange Rates As of January 1, 1995, Syria has moved toward unifying its exchange rates against the Syrian Pound (SP). Government accounts are calculated at the neighboring countries' official rate of SP 43/US$ 1, rather than the previous SP 23/US$ 1. The official rate of SP 11.2/US$ 1, which has been in existence since 1988, is still used to calculate some transactions, including hotel bills paid by foreigners and various government transactions. The SP 23/US$ 1 rate remains in effect for some customs tariffs. In contrast, the black-market rate in Damascus has hovered between SP 48 to 54/US$ 1 since the early 1990s, while the rate in Beirut is around SP 54/US$ 1. Reform Relative to the dismal state of the economy in the 1980s, Syria has prospered in the 1990s. Nonetheless economic reform has been slow, resulting in a frustrated local business community, especially regarding the government's inability to build on the 1991 Private Investment Law. Some minor improvements are expected in 1997, possibly at the prompting of European states. Syria is actively seeking foreign investment, particularly in agriculture, oil and gas, industry, electricity distribution, telecommunications and tourism. To attract investors, Syria offers freedom to expatriate profits and various tax incentives for up to seven years. To date, Syria has only attracted significant Arab investment. More than 60 percent of imports, and 65 percent of non-oil imports are now handled by the private sector. Syria is not a signatory to GATT and is unlikely to become one soon, fearing that lower trade barriers could damage its emerging industrial and agricultural base. Syria is receiving ECU 4.5 million from the EU to help with the administrative reform of its commercial and central banks. Previous Chapter Contents Menu Next Chapter

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