Controversy Over Devaluation Plan

A government proposal to revalue the Syrian lira has sparked criticism from economists, who question whether such a move would really help the country’s ailing economy, the pro-government website Syria News reports.



Earlier this month, Minister of Industry Fuad al-Juni called for a study to be done on the possibility of devaluing the currency with the aim of boosting domestic production and increasing export levels.



Exports have been falling as import costs rise steadily. Al-Juni attributed the recent decline in Syrian exports to rising energy costs which fed into higher production costs; and to the lira’s appreciation against both the US dollar and the euro, as those currencies weaken. [Both factors would leave exports priced at increasingly uncompetitive levels.]



Economist Nehad Haidar, however, warned that another effect of devaluation would be to massively increase the price of imports in Syria. This would affect local industries that depend on imported materials, and would cause inflation as retail prices for their output as well as straight imports were forced up.