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Syria: Local Currency Devaluation Exacerbates Sufferings In Damascus

Syria: Local Currency Devaluation Exacerbates Sufferings In Damascus

Saturday, 16 May, 2020 - 09:30
Souvenir mugs featuring Syria’s President Bashar al-Assad, Russia’s President Vladimir Putin and Lebanon's Hezbollah leader Sayyed Hassan Nasrallah are seen among other items for sale in old Damascus, Syria, February 8, 2016. REUTERS/Omar Sanadiki

The rise in the exchange rate of the US dollar against the Syrian pound has exacerbated the suffering of the people of Damascus. Recent tension erupted between Rami Makhlouf, who for decades had the country’s most prominent economic pillars, and the government who asked the businessman to pay about $180 million. As a result, the lira lost about 35 percent of its value, as the exchange rate fell against the dollar from 1200 to 1600 after it was 46 liras back in 2011.

The Syrian regime has ordered a series of measures against Makhlouf’s companies, including the Association, and his shares in the state-owned Syrian Telecom Company (Syriatel), the country’s biggest mobile phone company.

The government’s Telecommunications and Postal Regulatory Authority informed two of Makhlouf’s companies, “Syriatel” and “MTN” mobile phone to pay about 234 billion Syrian pounds to the state treasury as a penalty.

Official media quoted a Syrian economic researcher as saying that the amendment of the contracts with the two mobile companies has caused the loss of more than 338 billion pounds (482 million dollars) to the treasury.

Economists told Asharq Al-Awsat that the crisis between the government and Makhlouf had been silent for a year, but that the new conflict emerged in light of “the government’s urgent need for the dollar,” which was reflected in a terrible rise in food prices in the capital.

The World Food Program estimated that food prices rose by 107% in one year.

In parallel, the Ministry of Oil stopped, on Sunday, supplying vehicles with subsidized gasoline, in a new austerity measure that reflects the exacerbation of the economic and financial crisis.

The decision sparked criticism on social media and on the street, while government officials blamed the fuel crisis on economic sanctions imposed by several Arab and Western countries, which prevented the arrival of oil tankers.

The US sanctions against Tehran have aggravated the fuel crisis in Syria, which depends on a credit line that links it to Iran to secure its fuel.

Meanwhile, the government and the central bank have demonstrated a great inability to find solutions to the economic crisis and to control the exchange rate. Instead, they stood idle at the fastest deterioration of the value of the lira without taking any proper action.

“Our government does not have the needed dollars and is barely managing to bring in wheat, sugar and rice,” An economic expert told Asharq Al-Awsat.

“Unless the government demonstrates great flexibility in the international conflict taking place over the Syrian file, the economic situation in the country is heading towards a further deterioration,” he added.

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