The Syrian regime has recently approved the lowest budget allocations in the country’s history, marking a concerning development. The approved general budget for the year 2024, as endorsed by the Syrian government, has been significantly reduced in terms of its real value when expressed in dollars. This decrease sets a new record for the lowest budget in Syria’s history and does not bode well for any substantial improvements in the deteriorating Syrian economy.
The Syrian pound has experienced successive devaluations, resulting in high inflation rates. As a consequence, experts anticipate that the budget deficit will plummet to less than half its previous levels, leading to severe challenges for the livelihoods of Syrian citizens.
The Cabinet has endorsed the initial budget appropriations for the 2024 state budget, amounting to 35,500 billion Syrian pounds. This allocation is divided into 26,500 billion for current expenditures and 9,000 billion for investment spending.
The increase in the size of the new budget, when compared to the 2023 budget, which was 16,500 billion Syrian pounds, indirectly acknowledges the alarming inflation rate within the Syrian economy. Analyzing the two budgets based on their official and floating exchange rates reveals that the 2024 budget has been introduced at a particularly challenging time for Syria’s economy. This could result in a deteriorating quality of life and public services for Syrian citizens, possibly affecting various government support programs.
In 2023, the budget was valued at 5.4 billion dollars according to the official exchange rate, which was 3,015 liras for every dollar. In contrast, the 2024 budget, calculated at the new official rate of 11,557 liras, is worth 3.076 billion dollars. This represents a significant decrease of 43% when assessed against the official dollar rate.
Economic researcher Yahya Omar highlights that the 2024 draft budget is the largest in Syria’s history in terms of its value in Syrian pounds, yet it is the lowest when evaluated in dollars. He explains that the increase in the budget’s value amounts to 114.5% in Syrian pounds but, in terms of U.S. dollars, the current projection is approximately 2.59 billion dollars, based on the black market exchange rate. In contrast, the 2023 budget was worth around 3.6 billion dollars according to the black market rate, signifying a real decline in budget value of approximately one billion dollars, equivalent to a 27.7% decrease.
The budget figures, coupled with the persistent rise in inflation levels, suggest little hope for an economic turnaround within the Syrian regime’s areas of control. Karam Shaar, director of the Syrian program at the Observatory of Political and Economic Networks, points out that investment spending remains significantly low compared to pre-revolution years. In 2010, investment spending accounted for 44%, while the 2011 budget allocated 46% to investments. In contrast, the new budget allocates only 25% to spending, which is still considered insufficient, especially considering the significant reduction in citizen support.
Omar predicts that the Syrian government may face more financial pressures, leading to further deterioration in public services. There could be cuts to social support, either by excluding new segments or by increasing the prices of subsidized items, such as bread and fuel. This could result in higher poverty and unemployment rates.
The budget deficit is likely to reach 40%, considering that the deficit percentage in the 2023 budget was 30%. If the Syrian government resorts to deficit financing by printing more Syrian pounds, this would exacerbate inflation and deepen the budget deficit, potentially pushing the economy into a downward spiral, which would negatively impact the lives of Syrians.
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.