Currency and Banking
While the import of foreign currency by non-residents into Syria is not restricted, the exportation of Syrian currency abroad is, in most circumstances, prohibited. On leaving Syria, non-residents are only permitted to take out of Syria the amount of foreign currency that they declared as carrying upon entering Syria.
Non-residents employed in Syria are allowed to remit abroad in foreign currency 50 percent of their salary (including benefits) and 100 percent of their severance pay after paying Syrian income tax.
Non-resident companies registered and operating in Syria may open bank accounts in both foreign and Syrian currency. The source of such bank accounts must be currency transferred from abroad or Syrian earned currency, respectively. Only 50 percent of the net profits of foreign investment may be remitted abroad. Foreign funds of a capital nature require the approval of the Central Bank in order to be sent abroad. Furthermore, real property may not be owned by non-residents without prior approval from government authorities.
The Syrians banking system is controlled entirely by the government, and no private or foreign bank may operate in Syria. There are five banks: the Commercial Bank of Syria, the Agricultural Cooperative Bank, the Industrial Bank, the Real Estate Bank, and the People’s Credit Bank. Banking operations and the money supply is regulated by the Central Bank.
The Central Bank of Syria, Commercial Bank of Syria, Industrial Bank, Agricultural Cooperative Bank, Loan and Savings Bank, Real Estate Bank, the General Syrian Insurance Agency and the General Postal Savings Establishment, however, provide the usual services provided by banks elsewhere with the notable exception that the specialized sector banks listed are designed to provide services specifically for businesses dealing in a particular sector.
The services offered to non-resident companies by Syrian banks are generally limited to providing bank accounts in foreign and Syrian currency and bank guarantees; non-resident companies that obtain a bank guarantee based on their existing funds on account may, however, receive loans from Syrian banks in Syrian currency.
Interest rates in Syria are low (between 2 and 10 percent); in real terms, given the average yearly inflation rate, they are negative. The private sector can borrow at rates of 7 to 10 percent, but the government’s priority is to lend to the public and mixed sector at favorable rates. Credit, therefore, is limited.
As the Syrian economy becomes more privatized and continues to grow, the high costs for finance available through the banks in Syria may become a burden on development. Nevertheless, presently there are no measures that will allow private banks.
Syria also does not have an organized capital, foreign exchange and financial market. The government is currently studying a number of proposals for the formation of a stock exchange for the benefit of firms operating under the new Investment Law but no decision has been taken.
Other projected reforms include scrapping Law No. 24, which prohibits Syrians from holding foreign currency but which is also contradicted by Law No. 10 which permits investors to deal in foreign currency