Syria budget deficit widens due to Western sanctions, strife

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The slide in the value of the Syrian pound has crippled the purchasing power of ordinary people. Photo – Anwar Amro/AFP

Syrian government has submitted the 2013 budget in which it revealed a steep increase in the deficit due to falling revenue and rising expenditure.

The state-run Syrian Arab News Agency quoted Finance Minister Mohammad al- Jleilati, who tabled the budget on Sunday, as saying that the country is suffering from sanctions which are also affecting the state budget, exchange rates, foreign currency reserves, general debt, inflation, unemployment and cash reserves.

The budget proposes a 4% rise in spending to 1.38 trillion Syrian pounds ($20 billion) for 2013. There is also an increase in public sector wages by about 13% to 236 billion pounds ($3.38bn), while spending on subsidies will increase by 33% to 512 billion pounds ($7.33bn), SANA said while adding that the deficit will reach 745 billion pounds ($10.67bn) next year compared with an estimated deficit of 216 billion pounds ($3.09bn) in 2012.

“Syria has suffered catastrophic destruction since the start of the anti-Assad uprising in March last year,” Lakhdar Brahimi, the United Nations peace envoy for Syria, said last month. The opposition-led Syrian Observatory for Human Rights maintains that more than 35,000 people have lost their lives in the conflict so far.

According to a 26 October report by the Economist Intelligence Unit, Syrian oil exports have come to a complete halt due to the heavy infighting and rebels attacking pipelines constantly. Oil accounted for a quarter of Syrian government revenue in 2010.

The report added that while the government is deprived of customs revenue as imports have declined sharply, the main revenue source is the state share in the income of Syria’s two mobile-phone companies.

According to the EIU, gross domestic product (GDP) is set to shrink by 10.2% this year with inflation hovering around 35% in August.

The Syrian finance minister did not disclose how the government plans to fund the deficit but said current conditions required a reduction in investment spending to 275 billion pounds ($3.94bn), down 100 billion pounds ($1.43bn) from last year. He promised measures to control spending and combat tax evasion.

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