Syrian regime proposes modest budget increase for 2022

Syrian regime proposes modest budget increase for 2022
The proposed budget allocates the highest portion of current spending of any budget since 2010, reflecting the depth of Syria's economic malaise.
3 min read
28 October, 2021
Some analysts allege that the passing of the budget is little more than a public relations exercise.

On 19 October, the Syrian regime approved a draft budget for 2022 which presents a modest increase from last year’s expenditures.

The budget halts a two-year trend of declining budgets – though it is still a fraction of Syria’s budget a decade earlier.

Damascus has proposed a whopping 13.9 trillion Syrian pound (SYP) budget, which in nominal terms, is far greater than last year’s 8.5 trillion expenditure.

In real terms however, the gains are more measured. Like neighbouring Lebanon, Syria’s official exchange rate is far lower than its black market exchange rate, which everyday transactions are conducted in.

When converted to the black market exchange rate of SYP 3,511 to the dollar (the average for October) and adjusted for inflation, Syria’s proposed 2022 budget comes to just under $3 billion. This is about a 26 percent increase from last year’s budget, which was approximately $2.4 billion in real terms.

The budget will create a budget deficit of SYP 4.1 trillion ($1.2 billion), most of which will be financed by borrowing, according to the Syria-focused business newsletter The Syria Report.

Syria is in the midst of a two-year long economic crisis which has plunged must of the population into dire poverty. The last measure of poverty by the UN put just over 80 percent of the population under the poverty line – and living conditions have only gotten worse since the UN survey in 2019.

The regime is increasingly unable to provide for the needs of its population and subsidies have been stripped away in recent months. The most recent assessment by the World Food Programme (WFP) revealed that 12.4 million Syrians are food insecure, the highest number ever recorded.

Accordingly, next year’s budget has the highest proportion of expenditures dedicated to current spending when compared to any other budget since 2010. Current spending encompasses social programs, wages for public servants and other forms of short-term oriented spending.

Up to 85 percent of the budget, or SYP 11.3 trillion ($3.2 billion) is dedicated to current spending – of which SYP 5.5 trillion will go to social support, mostly in the form of subsidies for food and fuel.

The rest of the budget – 15 percent or SYP 2 trillion (~ $570 million) – will be dedicated to investment spending, a slight decline from last year. Investment spending is the portion of the budget slated for infrastructural and reconstruction projects.

Much of Syria lies in ruins after over a decade of civil war, and the UN has estimated it will cost $177 billion to rebuild. This is over 205 times the amount Syria is dedicating to investment spending in 2022 –and majority of this spending is going to projects unrelated to reconstruction.

The budget is still in its drafting stage and has yet to be formally adopted by the government. It also does not include defence and security expenditures, both of which demand huge sums from the authoritarian regime.

There is also little indication that the government adheres to the budget blueprint throughout the fiscal year, with some analysts alleging the passing of the budget is little more than a public relations exercise.