The Syrian Initiative for Fundamental Rights issued a statement warning against the current pattern of cooperation between the Syrian transitional government and both the International Monetary Fund (IMF) and the World Bank. The statement argues that this approach overlooks crucial dimensions of the economic transition process, such as political participation, social justice, and sustainable development. This warning aligns with the conclusions of interventions by civil society organizations, such as the Tahrir Institute and the Syrian Center for Policy Research, on the sidelines of the 2026 Spring Meetings of the IMF and the World Bank. These organizations emphasized the importance of learning from past experiences when designing IMF and World Bank programs in fragile and conflict-affected countries like Syria.
In principle, the IMF provides technical support for stability in Syria, but its role extends beyond that to effectively legitimize policy choices that produce superficial fiscal improvements but reproduce the deep-seated roots of the conflict: inequality, weak governance, crony capitalism, the fragmentation of public authority, and the erosion of the developmental state. In other words, the problem is not that the IMF talks about “reform”, but rather the type of reform it chooses to recognize as successful, acceptable, and praiseworthy. If “reform” achieves a degree of short-term accounting stability but deepens the social and political foundations of the conflict, it is not successful reform, but rather a reproduction of the very elements of instability.
This is what makes Syria important for the IMF's conditionality review. In its current review, the IMF states that it wants more "realistic", "credible" and "balanced" programs that support "sustainable and inclusive growth" (IMF, 2026). However, the Syrian case reveals that the problem is no longer the standard language used by the IMF, but rather the practical substance of what constitutes "balance" and "reform", and who bears the cost and who reaps the benefits. Therefore, unless the IMF places questions of distribution, governance, and dominance at the heart of its policy evaluation, the "realism" it speaks of will become merely an acceptance of unfair arrangements simply because they exist and are politically feasible.
The IMF has made this mistake in Syria before
The IMF’s current position cannot be understood without recalling its misreading of Syria before 2011 as well. At the conclusion of its 2009 Article IV mission, the results of which were published in February 2010, the IMF welcomed the simplification of the tax system, pushed for the completion of preparations for a value-added tax, praised progress in reforming fuel subsidies, encouraged preventing a return to “inefficient price subsidies”, and called for further trade liberalization and for the private sector to take the lead in investment and infrastructure, including through public-private partnerships (IMF, 2010). At that time, the IMF legitimized a package of reforms that exacerbated the fragility of society and the economy within an authoritarian and monopolistic structure that disregarded accountability, fairness, and participation.
Hopes for economic recovery
17 December 2025
This is the essence of a political reading of economics: a package may be “coherent” from a technical perspective, but it becomes socially explosive when it passes through a system of governance based on exclusion, patronage, and appropriation. Professor of Peace and Conflict Studies Michael Pugh warned early on that “liberal peace” programs often reproduce authoritarian structures and hegemony in the name of the market and openness, rather than establishing a just peace. Professor of Peace and Conflict Studies at the Henry Krug Institute at the University of Manchester, Nicolai Lemay-Hibbert, and Professor of International Industrial Economics at the University of Birmingham, Syed Mansoob Morshed, have also shown that rebuilding the state on rentier, elitist, or subservient foundations does not deepen legitimacy, but rather exacerbates dependency and inequality. Syria before 2011 was not a “natural” environment for reform, and neither is it today.
The same logic is being repeated today under a new authority
The problem is that the same logic is being reproduced today, albeit under a new authority and with a different rhetoric. In June 2025, the IMF stated that Syria needed “sound fiscal and monetary policies” and the creation of conditions for “the private sector to lead development and growth” (IMF, 2025). In November 2025, it commended the authorities for adopting a “tight fiscal and monetary stance” and supported efforts to develop a “simple, competitive, and easily administered” tax system, along with the restructuring of public enterprises and major investment projects with the private sector (IMF, 2025). In February 2026, it again praised the small surplus achieved in 2025 and described the 2026 budget revenue estimates as ambitious but feasible, while adding some caveats regarding social spending, transparency, conditional commitments, and the governance of public enterprises (IMF, 2026). These reservations are important, but they do not change the essence of what is being endorsed. The path the IMF is legitimizing in Syria today is based on a combination of fiscal discipline, subsidy cuts, expanded indirect taxation, weakening of the labor market, downsizing of the public sector, rapid trade liberalization, and private sector-led reconstruction without governance standards. These policies are being implemented in an economy plagued by widespread poverty, fragile productivity, multiple financial systems, a lack of transparency in assets and contracts, and weak legal and institutional oversight. In such a context, it is difficult to characterize this path as pro-reconstruction; more accurately, it is a path that perpetuates conflict under the guise of reform and fiscal discipline.
