Syria’s 2025 budget is bigger but light on subsidies and detailhttps://en.majalla.com/node/323057/business-economy/syria%E2%80%99s-2025-budget-bigger-light-subsidies-and-detail
Syria’s 2025 budget is bigger but light on subsidies and detail
Damascus has artificially lowered prices for years, but Syrians today cannot afford basics like fuel without them, meaning its budget has become a delicate balancing act
Al Majalla
Syria’s 2025 budget is bigger but light on subsidies and detail
The Syrian government has approved a draft state budget for 2025 that is 48% bigger than last year’s budget, but several questions remain unanswered. The 2025 budget is SYP 52.6tn (or $3.9bn), while the 2023 budget was SYP 35.5tn (equivalent to $3.1bn). In real terms, according to an official exchange rate of SYP 13,500 per US dollar, this equates to a 26% rise.
However, a bigger budget does not necessarily mean Syrian lives will improve overnight. Spending for 2025 is projected at SYP 37tn, up 40% from this year. Most of this goes on salaries, with much of the remainder going towards the management and operation of state institutions, as well as the Public Debt Fund (PDF).
In recent years, the PDF has been used to provide loans to public entities to finance investments in things like infrastructure, but since 2018, allocating funds to the PDF has also been a way to hide the state’s spending on defence and the presidency.
‘Investments expenses’ for 2025 are up 70% compared to the 2024 budget, to SYP 9tn. Presenting the budget, Finance Minister Riyad Abdel Raouf said this makes up nearly 30% of the total budget, compared to 25% in 2024. He said the goal of investment expenses was to stimulate demand, secure the needs of Syrian state institutions, ensure the continued availability of services to citizens, and stimulate supply by increasing productivity.
Keep on privatising
The government recently said it would withdraw its funding from loss-making state enterprises that provide no additional value for society, yet it continues to push through Public-Private Partnership (PPP) agreements that privatise state assets rather than invest in them or state infrastructure.
In late July 2024, it was announced that a private company had been given the contract to manage Syrian Airlines. The company was not named but is believed to be Eluma, which is owned by businessmen linked to the presidential palace. An airline director said the contract with this private company was for 20 years, with the government getting a 25% cut of the revenue for the first ten years, then 37.5% in the second.
Spending for 2025 is projected at SYP 37tn, up 40% from this year. Most will go on the salaries of public-sector employees.
In October 2024, Damascus announced an agreement to privatise the production of car registration plates just prior to the launch of a campaign compelling vehicle owners to update their car plates with newly designed plates.
Other PPP projects have been signed in cement, tractors, batteries, and medicine, in a process that consolidates the influence of regime-affiliated businessmen and extends their control over public goods at the expense of public interests, depriving the state of revenue.
Policies prioritising private capital accumulation date back to before 2011, when the country convulsed in civil war. In recent years, the policies have renewed only concentrated on the regime's authoritarianism and patrimonialism.
Diving into the detail
Raouf did not provide clear figures regarding revenues in the 2025 budget, only saying that there are no plans to impose new taxes. According to Syria Report, a news website focused on the Syrian economy, budget revenues are estimated at SYP 41.6tn, a 74% increase over last year's SYP 26.1tn. Raouf said the government hoped to raise revenues by enhanced yields from state property. According to pre-2011 figures from the United Nations, around 62% of Syrian land is state-owned.
Damascus recently implemented an e-payment system to make tax collection more efficient, imposed new taxes on sugar imports and solar panels, reduced the compensation it pays for military conscription, and doubled consulate fees.
The budget deficit has been reduced to 21% for 2025, compared to 26% in 2024, said Raouf, without giving further details. As a slice of the total budget, this would be SYP 11.04tn. It is likely that the deficit will be covered by printing money and by borrowing through the issuance of treasury bonds.
Pomegranate molasses, an agricultural product in the Afrin region of Aleppo, northern Syria, October 22, 2024.
Subsidies and austerity
In the 2025 budget, the share of spending on public subsidies and other public support programmes is listed as 15.8%, equivalent to SYP 8.3tn. SYP 4tn is projected to be spent on oil and oil products, and SYP 3.85tn on bread flour.
Other smaller components of social support include SYP 150bn for irrigation, SYP 125bn for yeast, SYP 100bn for agricultural support, SYP 50bn for supporting army veterans, women, and small enterprises, and SYP 50bn for natural disaster funds. In addition, SYP 27tn has been allocated to the medical sector for the purchase of laboratory supplies, medical equipment, and medications, including those needed to address a severe shortage of cancer treatments. Yet while this component has risen by 34%, it has, in fact, reduced as a share of the total budget.
Continuing austerity means continuing to reduce state subsidies, which in turn means increasing the price of key goods and services. In February 2024, the government again increased the selling price of a loaf of bread by up to 100%, diesel for ovens by more than 165%, and the cost of electricity was up between threefold and sixfold.
In September, another diesel subsidy cut allowed the government to save SYP 600bn annually, while a month later, new cuts to subsidies in several industries, including agriculture, increased the price of fertiliser.
Higher cost of living
Alongside the price rises on subsidised products, there are supply shortages, too, particularly in oil derivatives following Israel's war against Lebanon since mid-September 2024. This has forced Syrians to buy on the black market, where quantities are restricted and much more expensive.
To compensate in part, the government has given one-off bonuses to state employees, soldiers, and pensioners and has increased some salaries, but this has not alleviated the population's suffering owing to unaffordable prices. For instance, a litre of diesel for ovens is now a significantly higher percentage of the average monthly salary than it was in 2020. Most state-employed Syrians cannot cover the basics with their salaries. They are simply not enough to sustain a family. The cost of living has doubled in a year and tripled in just two years.
The 2025 budget, therefore, reflects the Syrian government's need to avoid big salary rises and cut back wherever possible. Alas, this means further impoverishing Syrians, increasing the cost of production, and hobbling the economy. Damascus will be hoping that, for all the pain, there is some gain.
