In his analysis of the draft general budget for 2025, banking expert Amer Shahda highlights that the proposed budget shows little divergence from previous years. However, he notes a promising 5% increase in investment spending.
Shahda points out that the budget reflects the government’s awareness of both national and global economic instability. Notably, oil derivative subsidies have doubled from two billion in 2024 to four billion in 2025, which Shahda interprets as a proactive measure to hedge against anticipated increases in global oil prices.
Despite the budget’s aim to reduce the deficit by 21% compared to 2024, Shahda expresses skepticism about achieving this target. He argues that the ongoing economic transition could exacerbate inflation, a common consequence of such transformations. He emphasizes that economic transitions often lead to rising prices and depreciation of the local currency, citing the approved exchange rate increase from 11,500 to 13,500 pounds per dollar—a 17% rise.
Shahda explains that as the budget is implemented, inflation will likely impact both current and investment spending, complicating efforts to reduce the deficit. He believes that addressing the deficit and inflation will depend on the policies adopted, particularly monetary policy, which must align with the budget’s investment goals. He stresses the need for clear coordination between monetary and fiscal policies.
According to Shahda, the primary objectives of monetary policy during this transformation should include maximizing production, stabilizing prices, correcting economic imbalances, and protecting the national currency. He urges policymakers to develop a rational vision regarding annual increases in the money supply and inflation rates, which would necessitate intervention from the Central Bank to address structural economic issues.
Shahda also emphasizes the importance of identifying sustainable sources of funding for the national economy to support its growth while maintaining internal economic stability and balance of payments.
He raises several unanswered questions regarding the 2025 budget, particularly concerning support for small and medium enterprises, social support allocations, and the implications of Syrian refugees returning, as well as the influx of Lebanese migrants.
This article was translated and edited by The Syrian Observer. The Syrian Observer has not verified the content of this story. Responsibility for the information and views set out in this article lies entirely with the author.
