QNA

Damascus

Academics and economic experts affirmed the importance of the resumption of technical engagement between Syria and the International Monetary Fund (IMF), viewing it as a fundamental step toward strengthening the country’s economic and financial stability.

They said it lays the groundwork for restoring confidence with international financial institutions and gradually reintegrating the Syrian economy into the global financial system.

Professor at the Faculty of Economics at Damascus University Dr Ma’ruf Al-Khalaf told Qatar News Agency (QNA) that the resumption of technical engagement between Syria and the IMF, after more than a decade of interruption, reflects an initial international acknowledgment of signs of economic recovery in Syria—backed by relative improvements in key macroeconomic indicators such as investment levels, GDP, reduced unemployment, improved per-capita income, the gradual return of some refugees, and partial easing of sanctions.

He added that the engagement helps bolster transparency and modernize financial policies, while providing a conducive environment for bilateral and multilateral partnerships that support economic recovery, sustainable development, the exchange of expertise, and capacity building within the financial and banking system.

He explained that the proposed intensive program of engagement between Syria and the IMF focuses on capacity building and improving the quality of economic statistics, which is an essential precondition for any serious reform. Among its most notable expected outcomes are curbing inflation through supporting contractionary monetary policy, improving tools to monitor the money supply, managing exchange and interest rates, enhancing public revenues through tax system reform, broadening the tax base, implementing electronic invoicing, and improving public debt management through developing a medium-term strategy and updating monitoring and analytical tools—contributing to restoring financial balance and reducing reliance on deficit financing, he added.

Regarding reforming the banking system, he noted that Damascus faces complex structural challenges, the most prominent of which are the weakened human capital in the sector after years of institutional depletion and migration of skilled workers, erosion of public confidence in the banking system, declining deposits, and outdated legislation that does not align with international standards. Realistic options, he said, include gradually restructuring public banks while strengthening governance, oversight, transparency, and accountability; modernizing banking legislation in cooperation with the IMF, World Bank, and regional financial institutions; and launching intensive training programs to build a qualified banking workforce.

The Damascus University economist clarified that Syria’s eligibility for World Bank grants amounting to USD 1 billion over three years is linked to making tangible progress in reforms—particularly in financial transparency, fiscal disclosure, public budget management aligned with fiscal and monetary space, targeted social support for the most vulnerable groups, and transitioning from relief to investment. He noted that the positive scenario depends on linking grants to results-oriented programs such as education, health, and infrastructure, helping shift from recovery to development, generating jobs across all economic sectors, improving government efficiency, and accelerating reconstruction. Meanwhile, the negative scenario assumes that slow reforms or lack of transparency may hinder the flow of aid or subject it to stricter conditions, he added.

For his part, Dean of the Second Faculty of Economics University of Aleppo Dr. Malek Suleiman underlined the improved consumer and investor confidence in Syria, attributing this to positive expectations regarding economic stability, the investment climate, and the gradual return of some economic activities following the easing of certain restrictions and sanctions—allowing greater flexibility in commercial and financial movements. He said the economic reform roadmap includes modernizing the tax system, preparing the 2026 budget, and rehabilitating the banking sector to enhance financial stability and improve resource management.

In a similar statement to QNA, he said that the intensive cooperation program with the IMF includes providing technical assistance to improve the quality of economic data and develop institutional capacities. It aims to pave the way for the resumption of Article IV consultations, which are periodic reviews of economic policies that have not occurred since 2009, he pointed out.

HE also said that the cooperation priorities include improving national statistics, particularly GDP and inflation data, to create a reliable information base for effective economic decision-making, explaining that the current cooperation does not involve direct financing or loans but focuses on technical support and capacity building, continuing in line with the Syrian government’s commitment to reforms and progress in governance and transparency.

He added that the program offers a technical and strategic entry point to addressing economic imbalances if implemented within a comprehensive reform framework, noting that technical support will help improve inflation-measurement tools, modernize the tax system, broaden the tax base to enhance revenues and reduce the fiscal deficit, and build a more efficient institutional framework for managing public debt, improving transparency, developing financing strategies, and assessing risks related to internal and external debt—while stressing that the effectiveness of the program depends on political commitment and local institutional capacity.

