Syria's Economy in Transition: Stagnation Despite Currency Improvements

The depreciation of the Syrian pound (SYP) against the American dollar (USD) has contributed to the continued deterioration of the country's economic environment since the start of the Syrian crisis in 2011. In 2010, USD 1 equaled SYP 45-50; by 2024, it had reached SYP 15,000. While a sharp deterioration occurred on December 8, 2024 with the ouster of Bashar al-Assad’s regime (reaching SYP 27,000), the exchange rate soon began to show signs of recovery. These improvements have continued into the first two months of 2025, with the official exchange rate set at SYP 13,200 per 1 USD on February 10.

Despite these improvement, market activity and overall economic conditions remain stagnant and – by some accounts – has worked since the fall of the al-Assad regime. Explaining this discrepancy requires an examination of a number of factors contributing to the Syrian pound’s historical decline, as well as recent rapid rate of improvement.

SYP's 14-Year Decline

The comparative value of a currency is determined by a range of factors, including Gross Domestic Product (GDP) as well as a country's balance between its total imports and exports. In the years leading up to the Syrian uprising in 2011, many of these factors were declining in Syria, with these conditions worsening over the over the 14 years of conflict that following, seeing the GDP dropping from USD 61 billion in 2010 to approximately 8 billion in 2023. Meanwhile, Syria faced an ongoing trade deficit, with exports amounting to approximately 31% of its exports in 2023. The sanctions imposed on the regime also contributed to the currency's deterioration; in 2019, the value of the SYP per USD 1 was 1,000, but following the implementation of the Caesar Syria Civilian Protection Act in 2020 (and the myriad sanctions it entailed), this rate rose to SYP to 1,300 by mid-2022.

Rapid But Superficial Improvement

A number of factors have contribute to the improved value of the SYP since December 8. Following the issuing of General License 24 on January 8, 2025, the official exchange rate set by the Syrian Central Bank (SYP 13,065 : USD 1) was – for the first time in many years – more favorable than that of the black market (SYP 11,600). Since then, several bilateral and multilateral international actors, including the European Union, have expressed support for an easing and eventual lifting of sanctions.

This improvement in political conditions has not however led to any improvements in economic conditions. Thus far, the country has not yet seen any improvements in its productive, import, or export activity. Likewise, increased levels of foreign aid and investment have not yet materialized. Meanwhile, the interim authorities in Damascus have introduced a number of policies to garner greater recognition as a transitional government, but they have yielded some adverse consequences, at least in the short term, to the local market. One example is the introduction of an updated customs policy and new list of associated fees for the import of more than 6,000 items. The policy also aimed to standardize customs across Syria’s various crossings (which are now now controlled by one authority); however, the policy was met with substantial dissatisfaction because it led to a sharp increase in custom fees on goods imported through Syria’s northwestern crossings.

Changes in Custom Fees on Select Products Following New Policy on January 11, 2025

Item	Previous Import Fee (USD)	New Import Fee (USD)
Cement	17 (ton)	34 (ton)
Iron	60 (ton)	120 (ton)
Gasoline	30 (1,000 liters)	210 (1,000 liters)
Flour	2 (ton)	20 (ton)
Sugar	10 (ton)	50 (ton)

Improved Value, Diminished Availability

While it could be argued that encouraging the import of goods that were previously unavailable at sufficient quantities locally constitutes a positive decision, the development may also raise concerns regarding the ability of local products to compete with goods imported from Turkey. Moreover, while the appreciation of SYP exchange rates may benefit importers, it could also present challenges for those exporting Syrian goods.

Similarly, while having an official exchange rate that is a more favorable than the unofficial/black market rate was initially seen as a positive development, it also introduced concerns. Namely, while the Central Bank in Damascus continues to set a favorable rate, it also introduced a number of restrictions that have limited the availability of SYP in the market. For instance, restrictions have been put in place to limit daily withdrawals from personal bank accounts (between SYP 250,000-500,000 SYP – approximately USD 19-38). The Central Bank also imposed demanding conditions (a deposit of USD 20 million in some cases) on private currency-exchange offices and companies, resulting in many of them having to shut down a large number thereof. At the same time, with little availability of local currency at the official rate, many Syrians have been forced to burn through their savings or exchange money they receive via remittance through unofficial vendors due to a lack of alternatives.

Difficult Path Ahead

There is continued speculation about the depth of research that informs the interim authorities' financial policies – as well as the motivations driving the policy. Many local observers believe that a large number of the policies concerning the local currency aim to (1) maximize the interim authorities' control over the exchange rate across the country, and (2) replenish funds available for the state to deliver on some very ambitious economic promises (including a 400% pay raise to employees in the public sector, which has yet to take effect). While some observers have argued that these measures as temporary but necessary for Syria's transition, criticism has also been levelled against the measures. For instance, they have suggested that the continued presence of unregulated exchange vendors in the streets is allowing the black market to control the de facto exchange rate in many places. Similarly, while the drawbacks of strict and stringent economic policy may have been agreeable immediate after the fall of al-Assad, the continued deterioration of economic conditions across the country could detract from any good will the interim authorities have cultivated with the public. As such, more detailed and collaboratively designed economic and financial strategies need to be designed and verified to ensure that the current economic difficulties are temporary growing pains.