Dardari outlines reforms for 2006

09 December 2005
Damascus is set for wide-ranging reforms aimed at boosting the local economy, deputy prime minister for economic affairs Abdullah Dardari said in London on 30 November. The minister acknowledged that the initiative was largely driven by the fact that the country was expected to become a net importer of oil by 2010. 'We have a five-10-year window of opportunity, which is manageable if we do not hesitate over reforms - we are talking about a drastic change in mindset to make this programme successful.'

Dardari said that initiatives aimed at improving the investment climate would play a key role in the reform programme.

'We are planning to introduce a new investment law and a new agency for investment promotion,' said Dardari. 'We are aiming for $6,000 million worth of investment a year across all sectors, including transport projects, education, healthcare and tourism - we plan to attract 15 million tourists by 2015.'

Banking sector reform is also being studied, Dardari said. Currently, private banks are restricted to 49 per cent foreign ownership, while 51 per cent of shares need to be held by local investors. 'The 49:51 per cent ceiling will be eliminated,' said Dardari. 'We plan for 100 per cent foreign ownership soon.'

According to Dardari, Damascus is also working on monetary initiatives. 'We aim to normalise monetary policy by floating the currency in June 2006 and to introduce VAT [value-added tax] by 2008 with IMF assistance.' A new income tax law and the establishment of a capital markets authority are also planned, he said.

Dardari underlined the importance of the Central Bank of Syria's role in stabilising the economy. 'Interest rates and exchange rates must be influenced by the central bank according to international best practices,' he said. 'We must ensure the independence of the central bank.'

On the fiscal side, the deputy prime minister addressed the need to tackle fuel subsidies and rising public expenditure. 'There is no way this can continue. We aim to corporatise the public sector and are undergoing a public expenditure review with the World Bank to ensure that there will no longer be free money from the government.'

Referring to the EU association agreement, finalised in 2004, Dardari said it was 'very important to have this agreement signed [and ratified] to act as leverage for reform and reformers in the country'.

Commenting on US-Syrian relations, he said: 'It's amazing that at a time of launching liberal policies we are facing such political pressure - we have nothing to hide or be ashamed of.'


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