Tuesday, February 23, 2021

Fears of a suffocating financial crisis due to the decline of the Syrian pound to an unprecedented level |


Damascus – The Syrian pound plunged to a new record level on Sunday, which foretells severe repercussions for the country’s economy, which has been resisting a severe crisis for nearly ten years.

Dealers and bankers said that the Syrian pound plunged to a new record level on Sunday, with the scramble to buy dollars in a country severely affected by the sanctions imposed on it and facing a severe shortage of foreign exchange.

Traders said that the price of the dollar on the black market reached 3,450 pounds on Sunday, which is more than 18 percent less than its price at the end of last month.

The last rapid decline of the pound was last summer when it broke the 3,000-pound barrier to the dollar, due to fears that the imposition of US sanctions would add to the woes of the country’s ailing economy. Syria has been beset by Western sanctions for years, in addition to a grinding civil war.

Analysts warn that the depreciation of the lira will be reflected in a rise in the prices of basic foodstuffs and commodities across the country, the majority of whose population lives below the poverty line, according to United Nations estimates.

The report of the United Nations Economic and Social Commission for Western Asia “ESCWA” estimated that 5.6 million people of the Syrian people have become refugees, 6.4 million internally displaced persons, 6.5 million suffer from food insecurity, and 11.7 million citizens need humanitarian assistance. .

A major Damascus-based trader said the dollar rose after demand far outstripped supply, following months of relative stability at the 2,500 level.

A trader in Aleppo said, “There is a great demand for dollars, but hard currency is not available.”

The dollar was worth 47 pounds before the protests against the regime of President Bashar al-Assad in March 2011, in unrest that led to a war that is still going on.

Bankers and businessmen say that one of the reasons for the dollar shortage is the financial crisis in Lebanon, as banks, which are facing an exhausting crisis there, have frozen billions of dollars for Syrian businessmen.

The Lebanese financial sector has for decades been a safe haven for Syrian business leaders, as well as for government-linked companies, which have used some of its banks to evade sanctions and import raw materials.

Businessmen say the country has been forced to cut fuel subsidies and provide foreign currency for essential imports.

The collapse of the currency led to a rise in inflation, which added to the suffering of Syrians to save food, energy and other basic needs.

Bankers say that despite the central bank pledging last week to intervene to support the collapsing currency, it is reluctant to do so in order to preserve what remains of its scarce foreign exchange reserves. The reserves were $ 17 billion before the outbreak of the conflict ten years ago.

The losses of the Syrian economy from 2011 to the beginning of this year amounted to 530 billion dollars, which is equivalent to 9.7 times the GDP for the year 2010 at constant prices.

According to a study prepared by the Syrian Center for Studies Research, the country’s public debt rose to about 208 percent relative to GDP, and the local currency (the Syrian pound) lost about 97 percent of its value over several years, in addition to the country’s unemployment rate reaching 42 percent. Percent.

Last January, the Central Bank of Syria issued 5 thousand banknotes, which left a wave of widespread criticism from economists and on social media sites, as Syrians considered that this step heralds a worsening of the economic situation in the country and will strengthen the collapse of the Syrian pound, pointing out that the system It works to fill the existing budget deficit by issuing new banknotes.

However, the Central Bank said at the time, that this step came to meet the expectations of the actual trading needs of banknotes, in a manner that guarantees facilitation in monetary transactions and a reduction in their costs and their contribution to facing the effects of inflation that occurred during the past years, in addition to reducing the intensity of dealing in banknotes due to the high prices during War years.



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