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New Syrian budget based on extent of regime's control

February 10, 2014 at 5:49 am

The Syrian government has revealed that its 2014 budget amounts to 1.39 trillion Syrian pounds (around $9.8 billion). On paper this is the largest budget in the government’s history, at SYP7 billion more than 2013. However, in reality, it is only a third of the figure for 2010, before the outbreak of the revolution and the deterioration of the exchange rate against the US dollar. Taking the exchange rate into account the 2014 budget should have been around $24 billion, three times what has been announced.

However, observers believe that the amount approved for the 2014 budget only accounts for about one-third of the presupposed set of figures, reflecting the reduced area of the country controlled by the regime. President Assad and his government are expected to focus spending on the area under the regime’s control specifically for military operations, including arms and salaries as well as fuel and food subsidies. Price rises and poverty due to the war are causing economic and social decline, and Syria is now experiencing a severe shortage of local and imported goods as well as a rise in the cost of food and consumer goods. At the same time, there has been a severe decline in the exchange rate of the Syrian pound against foreign currencies.

Moreover, the Economist Intelligence Unit of the Economist magazine reported that food prices in Syria have become inflated by about 322 per cent between the years 2000 to 2013, and household food consumption reached 45.6 per cent of total household spending. Furthermore, the prices of goods and food during the crisis increased at an insane rate; official data revealed the increase of products by about 30 per cent, and the prices of other goods have multiplied several times over during the past three years. A report published by Syria’s Al-Watan newspaper, which is friendly to the regime, noted that Syria dropped seven places in the Global Food Security Index during 2013 compared with its place in 2012, ranking it 79 out of 107 countries. It has now reached 96th place in the index, signalling a massive decline. It is also ranked in 75th place in the affordability index and 73rd in the quality and safety of food index.

As for poverty, a report by the United Nations Development Programme (UNDP) revealed that over half of the Syrian population has become officially poor and that 6.9 million citizens are living below the poverty line; 4.4 million of those are living in extreme poverty. The programme defines poverty as a condition characterised by severe deprivation of choices in key areas, such as education, health and sources of income, which means an inability to participate effectively in society. At the same time, data from the UN Economic and Social Commission for Western Asia (ESCWA) indicates that 4 million Syrians are now living under the food poverty line, compared to 200,000 in 2010, while the number of Syrians who live below the overall poverty line increased from 2 million to 8 million.

Farmers’ complaints have increased lately due to the government’s neglect of the agricultural sector. The head of the Syrian Farmers’ Union, Hammad Al-Saud, warned of the failure of the crops if the government continues with its policy, which has been the same as in recent years. In terms of wheat and flour import deals made by the government throughout the crisis, Al-Saud said that Damascus abandoned the crops in favour of import deals with merchants, which has had a negative impact on the sector. In his previous press statements, the union chief said that the government’s justifications for refusing to fund farmers during the 2014 season are “weak”, as the debt of the Agricultural Cooperative Bank has now reached SYP72 billion, 40 billion of which is made up of long- or medium-term loans.

With regards to economic losses, the UNDP report puts the total losses in Syrian as of mid-2013 at $103 billion: $12.5 billion dollars in 2011, $50 billion in 2012, and about $40 billion during the first half of 2013. With the intensification of the battles and increased destruction and devastation, experts predict that this figure will have passed the $140 billion mark at the end of 2013.

The regime in Damascus has also suffered huge losses due to a reduction in oil production; they have been estimated at $13 billion, and have to be added to the $8 billion from lost tourism revenues and the huge losses in the industrial sector caused by the total destruction of industrial areas and the fact that some factory owners shut down their factories. The Syrian Ministry of Petroleum has stated that 40,000 barrels are stolen daily, as well as large quantities of domestic gas cylinders. The ministry also estimated the losses in production oil reserves at about 11 million barrels since the outbreak of the crisis. It downplayed the importance of exporting “stolen” petrol, explaining that technical reasons would make it difficult: “The export of oil requires certain specifications calling for separating the water and condensate, which is difficult for vandals and oil thieves to do.” The ministry added that there has been some oil transported by tankers to Turkey and that the Syrian army usually bombs them.

In May last year, the European Union decided to allow its members to import petroleum and petroleum products from Syria in order to support the opposition by dealing with the “National Coalition” which opposes the regime. It is worth noting that the Ministry of Petroleum had announced earlier that the ban on Syrian oil and the events experienced by the country had led to a decline in production, from around 380,000 barrels a day before the crisis to 20,000 barrels a day at the moment. In addition to this, there has been a drop in the amount of gas produced, from 30 million cubic metres per day to 15 million.

Source: Arabi21