Syrian markets and pound pay the price for increased customs dollar rate

April 25, 2024

4 minutes read

Enab Baladi – Jana al-Issa

On April 21, the Central Bank of Syria (CBS) raised the customs dollar rate in Syria against foreign currencies by nearly 6%, approximately four months after increasing its value by 30%.

The bank set the selling price of the dollar at 9,090 Syrian pounds and the buying price at 9,000 pounds, while the selling price of the euro was set at 9,685 and the buying price at 9,589 pounds.

Typically, the Central Bank updates the customs bulletin weekly, without publishing it on the official site, while local media circulate it.

What is the customs dollar?

The customs dollar is the exchange rate of the dollar by which the value of goods is assessed in Syrian pounds for the imposition of taxes and fees at a percentage rate.

There are several bulletins for the exchange rates of foreign currencies against the pound in Syria, two of which are announced daily: the official market bulletin and the transfers and money exchange bulletin, in addition to an unofficial rate known as the black market rate.

Over the past years, the Syrian regime has resorted to creating several figures for the dollar exchange rate in Syria for a variety of reasons, the most prominent being to benefit from the differences between the prices it imposes and the real figures of the pound’s value against the dollar in the parallel market.

According to the S-P Today website, specialized in exchange rates and cash currencies, the selling price of the dollar reached 14,850 Syrian pounds, and the buying price stood at 14,700 pounds.

Since the beginning of last year, the Central Bank of Syria has taken a number of decisions, justifying them as a “step towards reducing the number of exchange rate bulletins issued by it, in an effort to unify them.”

Central Bank of Syria – February 14, 2024 (General Organization of Radio and TV-Syria)

Affected markets and pound

Certainly, the increase in the customs dollar rate will reflect on the markets, as stated by the economic researcher, Adham Qudaimati, to Enab Baladi, pointing out that the Syrian markets largely depend on imports, especially concerning raw materials in the production wheel.

The price increase of products in the markets may be higher than the rate at which the customs dollar rate has risen, given that the costs of importing involve more than just the dollar rate, according to Qudaimati.

The researcher considered that the rise in market prices could also threaten the value of the pound, creating greater opportunities for its deterioration.

Najah Abdel Halim, an assistant economic researcher at the Harmoon Center for Contemporary Studies, told Enab Baladi that raising the customs dollar rate directly affects the markets in terms of prices and production.

From the price perspective, raising the customs dollar rate increases the costs of importing goods, which negatively reflects on the final prices of imported goods and even local goods that rely on imported raw materials, leading to an increase in living costs for citizens and putting more pressure on purchasing power, according to Abdel Halim.

She added that, on the other hand, raising the customs dollar rate might reduce the ability of companies and factories to produce, especially if they rely heavily on imported raw materials or industrial equipment and machinery, negatively affecting the industrial sector and reducing local production volume, increasing dependence on imports and affecting the economy’s autonomy.

Food shop in Daraa al-Mahatta – March 18, 2024 (Enab Baladi/Sarah al-Ahmad)

Inflation battle

Raising the customs dollar rate contradicts the policy of controlling inflation rates, which the Central Bank of Syria claims to be working according to, said Najah Abdel Halim.

She pointed out that raising the customs dollar rate, which increases costs and prices, contributes to accelerating inflation rates instead of controlling them.

As the researcher, Adham Qudaimati, considered, the inflation rates existing in Syria are very high despite the regime’s denial due to the absence of free market fundamentals that accurately determine the inflation rate.

The regime deals with the inflation rate control file according to spontaneous, unstudied decisions that are not based on economic fundamentals, according to Qudaimati.

According to a report issued on August 10, 2023, Syria ranked third globally in inflation levels at 238% on an annual basis, after Zimbabwe and Venezuela, according to Hanke’s Inflation Dashboard in several countries, without relying on government statistics.

According to the data, the last official update on Syria’s inflation rate was in September 2019, which was then 34.50% on an annual basis.

Syrian banknotes – February 28, 2024 (Enab Baladi/Sarah al-Ahmad)

Assassination of the economy

The economic expert, George Khazam, said in a post on his personal Facebook page that “the only crime lacking in the assassination of the national economy was the deliberate and premeditated raising of the customs dollar exchange rate by 5.88% in conjunction with the rise in the dollar exchange rate in the black market.”

Khazam confirmed that the decision means an increase in customs and financial fees, i.e., higher costs for imports and national production, and more rising prices and costs, and the potential shutdown of factories and workshops due to poor management of monetary and economic policies in the Central Bank and the Economic Committee.

The expert pointed out that abolishing the notorious Import Financing platform has become more necessary than ever today, to compensate for the rise in industrial electricity costs and increase financial and customs fees, because the platform raised the import costs of raw materials by 35%.

The platform was the reason for the decline in the quantity of goods available for sale, leading to a very significant price increase regardless of the drop in the dollar exchange rate.

Khazam called for the necessity to form a committee of economists outside the current economic committee to understand the real reasons and what is happening due to the excessive adherence to the platform at the expense of collapsing the national economy, according to his expression.