Enab Baladi – Jana al-Issa
For several months, Syrian government officials directly involved with the country’s economy have repeatedly stated their commitment to a policy of rejecting foreign borrowing, categorically refusing this option.
Despite Syria’s immense needs—estimated at over $400 billion to support comprehensive reconstruction—the government appears to have no clear plan beyond foreign loans to meet these needs.
An Official Orientation
In early July, the Governor of the Central Bank of Syria, Abdul Qader Hasriyeh, stated that, by order of President Ahmad al-Sharaa, Syria will not resort to foreign debt, nor will it borrow from the International Monetary Fund, the World Bank, or similar international institutions.
Regarding the financing of the budget deficit, Hasriyeh pointed to reliance on domestic sukuk issuances as a primary funding tool, alongside the continuation of cash flows through internal and external borrowing over a period estimated at 15 to 20 years, according to his statement.
The same position was affirmed by Minister of Finance Mohammed Yosr Bernieh on several occasions. In an exclusive interview with Enab Baladi in mid-June, he stated that the Syrian state is not considering borrowing from any international financial institution at the current time.
Bernieh left the door open on this issue, adding in his statements, “If we ever decide to borrow, we will be transparent with our people and clearly explain the reasons.”
Understandable Justifications
According to Dr. Muhammad Gharib, Head of the Marketing Department at the Faculty of Economics, University of Aleppo, there are valid reasons for the Syrian government’s stance on not borrowing and relying instead on domestic resources.
Gharib told Enab Baladi that this approach helps achieve financial independence and avoids the high and often conditional costs of foreign debt. The government is counting on foreign investment in Syria to rebuild infrastructure and stimulate reconstruction. It also anticipates improvements in production and increased exports, especially after the lifting of sanctions on Syria.
It further expects revenue from Syria’s natural resources—especially oil and crops such as wheat. However, this depends on the Syrian state establishing full control over the Jazira region, as benefiting from these resources requires full territorial control and enhanced security and stability.
Long-Term Commitments
The decision not to resort to foreign borrowing at this stage marks a critical economic turning point, reflecting a different approach from most post-war or crisis-stricken countries.
Economic researcher Muhammad al-Salloum believes this decision, although bold, embodies a kind of “sovereign wisdom and political caution.”
According to al-Salloum in a conversation with Enab Baladi, the Syrian government, led by President Ahmad al-Sharaa, is a transitional government and thus faces sensitive political and historical responsibilities.
He added that any decision to open the borrowing file may create long-term obligations that would later fall on the shoulders of elected or permanent governments. It could also restrict future fiscal policy, which is why the government adopts a more cautious and flexible approach, in his view.
Economically, this approach may be understood within the framework of achieving financial independence by mobilizing national resources, boosting production and exports, and attracting investments—particularly from the Gulf. Early signs of this path are visible in the shifting relationship between Syria and Saudi Arabia, indicating promising alternatives to international loans, which are usually conditional and limit a country’s policy flexibility, al-Salloum added.
“Well-Considered” Borrowing as an Option
The non-borrowing strategy may have negative repercussions amid Syria’s difficult economic reality and the massive costs of reconstruction—estimated at $400 billion according to UN reports.
Based on this, Dr. Muhammad Gharib believes that partial borrowing can be used to cover reconstruction costs and promote economic development through major strategic projects that require large funding. In such a case, well-considered borrowing is a viable financial tool that could accelerate reconstruction and stimulate the economic cycle.
However, he emphasized that borrowing should not be heavily relied upon due to its significant negative economic impact. Most importantly, debt should be managed properly and directed toward strategic investment projects that generate revenue or infrastructure projects that contribute to economic development. In that case, debt serves as financial leverage for the Syrian economy. Conversely, directing it toward unnecessary projects would burden the economy and fail to deliver the intended benefits, according to Dr. Gharib.
Multiple Alternatives
Several alternatives to borrowing are available, such as relying on foreign investments to fund development projects. Privatizing public sector institutions could also help reduce government spending and improve operational efficiency, especially in industrial sectors where the private sector is generally more experienced than the public sector, Dr. Gharib noted.
Public-private partnerships can also be pursued, offering favorable terms to encourage participation in joint ventures in Syria.
Gharib added that local investment funds could be created, funded by citizen savings, to finance large-scale projects. The government could also rely on domestic borrowing rather than foreign loans by issuing long-term government bonds with attractive interest rates for citizens. These bonds could provide substantial funding for infrastructure projects and support local industry and production.
A Temporary Decision
According to economic researcher Muhammad al-Salloum, complete reliance on national resources in the short term is unrealistic due to fragmented control over resource-rich regions, weak institutions, and deteriorating infrastructure.
Therefore, focusing on investments instead of debt appears to be a transitional, temporary decision that the government might reverse later—possibly after three or more years—if conditions stabilize and the new national economic model takes shape.
Al-Salloum believes that the key issue is not whether to borrow, but the existence of a clear economic vision that rebuilds trust, establishes a sound legal and administrative investment environment, and ensures social justice and purchasing power. Without this, even loans would become a burden rather than an opportunity for growth, in his view.
Decades Ago… Syria Was Heavily Indebted
An analytical study covering the period between 2011 and 2020—published by Hama University Journal in 2022 under the title “The Economic Burden of Foreign Debt in Syria”—explained that Syria, like most developing countries, heavily relied on foreign loans in the 1980s and early 1990s. External debt rose sharply during that period before starting to decline in the early 2000s.
During that time, Syria’s external debt sources and uses were diverse, and the country repeatedly failed to make timely debt service payments, suffering from chronic arrears issues.
The high level of indebtedness led to Syria being classified as a heavily indebted country from the mid-1980s until 2004, according to a 2005 World Bank report. Afterward, Syria succeeded in concluding comprehensive debt settlements on favorable terms—especially with debts owed to the former Soviet Union—subsequently being reclassified as a low-indebtedness country.
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