Exclusive – Syria’s new central bank chief vows to boost bank independence after Assad Reuters
Timour Azhari
DAMASCUS (Reuters) – The new governor of Syria’s central bank, Maysaa Sabreen, said she wants to strengthen the institution’s independence over monetary policy decisions, which would be a major change from the heavy controls exercised under the Assad regime.
Sabreen, previously the number two at the Central Bank of Syria, took over as interim governor from former governor Mohammed Issam Hazime late last year.
She is a rare example of a former senior civil servant who was promoted after a lightning offensive by Syria’s new Islamic rulers led to the fall of President Bashar al-Assad on December 8.
“The bank is working on drafting amendments to the bank law to increase its independence, including allowing greater freedom to make decisions on monetary policy,” she told Reuters in her first media interview since taking office.
The changes would need approval from Syria’s new governing body, although the process is unclear at this stage. Sabreen gave no indication of the time.
Economists believe that the independence of the central bank is essential for achieving long-term macroeconomic stability and the stability of the financial sector.
While the Central Bank of Syria has always been, on paper, an independent institution, under the Assad regime the bank’s political decisions were de facto determined by the government.
The Syrian central bank, Sabreen added, is also looking at ways to further expand Islamic banking to include Syrians who have avoided using traditional banking services.
“This may include giving banks that provide traditional services the opportunity to open Islamic banking branches,” Sabreen, who has worked at the bank for 20 years, told Reuters from her office in the bustling center of Damascus.
Islamic banking is in accordance with Sharia, or Islamic law, and prohibits the charging of interest, as well as investing in prohibited businesses such as the trade in alcohol, pork, weapons, pornography or gambling. Islamic banking is already well established in the majority Muslim nation. Limited access to international and domestic financing meant that the Assad government used the central bank to finance its deficit, fueling inflation.
Sabreen said she wants all that to change.
“The bank wants to avoid printing Syrian pounds because that would have an impact on inflation rates,” she said.
When asked about the size of Syria’s current foreign exchange and gold reserves, Sabreen declined to provide details, saying a balance sheet review was still underway.
Four people familiar with the situation told Reuters in December that the central bank had nearly 26 tons of gold worth about $2.2 billion, about $200 million in foreign currency and a large amount of Syrian pounds in its vaults.
Syria’s central bank and several former governors are under US sanctions imposed after the violent crackdown on former Assad’s protests in 2011 that turned into a 13-year civil war.
Sabreen said the central bank has enough money in its coffers to pay the salaries of civil servants even after the 400 percent increase promised by the new administration. She did not provide details.
Reuters reported that Qatar will help finance public sector wage increases, a process made possible by a January 6 US sanctions waiver that allows transactions with Syrian state institutions.
THE CHALLENGE OF INFLATION
Analysts say that stabilizing the currency and curbing inflation will be Sabreen’s key tasks – as well as getting the financial sector back on a healthy footing.
The value of the Syrian currency has fallen from around £50 to the US dollar in late 2011 to just over £13,000 to the dollar on Monday, according to LSEG and central bank data.
In a spring 2024 report, the World Bank estimated that annual inflation had jumped nearly 100% year-on-year last year.
The central bank is also seeking to restructure state-owned banks and introduce regulations for currency exchanges and money transfer shops that have become a key source of hard currency, said Sabreen, who recently oversaw the banking sector.
Assad’s government severely restricted the use of foreign currency, and many Syrians were afraid to even say the word “dollar.”
The new administration of de facto leader Ahmed al-Sharaa lifted such restrictions and now locals wave wads of banknotes in the streets and throw cash from the backs of cars, including one parked outside the entrance to the central bank.
To help stabilize the country and improve basic services, the US last week allowed sanctions relief for humanitarian aid, the energy sector and sending remittances to Syria, although it reiterated that the central bank remains subject to sanctions.
Sabreen said allowing Syrians to make personal transfers abroad is a positive step, and she hopes the sanctions will be fully lifted so banks can reconnect with the global financial system.
