The Syrian economy is surely suffering from the intensifying conflict as shown by the latest developments in the energy sector. The price of gasoline has been upped once again from 130 SYP per liter to 140 SYP per liter and the price of one ton of fuel oil has been increased from 90,000 SYP to 105,000 SYP. The latest figures indicate that the direct and indirect damages to the oil sector amount to $27B while the subsequent burden on the government is estimated at a minimum of $5B per year. The imports of oil by land for the industrial sector allowed for a period of three months expired back in March. The renewal of this procedure will be studied as the ministry of petroleum and mineral resources aims to eventually halt imports and be able to provide the necessary energy resources for all sectors itself.
The Association for Chemical Products noted that the total production value of its affiliated companies during the first half of 2015 (H1 2015) totaled 4.5B SYP, much lower than the planned 13B SYP. This is a direct consequence of the sabotage and destruction which drove several companies out of service such as the glass company of Aleppo, the Tyre Company in Hama, the Cleaning Company in the outskirts of Damascus, the Plastic Company in Aleppo, the Paper Company in Deir el Zor and the Rubber Company in Aleppo.
The agriculture sector is also having its share of trouble due to the war. In April, the ministry of agriculture was compelled to increase the price of fertilizers sold to farmers, some types by 30%, others by 46% and 50%. In fact, the price of establishing one greenhouse rose to 250,000 SYP compared to no more than 50,000 SYP before the war. In Tartous, the number of licensed greenhouses for the season 2014-2015 dropped from 125,000 before the crisis to 109,000 and the number of workers in that field also fell from 25,000 families in 2010 to 22,000 in 2014. Aside from higher production costs, farmers face financing troubles as agriculture banks have halted loans and as suppliers of fertilizers and other production material no longer sell items on credit.
The Syrian balance of trade revealed a marked deterioration in the first half of the year, especially after the closing of the Nassib border crossing. According to Syrian customs, the value of imports exceeded 908 B SYP while exports amounted to only 67.7 B SYP. Alarmingly, exports cover no more than 7.5% of imports. The weight of imports exceeded 6.3M tons while the weight of exports was no more than 2.7M tons. In H1 2015, 918 cases were investigated by the Syrian customs with the total value of unlawful goods exceeding 684 M SYP. The fees due on those goods totaled 133.6 M SYP, of which only 116.6M SYP were levied and the fines due on those goods amounted to 1.9B SYP, of which only 1.4 B SYP were levied. In July, the President issued a decree according to which a 30% fee is to be imposed on all the imported Turkish goods and materials. The fee will be allocated for the reconstruction of villages in Syria.
The Syrian government is in desperate need for revenues especially as tax evasion grew with the intensifying crisis. Sources estimate the value of tax evasion at more than 400 B SYP/year, a figure which represents around 30% of the total fiscal balance. This is why the ministry of finance is currently drafting legislation to establish the “Bill System”. According to this system, every sale of goods and services has to entail the drafting of a bill to be delivered to the consumer. This system allows the consumer to have proof of ownership and to have guarantee of after-sale services, allows the government to track the sales operations on which taxes should be applied, and prevents importers and merchants from tampering with prices and illegally smuggling goods into Syria. The government also sought to alleviate pressures on the treasury by increasing the prices of basic food products, including products imported through the Iranian credit line, by up to 30%. The price of sugar was upped from 100 SYP to 130 SYP and the price of oil has been upped from 275 SYP/liter to 325 SYP/liter.
The inflationary pressures and the deterioration of the balance of trade are all a consequence of the depreciation of the Syrian Pound against the dollar. The Syrian Pound depreciated by 21% going from 179.2 SYP for the dollar at the beginning of 2015 to 217.7 SYP for the dollar at the end of June. Syrian banks have been under pressure when it comes to their depositors’ base. Authorities are compelling banks to determine the source of the deposits but are also urging banks not to shy away from accepting deposits before establishing proper due-diligence. Banks are also issuing travel bans on debtors who are not paying their dues.
The weighted index of the Damascus Securities Exchange closed at 1,199.56 points in Q2 2015, down by 3.44% from the previous quarter. In Q2 2015, 2 million shares, valued at SYP 285M were traded. The top gainers were Alahliah for Vegetable Oil, Bank Alsharq, and Fransa Bank-Syria with respective gains of 12.25%, 3.65% and 0.20%. The top losing companies were National Insurance Company, Qatar National Bank Syria, Al Baraka Bank Syria, Alahliah for Transport and Cham Bank with losses of 17.45%, 14.32%, 8.96%, 8.47% and 8.32%, respectively.