Syria's banking sector still firm

DAMASCUS - Many countries have showered Syria with non-stop economic sanctions to throttle the Syrian government and speed up its collapse. The banking sector was still the hardest hit by those sanctions despite official assurances that it 's still holding.

The banking sector, according to most economist analysts, still endures heavy pressures after 16 months of unrest and excruciating international pressure.

Abed Fadhliyah, the general manager of the Syrian Real Estate Bank, told local media that the crisis has left very "passive impacts" on the Syrian economy in general, and the banking sector in particular.

Yet, he said, the financial sector is still coherent despite challenges.

"The financial sector is stable and stands at a favorable level, " he said, noting that a relative improvement has lately emerged regarding the size of liquidity and the stability of exchange rate.

"This proves that the Syrian economy is a real and solid one and not an economy of financial bubbles or fragile services," he said.

Fadhliyah confessed that the sanctions have caused some disruptions to the banking sector that were clearly seen in the funds withdrawal from banks and the shrink in loans and banking lending.

He indicated that Syrian private banks, which were boomed in Syria over the past decade, were badly influenced by the sanctions more than the public ones.

The United States has frozen Syrian assets and banned US businesses from dealings with Syria, adding to broader US measures against Syria which had been in place since 2004.

Arab League member countries also leveled their own sanctions on Syria that were considered the toughest ever against a member state.

The sanctions provide for halting dealings with the Commercial Bank of Syria and the Central Bank. They also suspended all trade agreements and bank transactions.

The most recent US measure was to sanction the International Islamic Bank, Syria's largest private bank, allegedly for helping the government to skirt sanctions imposed on its public banks.

The Treasury Department said the Syria International Islamic Bank has been acting as a front for other Syrian financial institutions seeking to circumvent sanctions. The new penalties will prohibit the SIIB from engaging in financial transactions in the United States and will freeze any assets under US jurisdiction.

Economists believe that the stability of the exchange rate for more than three months is a "healthy signal" in comparison with the magnitude of the crisis and the challenges the Syrian economy is going through.

The Syrian pound was trading officially at $45-48 before the eruption of the crisis in Syria. It's now trading at 68 following the positive intervention of the Central Bank of Syria that has succeeded in lowering the exchange rate from nearly 100 Syrian pounds per dollar.

Economists believe that the current exchange rate is rational given the market speculations and the psychological element that cause panic to people at hard times.

Economic and financial penalties have sent the economy into a free fall, and caused inflation that has grown by nearly 30 percent.

Economists said that the gloomy political landscape in Syria casts dim shadows on its economy and said that it's uneasy to tell to what extent the financial sector would be able to stand in the face of the storm.