Syria’s public finance trajectory explains why the IMF’s praise seems misplaced
A paper by the Syrian Center for Policy Research on public finances in transitional Syria demonstrates that 2025 was not a year of productive recovery, but rather a year of further fiscal tightening. The Center’s baseline estimate concludes that real growth in 2025 did not exceed 0.3%, and that the budget surplus was very small, while the economy remained effectively stagnant. The paper also shows that the revenue structure in 2025 relied heavily on customs duties, fees, and indirect taxes. The 2026 budget, despite its significant expansion, remained focused on consumption, trade, and import revenues, with public investment remaining below the required level and current and security spending continuing to be prioritized. In other words, “fiscal success” did not stem from productive recovery, but rather from containing spending, raising prices, and further extracting resources from society.
This bridge is not enough for peace
23 March 2026
In countries emerging from conflict, “success” cannot be measured solely by fiscal surpluses or price stability. True success is measured by the ability of fiscal policy to rebuild citizenship, justice, institutional capacity, and public trust. If the IMF continues to support policies that produce accounting stability at the expense of distributive justice, legitimacy, and developmental capacity, it will not be a partner in reconstruction, but rather in reproducing the conditions of the conflict itself.
The paper also clarifies that a significant portion of the surplus stems from the transformation of subsidies into state revenue. Instead of subsidizing prices and basic services, the state now generates surpluses from electricity, fuel, and other energy sources. This means that the improved financial balance does not come from increased production or greater tax fairness, but rather from shifting the cost onto households and producers. In a country where the majority of the population lives below the poverty line, and where productive sectors face severe energy, liquidity, and competitiveness shortages, lifting subsidies in this manner does not appear to be a reform policy, but rather a regressive redistribution policy that harms both consumers and producers. This is the point emphasized in the intervention: the shock therapy of lifting subsidies cannot be considered “reform” in a society experiencing such widespread poverty and fragmentation.
The problem lies not only in austerity measures
Current policies offer five “conflict-reproducing options”. The first is austerity in a devastated economy. Fiscal tightening might be understandable in a relatively stable economy, but in an economy just emerging from war, suffering from weak demand, destroyed infrastructure, and eroded public capital, it becomes an internal factor that exacerbates recession. The second is reliance on indirect taxes and customs duties. As American political scientist Deborah Brautigam, political economist Mike Moore, and others have pointed out, taxes are not merely a revenue-collecting tool, but a cornerstone of state-building and the relationship between the state and society. When the treasury is based on customs duties, fees, and consumption taxes, it not only produces distributive injustice but also weakens the representative nature of the financial contract between the state and its citizens. The third option is lifting subsidies without adequate social protection. Sanjeev Gupta, a senior policy fellow at the Center for Global Development, and others have demonstrated that fiscal consolidation policies in fragile environments cannot be separated from social protection and political legitimacy. In countries emerging from conflict, subsidies for bread, energy, transportation, and basic services may be considered part of an implicit social contract. When these subsidies are lifted before a genuine safety net is in place, the resulting financial savings can transform into new grievances. A fourth option is to dismantle the bureaucracy and rebuild it based on loyalty. Evidence points to widespread layoffs, deep wage inequalities, and the replacement of key positions with employees connected to new networks. This is not a neutral reduction in wage costs, but rather a restructuring of the public sector along patronage lines that weakens its institutional memory and public service. A fifth option is private sector-led reconstruction without confronting crony capitalism. The aforementioned paper warns against the expansion of sovereign wealth funds and economic entities as supra governmental institutions, off-budget flows, and the redeployment of public assets in an opaque environment. As Rubén Carranza (Senior Fellow at the International Center for Transitional Justice, ICTJ) points out, corruption and economic crimes are not peripheral issues in transitions, but rather central to the question of whether reconstruction will become a path to redress, compensation, and justice, or merely a means of redistributing assets among old and new elites.
Fragile countries need a different standard for success
For this reason, it is not enough for the Fund to ask whether policies have improved fiscal balances or reduced inflation. The most important criterion in fragile and conflict-affected countries is: does the policy reduce the drivers of conflict or reproduce them? This is what the session itself points to, when it emphasises that political economy remains marginalised in programme design, even though the Fund’s reports and evaluation research identify it as a decisive factor in the success or failure of programmes. The programme itself also points out that the Fund’s research in its periodic reviews indicates that social spending is beneficial for growth through significant fiscal multipliers, whilst programmes are often linked to cuts in such spending. This paradox is not incidental; it is at the heart of the problem with conditionality as it is actually applied.
