LATEST ECONOMIC BRIEFINGS
EMIRATES: DUBAI | 30.07.2010
Dubai’s capital markets appear to be in for significant change with plans unveiled to establish a second-tier stock exchange coming hot on the heels of Dubai Financial Market (DFM) – the government-administered domestic bourse – and the DIFC-based NASDAQ Dubai’s move to formally link their trading platforms. All of this is happening as speculation of a merger between the bourses of Dubai and Abu Dhabi mounts.
ALGERIE | 30.07.2010
Les efforts importants déployés par l’Algérie pour augmenter la production céréalière commencent à porter leurs fruits, dans la mesure où les récoltes record de l’année dernière et les rendements importants de 2010 aideront à réduire les coûts d’importation et à créer des emplois sûrs dans les zones rurales. Cependant, l’objectif de l’autonomie alimentaire fixé par le pays reste encore bien éloigné.
SENEGAL | 30.07.2010
Le Sénégal est en train de devenir un leader en matière de développement de l’énergie solaire comme énergie de l’avenir, et ce, à la fois à l’échelle nationale et continentale. Pour y parvenir, le pays veut augmenter l’utilisation des énergies renouvelables afin de surmonter ses propres manques et promouvoir un grand programme international ayant pour but de mettre fin à la dépendance de l’Afrique de l’Ouest à l’égard des combustibles fossiles.
BULGARIA | 30.07.2010
Though Bulgaria’s economy is likely to remain in the slow lane for the rest of this year, the country’s banking sector continues to show resilience in the face of global economic contraction. There are concerns, however, that increasing levels of bad loans carried by some lenders could add to pressures on the sector.
OMAN | 28.07.2010
A raft of new agreements recently signed by the Ministry of Transport and Communications will see a significant round of investment in Oman’s transport infrastructure. The 15 agreements, signed earlier in July, cover projects in land, sea and air infrastructure and are worth a total of OR136.9m ($355.9m).
COUNTRY COVERAGE
A Year in Review 2009
Syria, Volume 180
28.01.2010
28.01.2010
As Syria prepares to take stock of the first decade under President Bashar Al Assad's rule, observers of the Arab state will record a period of significant reform, the implications of which are steadily transforming both the country itself, and its standing in the wider region. With a new five-year plan under development however, 2010 will not be merely a year for reflection, but an important milestone in setting the tone of reform for the decade to come.
Of the various reforms undertaken over the past decade, perhaps the most significant have been those relating to the financial services sector. Prior to 2004, banking in Syria was a static state monopoly serviced by six public banks, with the largest being the Commercial Bank of Syria (CBoS). Following liberalisation however, 10 private commercial banks now operate in the country, while restrictions on convertibility have also been eased to allow Syrians to transfer up to $10,000 in foreign currency each month.
Private insurance companies and other financial services followed banks in 2005 and 2007, respectively. The liberalisation of capital that this process kick-started will transform Syria from "a socialist to a social market economy". The capacity of private banks to finance capital projects is growing steadily, as demonstrated by Bank Audi Syria's provision of a $380m bridging loan to Lafarge recently for the construction of a new cement works.
Numerous challenges do remain in the financial sector. The opening of the Damascus Securities Exchange in 2009 was a significant step in widening access to capital for the private sector, although listings have been limited. Likewise, in the continued absence of treasury bills, or certificates of deposit, private banks continue to have limited tools with which to price debt. A further decree issued in the second week of January 2010, requiring an increase in minimum capital from $30m to $200m, is also likely to prove controversial, though it was sweetened by a concession allowing private banks to increase their ownership from 49% to 60%, which may well result in more big hitters entering the Syrian banking sector in 2010.
As oil revenues continue to decline, the government will be hoping that investment – both in the form of capital from the nation's new private banks, as well as foreign direct investment – will be able to ensure the 7% annual growth estimated to be required to provide enough jobs for Syria's ever-expanding labour market. After early predictions from the government of 6% growth for 2009 (5.2% from the IMF), a downward revision was required midway through the year to account for the impact of continued drought in the agricultural sector and a severe recession in the textiles industry. The IMF revised growth expectations to 3% for 2009, although it expects 2010 to be more positive, with growth projected at 4.2%, while the government has announced growth of 4.5% for 2009.
