AMMAN- Syria’s cabinet announced on Monday a package of economic measures to help ease a currency crisis that has wreaked havoc on the war-torn – from tighter controls on spiralling prices to a crackdown on profiteers.
Finance Minister Mamoun Hamdan said the cabinet approved “necessary and precautionary” measures to mitigate the impact of sharp fluctuations in the local currency that drove it to a record low nearly two weeks ago.
“We will impose checks on (prices) in the market and tighten supervision and hit monopolists and smugglers with an iron fist,” Hamdan told reporters after a cabinet meeting.
The fall in the Syrian pound fell to a record low on the black market nearly two weeks ago was driven by a lack of central bank intervention and damage to the war-torn economy from tighter Western sanctions in the last year, dealers and businessmen said.
After rising to a record of 690 to the dollar, the local currency has since improved and has been fluctuating around 620 to the dollar in the last week, dealers said. The pound had traded at 47 to the dollar before protests against President Bashar al-Assad erupted in March 2011.
The fall in the pound’s purchasing power has driven up prices of most commodities across Syria, bankers and economists say.
Hamdan said the government would allocate more funds to a chain of hundreds of government-run superstores that sells consumer goods at prices lower than those prevailing in the market in a bid to bring down consumer prices. The central bank would also offer dollars at a preferential rate for traders importing much needed essential goods, he added.
Other steps include interest-free government loans to state employees.
The crumbling of the currency has driven up inflation and aggravated hardship as many ordinary Syrians struggle to afford basics such as food and power.
With growing public anger over the rise in prices of basic goods, the Syrian government has blamed speculators and unnamed “foreign hands” for manipulating the currency markets. People have complained that shoppers hoarded some products, fearing the impact of the soaring dollar on the price of goods in the days ahead.
Prime Minister Imad Khamis told Parliament on Sunday that the country was suffering from the impact of U.S.-led sanctions, which was imposing a siege on the economy and hurting ordinary Syrians’ livelihoods.
Khamis said the government had not intervened directly since 2016 to defend the local currency to help preserve what was left of depleted reserves, estimated by economists and bankers at $17 billion before the protests began.
“This (intervention) policy in the past caused the depletion of a substantial part of the foreign currency reserves and encouraged speculation on the pound,” Khamis said.
The pound had enjoyed almost two years of relative stability after Moscow, alongside Iranian-backed militias, turned the tide in favour of Assad by pushing rebels from large swathes of territory in Syria.
Currency stability had become Syria’s economic confidence index and a sign of the government’s ability to mitigate the effects of war and Western financial sanctions, bankers said.
Syria, however, has been hit by expanded U.S. and European sanctions since November against Syrian businessmen close to Assad, which has scared wealthy Syrians abroad who had been considering opportunities in the war-ravaged economy.
The risk of sanctions against anyone trading with Syria has also deterred non-Americans from investing in post-war reconstruction, as long as Assad clings to power.
More than eight years of conflict has caused billions of dollars’ worth of damage, disrupted agriculture, devastated industry and wiped out foreign currency income from tourism and oil exports.