The rythm behind Arak
20 May 2026
Critical scholars have emphasized this paradox for years. Alexandros Kentiklins, a professor of political economy and sociology at Bocconi University, and sociologist Thomas Stupps demonstrate that the IMF’s public rhetoric on progressive taxation is inconsistent with its actual advice, which remains biased toward regressive measures, particularly in low- and middle-income countries. Poe warned that rapid liberalization, asset privatization, and a reduced role for the state in post-conflict environments could result in elite restructuring rather than peacebuilding. Ha-Joon Chang, a South Korean economist and academic, argues that development requires public capacity and strategy, not a premature withdrawal of the state in the name of efficiency. Syria today stands at the intersection of all these criticisms.
What can the IMF do instead?
First, the IMF can stop treating fragile states as “normal” economies merely suffering from increased uncertainty. Fragility is not simply an added margin of risk; it fundamentally alters the way public finances function. Second, a clear criterion for examining policies that perpetuate conflict must be developed: Do reforms expand regressive taxation? Do they squeeze the wage bill in a way that destroys the public sector? Do they lift subsidies before establishing effective safeguards? Do they accelerate privatization in a weak legal environment? Do they legitimize off-budget flows and unchecked asset transfers? If so, these policies are neither “neutral” nor “realistic”; they are policies that will reignite conflict.
In the specific case of Syria, this means: prioritizing progressive direct taxation over customs duties and consumption taxes; rebuilding public administration, not dismantling it; restoring productive public investment, not replacing the state with the private sector in a monopolistic environment; designing social protections before lifting subsidies; and treating governance, crony capitalism, and off-budget flows as critical issues, not secondary institutional margins. The question in Syria is not whether the IMF is capable of supporting macroeconomic stability, but whether it is prepared to stop legitimizing reform options that improve some figures while destabilizing society.
And here lies the ultimate conclusion: in countries emerging from conflict, “success” cannot be measured by fiscal surpluses or price stability alone are insufficient. True success is measured by the ability of fiscal policy to rebuild citizenship, justice, institutional capacity, and public trust. If the IMF continues to support policies that produce accounting stability at the expense of distributive justice, legitimacy, and developmental capacity, it will not be a partner in reconstruction, but rather in reproducing the conditions of the conflict itself.
Selected References
The Syrian Initiative for Fundamental Rights (2026): Statement on the involvement of the International Monetary Fund and the World Bank in Syria. https://thesifr.org/ar/papers/imf-world-bank-engagement-2026-04/
Brautigam, D., Fjeldstad, O.-H., & Moore, M. (Eds.). (2008). Taxation and state-building in developing countries: Capacity and consent. Cambridge University Press.
Carranza, R. (2008). Plunder and pain: Should transitional justice engage with corruption and economic crimes? International Journal of Transitional Justice, 2(3), 310–330.
Chang, H.-J. (2002). Kicking away the ladder: Development strategy in historical perspective. Anthem Press.
Gupta, S., Bhattacharya, R., Clements, B. J., Tareq, S., Segura-Ubiergo, A., & Mattina, T. (2005). Rebuilding fiscal institutions in postconflict countries. International Monetary Fund.
International Monetary Fund. (2010). Syrian Arab Republic—2009 Article IV consultation, preliminary conclusions of the IMF mission.
International Monetary Fund. (2025a). Syria—IMF staff concludes staff visit to Damascus (June 10, 2025).
International Monetary Fund. (2025b). Syria—IMF staff concludes staff visit to Damascus (November 17, 2025).
International Monetary Fund. (2026a). 2026 review of IMF program design and conditionality: Public consultation.
International Monetary Fund. (2026b). IMF staff concludes staff visit to Syria (February 25, 2026).
Kentikelenis, A., & Stubbs, T. (2025). Progressive rhetoric, regressive reality: The IMF’s tax advice to 125 countries, 2022–2024. Global Policy, 16(4), 731–738.
Pugh, M. (2005). The political economy of peacebuilding: A critical theory perspective. International Journal of Peace Studies, 10(2), 23–42.
Syrian Centre for Policy Research. (2026a). Public Budgeting in Transitional Syria: Surpluses in the Accounts, Deficits in Development, and the Reproduction of Inequality.
Syrian Centre for Policy Research. (2026b). Rhetorical recovery and actual stagnation of gross domestic product in Syria.
