Banking relations between Turkey and Syria have witnessed a new and important boost, according to recent economic reports, aimed at facilitating the movement of trade and investment between the two countries. This step, viewed with cautious optimism in Syrian economic circles, is considered a development that may carry tangible effects on the life of the Syrian citizen, despite the existing challenges. Let us explore the three most prominent expected effects of these developments on the Syrian economy and on the Syrian Pound in particular.
First: Facilitating financial transfers for citizens
One of the most prominent positive effects expected from this step is the facilitation of financial transfers made by Syrians residing in Turkey to their relatives inside Syria. These improved banking relations are expected to contribute to reducing transfer costs and providing more formal and secure channels for sending money. This means that families in cities such as Damascus, Aleppo, Homs, and even remote areas, may receive their money faster and at lower costs. It is likely that transfer commissions previously imposed through informal channels will decrease by a percentage that may range between 5% to 15%, which increases the actual value of the funds reaching families and enhances their purchasing power amidst inflation.
Directing a larger portion of these remittances through official banking channels, instead of relying entirely on unregulated hawala networks, may contribute to strengthening citizens' trust in the banking system and reduce the risks associated with informal financial transactions. This shift, even if slow at first, could constitute indirect support for the Syrian Pound by increasing the flow of foreign currencies through transparent and reliable channels, which reduces pressure on the exchange rate in the black market.
Secondly: Boosting Trade and Reducing Costs
Undoubtedly, strengthening banking relations between the two countries will make a significant difference in trade traffic. Turkey is considered an important trade partner for Syria and is a source for many essential goods and raw materials. According to reports, difficulties in completing banking payments were hindering Syrian traders in cities like industrial Aleppo and the coastal Latakia and Tartus, forcing them to resort to expensive and unsafe options. Now, with the improvement of banking channels, traders are expected to be able to complete their deals with greater ease and lower costs.
This facilitation is likely to translate into a decrease in the prices of some goods imported from Turkey, whether foodstuffs or industrial goods, which alleviates the burden on the Syrian consumer. It will also encourage Syrian exporters to increase the volume of their exports, especially agricultural products and light industries, due to the ease of receiving payments. This development is expected to contribute to an increase in the volume of trade between the two countries by a percentage that may reach 10-20% during the coming period, which will positively reflect on customs revenues and stimulate the Syrian economy in general.
Thirdly: Investment Prospects and Support for the Syrian Pound
In the longer term, these developments may open new horizons for investment, even if initially limited. Facilitating the movement of funds between banks can encourage the establishment of small and medium-sized joint ventures, or enable Syrian investors to access wider markets for raw materials and technologies. This support for the private sector, even if gradual, can contribute to creating new job opportunities and improving local production.
As for the Syrian Pound, the increase in official financial flows, whether from remittances or trade revenues, is considered a positive factor. The more foreign currency that enters Syria through official channels, the less pressure there will be on the Syrian Pound in the unofficial market, which may contribute to achieving relative stability in the exchange rate. This step, while not a magic solution to all problems of the Syrian economy, nonetheless provides a positive impetus towards enhancing transparency and efficiency in financial transactions, and strengthens the resilience of the Syrian citizen amidst difficult economic conditions.
