Economic analysts predict that next year’s 2022 budget deficit will be much higher than the figure announced, amid warnings of the regime in Syria making a disastrous move. Shafiq Arbash, an economics professor at Damascus University, said that the deficit would be “covered by printing more Syrian currency, which will lead to more inflation.”
According to Arbash, state revenues are mainly based on taxes, investment properties, and surpluses transferred from the public sector.
Arbash said that tax revenue is currently at its lowest-ever level, and should be a minimum of 3.5 trillion Syrian pounds below budget.
“The problem lies in corruption regarding tax collection, which is widespread in the Ministry of Finance,” Arbash said, adding that such an ill-considered approach leads to the “dispersal” of people outside the country.
Arbash described the public sector as “almost paralyzed,” meaning that surpluses from public institutions will not support the budget.
Ibrahim al-Adi, a professor at Damascus University’s School of Economics, described the budget amount as “shocking and very large.”
Adi added that the government has outlined what it will spend, but not how it will obtain the money that it plans to spend. He considers this to be a significant problem, which can result in debt and deficit financing.
It is interesting that talk of abolishing subsidies has resurfaced after the announcement of the 2022 budget. The regime supported the idea of abolishing subsidies on goods and services once and for all, under the pretext of reducing corruption and delivering assistance to the subsidies’ intended beneficiaries — as promoted recently by the regime’s prime minister.
Subsidies amounted to 700 billion Syrian pounds for bread, 2.7 trillion Syrian pounds for oil, and 100 billion Syrian pounds split equally between the social security and agricultural production funds. These amounts do not include electricity subsidies, which totaled approximately 1.5 trillion Syrian pounds.
Some 600 billion Syrian pounds of the deficit will be covered through treasury bonds, with external resources covering another 500 million Syrian pounds. The Central Bank of Syria will cover the remainder of the deficit as credit taken from the Central Bank’s reserves, according to Finance Minister Kenan Yaghi, as reported by pro-government media outlets.
Economists have recently called for a clear time schedule for issuing treasury bonds or permits, which the Ministry of Finance can rely on to cover the budget deficit and finance development projects. They have advocated this approach over borrowing from the central bank under the current deficit financing policy.
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.