IMF glimpses rays of hope for Syrian economy

• Syria posted small fiscal surplus
• Consumer sentiment improving
• ‘Ambitious but feasible’ budget

Syria posted a small fiscal surplus last year as economic activity gradually began to recover, marking an early step in its long path out of civil war, the International Monetary Fund said.

Improving consumer and investor sentiment, the lifting of sanctions and Syria’s reintegration into the regional and world order all contributed to “accelerating” growth, said Ron van Rooden, the IMF’s chief for Syria, after leading a delegation to Damascus last week.

“Progress toward national reconciliation, the continuing return of refugees, increased electricity provision and rainfall, and several large new investment projects bode well for growth prospects for 2026 and beyond,” Van Rooden said in a statement on Wednesday.

Authorities from the interim government of President Ahmed Al-Sharaa have acted “prudently,” ensuring spending aligned with available resources.  

The budget for 2026 seeks to drastically grow public investment in healthcare, education, wages and infrastructure. The IMF found these plans to be “ambitious but feasible” thanks to “important safeguards” were the outlook to turn out less favourable than expected. 

Van Rooden positively noted Syrian officials are focusing new spending on bolstering the social safety net. He also encouraged them to continue streamlining their management of government finances, including through plans by the Finance Ministry to digitise services. 

“As the authorities pursue multiple large investment projects with the private sector, it is crucial that the Ministry of Finance plays a key role in assessing these projects and in containing contingent liabilities,” he said. 

“Similarly, it remains important to improve the governance and operations of state-owned enterprises to enhance their efficiency and financial viability.” 

Syria’s central bank has proven wise in managing its many constraints, and has helped drive a “remarkable slowdown” in inflation and an improvement in the exchange rate over 2024, Van Rooden said.

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As the country moves forward with introducing a new currency, the focus must turn to shoring up the central bank’s independence and its capacity to support price and financial stability, according to the IMF.

The institution must conduct a “thorough assessment” of the struggling banking system and lay the groundwork for its “rehabilitation” into an “essential” tool for domestic and international intermediation and payments.

In meetings with finance minister Mohammed Yisr Barnieh, central bank governor Abdulkader Husrieh and other senior officials, Van Rooden said the IMF remains committed to provide Syria with extensive technical support in the hope of resuming the fund’s formal Article IV consultations – the regular, usually annual, health checks of a member country’s economy conducted by the institution.