yrian lawmakers urged a fresh economic response from President Bashar Assad’s government after the 2013 budget revealed a more than threefold growth in the deficit amid falling revenue and rising expenditure.
The representatives made their recommendations in discussions that began Sunday on next year’s budget, tabled by the government on Oct. 23. Finance Minister Mohammad al- Jleilati blamed the country’s woes on sanctions, saying they’re affecting the “state budget, exchange rates, foreign currency reserves, general debt, inflation, unemployment and cash reserves,” the state-run Syrian Arab News Agency reported.
The government’s plans project a 4-percent rise in spending to 1.38 trillion Syrian pounds ($20 billion) for 2013, with public sector wages to increase by about 13 percent to 236 billion pounds, while spending on subsidies will increase by 33 percent to 512 billion pounds, SANA said. The deficit will reach 745 billion pounds next year compared with an expected deficit of 216 billion pounds in 2012.
The country has suffered “catastrophic” destruction since the start of the anti-Assad rising in March last year, Lakhdar Brahimi, the United Nations peace envoy for Syria, said last month. With the death toll estimated to have reached more than 35,000 by the opposition Syrian Observatory for Human Rights and conflict flaring across the country, everyday economic activity is under pressure.
“The economy is in a dreadful state and they’ve actually got no real basis for being able to finance government operations,” David Butter, Middle East analyst and associate fellow at Chatham House, said by phone. The government can survive by “relying on the balance sheets of the public-sector banks and the central bank for some time, but after that you may have to wonder where they’re going to find the resources.”
Oil exports, which in 2010 accounted for a quarter of Syrian government revenue, have almost ended, according to an Oct. 26 report by the Economist Intelligence Unit. Rebels regularly attack oil pipelines.
Customs revenue has also been depressed as imports have declined sharply, it said. The main revenue source to have been sustained is the state share in the income of Syria’s two mobile-phone companies, according to the report.
Gross domestic product is set to shrink by 10.2 percent this year, according to the EIU. Inflation rose above 36 percent in August.
Jleilati did not directly address how the government plans to fund the deficit. He said “current conditions” required a reduction in investment spending to 275 billion pounds, down 100 billion pounds from last year. Measures will be taken to control spending and combat tax evasion, he said.
Butter said Syria has traditionally borrowed from the state banking system and the central bank to finance its deficit. Now, “I assume they must be getting some financial support from Iran and maybe a little bit from Russia.”
Brahimi meanwhile told pan-Arab Al-Hayat newspaper Tuesday that he fears the worst for Syria if the crisis is not resolved.