Syria needs to rebuild institutions to attract investment, says IMF

IMF’s Azour urges stronger institutions and reforms before reconstruction begins

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Nivetha Dayanand, Assistant Business Editor
3 MIN READ
File photo shoppers at an outdoor market beside the Umayyad Mosque in Damascus, Syria.
File photo shoppers at an outdoor market beside the Umayyad Mosque in Damascus, Syria.
AFP

Dubai: The International Monetary Fund has said Gulf countries will play a key role in the reconstruction of Syria, but cautioned that the nation must first rebuild its institutions and financial systems to ensure aid and investment can be absorbed effectively.

“Syria is emerging from 15 years of conflict that has led to devastation in infrastructure, as well as in the economy and institutional framework,” said Jihad Azour, Director of the IMF’s Middle East and Central Asia Department. “What Syria needs to do is to rebuild institutions, including the statistical infrastructure, Central Bank, Ministry of Finance and other centres of government.”

He said the IMF had engaged with regional partners to explore coordinated support. “We had a dedicated meeting in Saudi Arabia with GCC countries and regional institutions to see how the regional and international community can mobilise resources to assist Syria,” he said. “Mobilising international support is important, and our coordination with institutions internationally and regionally is constant on that front.”

Azour said the Fund is scaling up its technical assistance to Damascus to help rebuild governance, data collection, and economic management capacity. “The IMF is actively engaged with Syria from the early days,” he said. “We are scaling up our capacity development support to Syria, including by providing them with assistance on some of the issues that you have highlighted.”

The IMF believes these early institutional efforts are essential to lay the groundwork for reconstruction. “Syria needs to prepare the economy to be ready for attracting additional investment and to accelerate recovery and reconstruction,” Azour said. “As you will see in the Outlook, we have a dedicated chapter that focuses on how to make a post-conflict recovery sustainable, and one of them is to build institutions.”

Gulf countries such as the UAE, Saudi Arabia, Qatar and Kuwait are expected to finance much of Syria’s and Lebanon’s eventual recovery, leveraging diplomatic openings and new investment channels. Azour’s comments suggest that the IMF wants such funding to rest on credible institutions and transparent governance before major capital commitments begin.

Lebanon faces a credibility test

Azour said Lebanon’s economic crisis remains one of the deepest in the region and called for decisive reforms to restore confidence. “Recently, the authorities have requested an IMF programme, and the IMF team is in dialogue and negotiation with the authorities, including also by providing additional technical assistance,” he said.

He outlined the Fund’s priorities for Lebanon’s recovery. “Lebanon needs to address long-lasting issues. One of them is to regain access to economic stability, and this requires dealing with the debt overhang by making the debt sustainable and having the right fiscal and monetary policies to achieve that,” he said.

Azour emphasised the need to restore the banking system’s credibility. “Lebanon has to address the issue of the banking system in order for the banking system to come back, finance the economy, and bring confidence back for depositors,” he said. “This requires addressing the issue of financial-sector restructuring by respecting the hierarchy of claim, protecting the savings of small and medium depositors, and reducing the pressure that this could have on public finance.”

He added that the country must also repair essential infrastructure. “This economy needs to grow, and for that, certain infrastructure needs to be upgraded, starting from electricity and telecom,” he said.

For Syria and Lebanon, the IMF notes that recovery starts with credible institutions. “We are scaling up capacity-development support,” Azour said, stressing that the IMF’s role will strengthen local institutions so that regional funding can be effectively and monitored transparently.

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