Unique-Syria’s new central financial institution chief vows to spice up financial institution independence put up Assad

By Timour Azhari

DAMASCUS (Reuters) – Syria’s new central financial institution governor, Maysaa Sabreen, mentioned she desires to spice up the establishment’s independence over financial coverage selections, in what could be a sea change from the heavy management exerted beneath the Assad regime.

Sabreen, beforehand the Central Financial institution of Syria’s quantity two, took over in a caretaker function from former governor Mohammed Issam Hazime late final yr.

She is a uncommon instance of a former prime state worker promoted after Syria’s new Islamic rulers’ lightning offensive led to President Bashar al-Assad’s fall on Dec. 8.

“The financial institution is engaged on getting ready draft amendments to the financial institution’s legislation to boost its independence, together with permitting it extra freedom to make selections concerning financial coverage,” she instructed Reuters in her first media interview since taking workplace.

The modifications would wish the approval of Syria’s new governing authority, although the method is at this stage unclear. Sabreen gave no indication of timing.

Economists view central financial institution independence as important to attain long-term macroeconomic and monetary sector stability.

Whereas the Central Financial institution of Syria has at all times been, on paper, an impartial establishment, beneath Assad’s regime the financial institution’s coverage selections had been de facto decided by the federal government.

Syria’s central financial institution, Sabreen added, was additionally taking a look at methods to broaden Islamic banking additional to usher in Syrians who averted utilizing conventional banking providers.

“This may occasionally embody giving banks that present conventional providers the choice to open Islamic banking branches,” Sabreen, who has served for 20 years on the financial institution, instructed Reuters from her workplace in bustling central Damascus.

Islamic banking complies with sharia, or Islamic legislation, and bans charging curiosity in addition to investing in prohibited companies reminiscent of buying and selling in alcohol, pork, arms, pornography or playing. Islamic banking is already effectively established within the predominantly Muslim nation. Restricted entry to worldwide and home financing meant the Assad authorities used the central financial institution to finance its deficit, stoking inflation.

Sabreen mentioned she is eager for all that to vary.

“The financial institution desires to keep away from having to print Syrian kilos as a result of this may have an effect on inflation charges,” she mentioned.

Requested concerning the dimension of Syria’s present international alternate and gold reserves, Sabreen declined to offer particulars, saying a steadiness sheet assessment was nonetheless underway.

4 individuals aware of the scenario instructed Reuters in December that the central financial institution had almost 26 tons of gold in its vaults, value round $2.2 billion, some $200 million in international forex and a big amount of Syrian kilos.

The Central Financial institution of Syria and a number of other former governors are beneath U.S. sanctions imposed after former Assad’s violent suppression of protests in 2011 that spiralled right into a 13-year civil battle.

Sabreen mentioned the central financial institution has sufficient cash in its coffers to pay salaries for civil servants even after a 400% increase promised by the brand new administration. She didn’t elaborate.

Reuters reported that Qatar would assist finance the enhance in public sector wages, a course of made attainable by a U.S. sanctions waiver from Jan. 6 that enables transactions with Syrian governing establishments.

INFLATION CHALLENGE

Analysts say stabilising the forex and tackling inflation might be Sabreen’s key duties – in addition to placing the monetary sector again on a sound footing.

The Syrian forex’s worth has tumbled from round 50 kilos per U.S. greenback in late 2011 to simply over 13,000 kilos per greenback on Monday, in keeping with LSEG and central financial institution information.

The World Financial institution in a report in spring 2024 estimated that annual inflation jumped almost 100% year-on-year final yr.

The central financial institution can also be trying to restructure state-owned banks and to introduce rules for cash alternate and switch retailers which have turn into a key supply of exhausting forex, mentioned Sabreen, who most lately oversaw the banking sector.

Assad’s authorities closely restricted the usage of international forex, with many Syrians fearful of even uttering the phrase “greenback”.

The brand new administration of de facto chief Ahmed al-Sharaa abolished such restrictions and now locals wave wads of banknotes on streets and hawk money from the backs of vehicles, together with one parked exterior the central financial institution’s entrance.

To assist stabilize the nation and enhance fundamental providers, the U.S. final week allowed sanctions exemptions for humanitarian help, the power sector and sending remittances to Syria, though it reiterated the central financial institution itself remained topic to sanctions.

Sabreen mentioned permitting private transfers from Syrians overseas was a optimistic step and hoped sanctions could be absolutely lifted so banks might hyperlink again as much as the worldwide monetary system.