He highlighted the structural challenges facing the Syrian banking system, including a fragile legal framework, weak central bank independence, lack of transparency, erosion of confidence in public and private banks, and outdated legislation that does not match international standards—hindering investment attraction and weakening monetary policy effectiveness. Gradual reform, he said, includes updating the banking law, strengthening central bank independence, introducing modern supervisory tools, and ensuring continued technical cooperation with international institutions, led by the IMF.

Dr. Suleiman addressed the issue of World Bank grants, noting that obtaining an amount of up to USD 1 billion is linked to three scenarios: the first is technical and preparatory support without direct financing, which includes improving statistics, preparing budgets, and reforming the banking system, and is used to build confidence before any financing. The second is development grants through multilateral programs, indirect financing through development projects in cooperation with the World Bank and the IMF, with transparency and governance conditions. The third is a conditional financing program, a direct loan in exchange for implementing strict structural reforms such as liberalizing the exchange rate, reforming subsidies, and modernizing legislation. This leads to reducing inflation, boosting revenues, achieving monetary stability, and launching reconstruction projects, and requires strong political will.

In a similar vein, researcher in international economics and finance Professor Mohammed Ghazal explained that the return of the technical mission to Damascus after a hiatus since 2009 and the IMF’s announcement of an intensive program of engagement with Syria means that the Syrian economy is emerging from a state of statistical and professional isolation, and beginning to be gradually integrated into the usual international monitoring and control system. He pointed out that this return does not mean injecting direct funding, but it allows Syria to build a new record of trust with international institutions and markets and link local reforms to global standards, which paves the way for reintegration into the global financial system and the restoration of concessional financing channels and foreign investment.

Professor Ghazal confirmed in a statement to QNA that the intensive cooperation program represents a pivotal step to address the root causes of financial and monetary imbalances, noting that the IMF will work with Damascus to design the 2026 budget in a way that increases the fiscal space for social spending while relying on realistic estimates of revenues, and will include technical support to strengthen public financial management, complete new tax legislation, and improve tax administration. This will reduce reliance on inflationary financing of the deficit.

He added that the program focuses on building a modern monetary policy framework aimed at reducing and stabilizing inflation, through the rehabilitation of the central bank’s tools and strengthening its independence, modernizing banking legislation and reforming payment and financial intermediation systems. It will also help in formulating a strategy for managing Syria’s old debts and controlling emergency obligations resulting from the restructuring of government companies and investment projects.

Professor Ghazal pointed out that the Syrian banking sector faces a heavy legacy of non-performing loans, weak capitalization, a fragmented banking structure, previous distortions in the exchange rate, weak governance and oversight, and erosion of trust and relationships with correspondent banks. He explained that realistic options begin with a comprehensive review of asset quality, followed by a gradual program to restructure viable banks, merge or liquidate weaker banks, introduce new capital contributions according to transparent rules, modernize the electronic payment and control system, and link banking reform to broader judicial and commercial reform that guarantees the rights of all parties.

He pointed out that the pursuit of up to USD 1 billion in World Bank grants over three years comes after settling arrears and the return of official channels to operation with the support of regional countries. He explained that the positive scenario links these grants to a clear reform program and transparency standards, so they go towards sectors that generate confidence and job opportunities in electricity, infrastructure and social services, while in the more conservative scenario the grants may be spent on scattered projects with a limited impact if the necessary reforms are not completed, while stressing that USD 1 billion is a symbolic figure compared to the estimated cost of reconstruction, which exceeds USD 200 billion according to the World Bank.

Experts point out that continued technical cooperation with the IMF is a key element in supporting the Syrian economic path, and contributes to strengthening financial and monetary stability, improving the management of public resources, enabling the building of an accurate information base for economic decision-making, accelerating the pace of reconstruction, and stimulating local and foreign investment, in light of the commitment to reforms and financial transparency.