One tenet of the government's reform strategy has been improving business infrastructure – a crucial step, given that a major element in holding back more rapid growth is poor standards in accountancy among small and medium-sized private enterprises, which employ up to 70% of Syria's workforce. Low standards prompted the government to delay indefinitely the introduction of value-added tax in 2009, thus hampering the transition of the state from oil revenues to tax-based revenues. Moreover, poor accountancy is affecting access to capital for these same companies from the nascent private banking sector. The expansion of Syria's NGO sector (a feature of the 10th Five-Year Plan currently being concluded) means that there are now organisations such as the Syrian Enterprise and Business Centre, or indeed the First Microfinance Institution, which can provide advice and/or credit to private businesses, big and small. However, strengthening private enterprise will continue to remain an economic priority.
In all likelihood, the coming period will see further liberalisation of the economy, though not necessarily towards the US and EU. Instead, the beneficiary is likely to be Turkey, which recently concluded a visa exemption agreement with Syria, and has overseen the creation of a visa-free zone now including Syria, Lebanon and Jordan.
Of the various reforms undertaken over the past decade, perhaps the most significant have been those relating to the financial services sector. Prior to 2004, banking in Syria was a static state monopoly serviced by six public banks, with the largest being the Commercial Bank of Syria (CBoS). Following liberalisation however, 10 private commercial banks now operate in the country, while restrictions on convertibility have also been eased to allow Syrians to transfer up to $10,000 in foreign currency each month.
Private insurance companies and other financial services followed banks in 2005 and 2007, respectively. The liberalisation of capital that this process kick-started will transform Syria from "a socialist to a social market economy". The capacity of private banks to finance capital projects is growing steadily, as demonstrated by Bank Audi Syria's provision of a $380m bridging loan to Lafarge recently for the construction of a new cement works.
Numerous challenges do remain in the financial sector. The opening of the Damascus Securities Exchange in 2009 was a significant step in widening access to capital for the private sector, although listings have been limited. Likewise, in the continued absence of treasury bills, or certificates of deposit, private banks continue to have limited tools with which to price debt. A further decree issued in the second week of January 2010, requiring an increase in minimum capital from $30m to $200m, is also likely to prove controversial, though it was sweetened by a concession allowing private banks to increase their ownership from 49% to 60%, which may well result in more big hitters entering the Syrian banking sector in 2010.
As oil revenues continue to decline, the government will be hoping that investment – both in the form of capital from the nation's new private banks, as well as foreign direct investment – will be able to ensure the 7% annual growth estimated to be required to provide enough jobs for Syria's ever-expanding labour market. After early predictions from the government of 6% growth for 2009 (5.2% from the IMF), a downward revision was required midway through the year to account for the impact of continued drought in the agricultural sector and a severe recession in the textiles industry. The IMF revised growth expectations to 3% for 2009, although it expects 2010 to be more positive, with growth projected at 4.2%, while the government has announced growth of 4.5% for 2009.
One tenet of the government's reform strategy has been improving business infrastructure – a crucial step, given that a major element in holding back more rapid growth is poor standards in accountancy among small and medium-sized private enterprises, which employ up to 70% of Syria's workforce. Low standards prompted the government to delay indefinitely the introduction of value-added tax in 2009, thus hampering the transition of the state from oil revenues to tax-based revenues. Moreover, poor accountancy is affecting access to capital for these same companies from the nascent private banking sector. The expansion of Syria's NGO sector (a feature of the 10th Five-Year Plan currently being concluded) means that there are now organisations such as the Syrian Enterprise and Business Centre, or indeed the First Microfinance Institution, which can provide advice and/or credit to private businesses, big and small. However, strengthening private enterprise will continue to remain an economic priority.
In all likelihood, the coming period will see further liberalisation of the economy, though not necessarily towards the US and EU. Instead, the beneficiary is likely to be Turkey, which recently concluded a visa exemption agreement with Syria, and has overseen the creation of a visa-free zone now including Syria, Lebanon and Jordan.
