Syria’s approach to monetary stability carries substantial economic costs. Restricting access to pounds limits demand for dollars, but also constrains consumption, working capital and wage payments. The burden is uneven. Businesses with foreign-currency holdings or external financing can continue operating, while others struggle to use their own funds. Protecting the currency through these restrictions weakens the activity needed to sustain its value.
Weak financial intermediation limits conventional monetary policy. The IMF describes Syria’s banking system as highly dysfunctional and its monetary policy instruments as limited. Withdrawal controls consequently have considerable influence over spending. They impose some contractionary effects of higher interest rates without compensating depositors, while encouraging cash holdings outside banks and further eroding trust.
This approach predates the transition. By late 2019, the CB was restricting pound withdrawals to curb dollarization. A 2022 circular explicitly linked these controls to exchange-rate management and limiting speculation. Their continuation after Assad’s fall reflects a persistent reliance on suppressing activity to manage currency pressures.
The pound’s initial appreciation therefore offered an incomplete picture of recovery. The World Bank documented banknote shortages and disruptions to currency circulation after the transition. Reduced access to pounds helps explain appreciation without necessarily indicating stronger production or larger foreign-exchange inflows. Restrictions do not eliminate import obligations, and currency pressures return when demand for dollars exceeds available supply.
Subsequent official adjustments reflected these pressures. By 29 June 2026, the CB’s rate stood at SYP 12,150 in old pounds, with a permitted pricing margin of 2%; both have remained unchanged since. The authorities accommodated depreciation while retaining tight control over official pricing. The broader dilemma is how to ease liquidity restrictions without renewing currency pressure. Having presented appreciation as evidence of economic success, they also face a political cost when allowing depreciation, reinforcing the emphasis on currency stability despite its economic burdens.
Meanwhile, calculations show that imports totaled USD 7.15 billion in 2025, up 85% from 2024. Their expansion alongside continuing constraints on domestic production highlights unequal access to financing. Importers with dollars or supplier credit can maintain activity, while domestic producers face restricted access to deposits, high energy costs and difficulties financing wages and inputs.
Households also bear costs through prices. Repeated depreciation encourages businesses to price in future currency losses, while weak competition allows precautionary margins to become excessive. Prices rise rapidly when the pound weakens but fall more slowly when it strengthens. Consumers absorb depreciation losses without receiving proportionate appreciation gains.
Remittances, exports and aid-related inflows supply foreign exchange while liquidity controls curb demand. The CB governor estimated remittances at USD 4 billion since Assad’s fall by December 2025. Household support thus serves a public function, supporting the currency and financing imports. While rising prices require larger transfers to sustain purchasing power. This sits uneasily with the authorities’ free-market rhetoric, spreading benefits while shifting part of the cost of monetary stability onto senders and recipients.
Exports provide a limited counterweight to import demand. Merchandise export values increased by only 1.8% in 2025. Customs duties, meanwhile, accounted for 39% of government revenue in 2025, underscoring fiscal dependence on imports. Collecting duties in dollars transfers existing foreign exchange to the treasury rather than generating external inflows. When passed through to essential-goods prices, their burden is regressive, absorbing a larger share of poorer households’ incomes.
Fiscal and monetary policy are pulling in different directions. The 2026 budget raised planned expenditure to USD 10.5 billion, while liquidity restrictions constrain spending across the economy. This places greater demands on financing channels already weakened by banking dysfunction. Without disclosure of funding sources, it remains unclear how fiscal expansion will be reconciled with monetary restraint, or who will bear the adjustment costs.
Electronic payments facilitate disbursement but do not establish how expenditure is financed. An April 2025 Finance Ministry circular directed payroll deposits into a ShamCash account at the CB. Their monetary implications depend on outstanding balances, backing and redemption arrangements, which require disclosure. So electronic payments cannot close the financing gap, while limited borrowing alternatives point to the sovereign fund as a potential source of treasury financing. Any such lending requires disclosure of its amounts, terms and underlying funding sources.
Recovery requires transparent fiscal-monetary coordination, central bank independence and banking rehabilitation, alongside gradual liquidity easing, reliable energy and working-capital finance. Success should be measured through production, purchasing power, employment and the distribution of policy costs. Treating exchange-rate stability as the principal measure of success obscures costs that undermine the very stability being pursued.
