Syrian Embassy in Bulgaria: Sanctions are Still Affecting Syria’s Economy

Politics » DIPLOMACY | March 24, 2022, Thursday // 14:26
Bulgaria: Syrian Embassy in Bulgaria: Sanctions are Still Affecting Syria’s Economy

Press Release by the Embassy of the Syrian Arab Republic in Sofia, Bulgaria

The effects of the Syrian crisis are still casting a shadow over the national economy - this crisis has had a negative impact on overall economic life, economic balance and economic performance. The Syrian central bank has been subjected to US, European and Arab sanctions, which have affected state-owned banks, most public sector companies and, subsequently, private banks. The sanctions provided mainly for a ban on working with legal entities and Syrian entities, a freeze on funds and economic resources of those individuals and entities in the countries imposing sanctions, a cessation of all transfers to Syria and a ban on Syrian oil imports. We present to your attention the consequences of the negative impact of sanctions imposed on the Syrian Arab Republic on the work of the Syrian Central Bank:

First: Banking and financial sector: The banking and financial sector are most affected by these sanctions, which have led to a number of negative consequences. Some of them are:

- Freezing the assets and accounts of the Syrian Central Bank, as well as public banks, which are considered the official foreign exchange reserve of the Syrian Arab Republic, designed mainly to deal with crises in exchange rate fluctuations and local currency financing of basic imports and servicing of external debt obligations;

- Abstinence on the part of a number of banks abroad from working with local banks and from carrying out any banking operations related to Syria (letters of credit - guarantees - loans). This has led to an increase in the cost of letters of credit, transfers and banking operations as a result of the need to implement them through more than one bank, and this has led to additional commissions;

- Recourse of merchants to making high-risk banking decisions due to emerging difficulties for remittances;

- A decline in the exchange rate of the Syrian pound against the US dollar, affected the purchasing power of the Syrian pound and led to a deterioration in the lifestyle of the Syrian citizen and their ability to meet basic needs;

- The severity of these sanctions has led to the intensification of the operation of irregular markets, thus paving the way for many operations outside the regular channels and increasing the risk of money laundering and terrorist financing;

- Limiting the necessary banking channels for repaying and paying off the debts of the Syrian Arab Republic to foreign creditors, which seriously damaged its credit reputation, despite the constant attempts of the Syrian Central Bank to negotiate with creditors;

Second: Foreign trade sector: Export trends have declined significantly from pre-crisis levels, as they have been negatively affected by sanctions against Syria. These sanctions were also targeted at imports of basic goods and services, which affected the quantities supplied to the local market. Consequently, the prices of goods in general and food, in particular, have risen significantly on the Syrian market. On the other hand, these sanctions have significantly affected the tourism sector, especially with the ban on travel by citizens of some countries to Syria.

Third: The investment sector and the services sector: As a result of restrictive European measures imposed on Syria, many development projects financed by loans from some creditors (as listed in Table 1) have been suspended. None of these countries has revealed the reasons for the suspension of funding, which has hampered the implementation of vital infrastructure projects and, consequently, a direct deterioration in the standard of living of citizens as a result of the suspension of such projects.

Table № 1: Development projects financed by external loans and suspended as a result of sanctions

/Embassy of the Syrian Arab Republic in Sofia, Bulgaria 

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