Budget of 2018 … Analytical look

Budget of 2018 … Analytical look

Budget of 2018 … Analytical look
Syrian Economic Forum - 2017-10-04

Minister of Finance in the government of Assad "Mamoun Hamdan" in a statement reported by "Watan" newspaper  which close to the government of Assad, that the value of the total budget for the year 2018 increase by about 3000 billion Syrian pounds, equivalent to 6 million dollars on the basis of exchange rate of 500 Syrian pounds for every dollar.

The Minister of Finance said that there is an addition in about 400 billion pounds for the social support than in the budget of 2017, and thus the total value of social support is about 750 billion Syrian pounds, according to the same source.

The 2017's budget is considered the largest in Syria at all, but these large figures have another face, revealing the amount of large losses suffered in the Syrian economy in all sectors.

The increase in the Syrian public budget does not reflect the development of the Syrian economy. On the contrary, it reflects the amount of inflated expenditure resulting from higher prices and the devaluation of the Syrian pound against the US dollar, As a result of the damage of many production units and the ending of their work, so the inflation rate in the country reached more than 500%, while the average salaries and wages did not rise only by not more than 130%, as the country's reserves of foreign currency went down, and the officials of the Central Bank of Syria still hiding the truth of this fact in the name of (the protection of the national economy)  And the debt to the Syrian government has increased significantly after it was zero before the beginning of the protests in Syria in 2011, as a result of the reliance on credit lines from friendly countries such as Iran and Russia to finance the war, there is also the flight of domestic capital abroad and the lack of foreign investment as a result of deteriorating security conditions and uncertainty about the future of the Syrian economy. All these factors directly led to a decline in state imports and a rise in the size of general debt.

During the years of the war in Syria, the Assad government pursued the principle of deficit financing, which means it financed its expenditures by placing more of the Syrian pound on the market, which directly reflected the real value of the Syrian pound against other currencies. This is what it is doing in its budget for 2018.

What also raises the question is: how to allocate the social support in the budget or who benefits from it, whether it is fair distribution or not, all developing countries abandoned the idea of supporting a particular product to benefit all the rich and poor sectors of society, and turned to a more modern idea: the support cards, Which are given to its beneficiaries. The Government has so far held dialogue and meetings to discuss the issue of this card.

The dangerous thing is: that the high level of social support, most of which is financed by new cash issues and distributed in an unfair and economically inefficient way, has many negative effects on Syrian economic and social life. The current method of distribution is widening the gap between rich and poor classes. The rich classes benefit exactly as much the poor classes do, in addition to local inflationary effects, as well as the impact of the exchange rate of the Syrian pound on successive cash issues.

It seems that the Syrian government is still pursuing its previous approach of increasing social support and increasing expenditure due to expenses, and is not taking practical steps to change the mentality and the way it has proved to fail over the past seven years.