Syria's New Central Bank Chief Pledges Independence Post-Assad

Syria's new central bank governor, Maysaa Sabreen, has vowed to increase the institution's independence in monetary policy decisions, Reuters reports. This marks a significant shift from the heavy government control exercised under the Assad regime.

Sabreen, previously the central bank's deputy governor, assumed her new role late last year. Her promotion is notable given that she is a former top state employee who has been elevated following the recent power shift in Syria.

"The bank is working on preparing draft amendments to the bank's law to enhance its independence, including allowing it more freedom to make decisions regarding monetary policy," Sabreen told Reuters in her first media interview since taking office.

Economists widely view central bank independence as crucial for achieving long-term macroeconomic and financial sector stability. While the Central Bank of Syria has always been theoretically independent, the Assad government effectively dictated its policy decisions.

Sabreen also outlined plans to expand Islamic banking in Syria, aiming to attract Syrians who have avoided using traditional banking services.

"This may include giving banks that provide traditional services the option to open Islamic banking branches," Sabreen stated.

Islamic banking, compliant with Sharia law, is already well-established in Syria. However, limited access to domestic and international financing under Assad's rule led the government to utilize the central bank to finance its deficit, contributing to high inflation.

Sabreen emphasized the central bank's desire to avoid printing more Syrian pounds, as this would exacerbate inflationary pressures.

Regarding Syria's foreign exchange and gold reserves, Sabreen declined to provide specific figures, stating that a balance sheet review is ongoing. However, sources familiar with the situation revealed in December that the central bank held approximately 26 tons of gold (worth around $2.2 billion), some $200 million in foreign currency, and a substantial amount of Syrian pounds.

The Central Bank of Syria and several former governors remain subject to US sanctions imposed following the government's violent suppression of protests in 2011.

Sabreen asserted that the central bank possesses sufficient funds to cover civil servant salaries, even after a promised 400% wage increase.

Analysts consider stabilizing the currency and tackling inflation to be Sabreen's top priorities, along with restoring the financial sector. The Syrian currency has plummeted from around 50 pounds per US dollar in late 2011 to over 13,000 pounds per dollar today. The World Bank estimated that annual inflation surged nearly 100% year-on-year in 2023.

The central bank is also exploring ways to restructure state-owned banks and implement regulations for money exchange and transfer services, which have become a primary source of hard currency.

Sabreen expressed hope that sanctions would be fully lifted, enabling banks to reconnect with the global financial system.