The medium-term outlook for the Syrian economy is ‘worrisome’, the IMF has warned. The comments are contained in the conclusions to the fund’s latest Article IV consultation with Damascus, published in early October.The report says that ‘medium-term prospects are worrisome given that oil, which presently contributes 20 per cent of gross domestic product (GDP), two thirds of exports and half of government revenues, is likely to be exhausted in the late 2020s and Syria may become a net importer within a few years’. The fund urges the government to speed up the pace and scope of its reforms, warning that ‘if structural reforms and fiscal consolidation are not accelerated, there is a risk that oil reserves will be exhausted before the reforms have had time to generate new sources of growth and income’. Given the uncertainty surrounding oil prices, reserves and extraction rates the fund recommends a strong fiscal consolidation strategy within a transparent medium-term fiscal framework (MTFF) to ensure financial stability. The MTFF should aim to improve the non-oil budget balance and moderate distributive demands fuelled by higher oil prices. The report also calls on the government to simplify the tax system, remove exemptions and calls for the creation of a taxpayer unit to prepare for the launch of the value-added tax (VAT). It urges civil service reform and the privatisation of public enterprises. On monetary policy the fund urges the government to launch a securities market. In the short term, the fund predicts that the ‘mild’ recovery since early 2004 is likely to continue during 2005, although despite high oil prices and further private investment in the tourism sector, the current account is expected to weaken further.