Syria is in a period of transition as the new president, Bashar al-Assad, seeks to cement his position. While the succession was carried out with remarkable aplomb, doubts still remain about his medium- to long-term prospects. Limited economic reform has been undertaken, and while the prognosis is for such reform to continue, there will remain little prospect of fundamental change over the forecast period, particularly as policy initiatives will be subject to revision at the behest of the old guard as they seek to preserve their interests. On the positive side, continued strong oil-price assumptions will help large export revenue to generate trade and current-account surpluses over the forecast period.

Key changes from last month

Political outlook

There remains little expectation for the resumption of peace talks with Israel until domestic concerns are addressed, and even then Syria is unlikely to compromise on its demand for the return of all occupied land. In any case the upsurge in violence in the Occupied Territories will have lessened further any such prospects.

* The pressing challenge of managing a new political dynamic in Lebanon will continue to test Bashar's abilities.

Economic policy outlook

Political uncertainty still remains the leading factor determining the business climate.

* New expansionary fiscal measures have been announced, including a 25% increase in all public-sector salaries and a package to tackle unemployment.

Economic forecast

Inflation will increase slightly over the forecast period, fanned by an increase in government spending.

* Strong oil-price assumptions will see export revenue generate substantial trade and current-account surpluses in both 2000 and 2001.

                                         Economic    Economic
Risk      Overall   Overall  Political    policy    structure   Liquidity
ratings    rating    score      risk       risk        risk       risk
November     D         65        D           C          D           D
August       D         68        D           D          D           D

Economic forecast summary
                                   2000     2001    2002
Real GDP (% change)                 1.5      2.4     2.6
Consumer prices (% change; av)      0.5      1.7     2.1
Exchange rate SŁ:US$ (av)          11.2     11.2    11.2
Current account (US$ m)
Goods: exports fob                4,675    4,350   3,748
Goods: imports fob               -3,586   -3,766  -3,950
Trade balance                     1,089      585    -202
Current-account balance           1,278      818       2
  % of GDP                          7.8      4.9     0.0
External financing (US$ m)
Financing balance                   327      -97    -907
Total debt                       22,897   23,147  23,420
Total debt service                  685      680     617
Debt-service ratio, paid (%)       10.3     10.7    10.7
Debt-service ratio, due (%)        22.4     23.6    24.6

The new president has brought to office a group of like-minded young technocrats, seeking to develop his vision for the country, and modernise Syria. Yet despite his abilities and ambitions, Bashar is clearly not fully in control of Syria. He is surrounded by an array of political "strongmen", who he must co-opt to carry out even minor policy changes. These are men at the head of the military, security services and the Arab Socialist Baath party who were loyal advisors to his father, and individually control the levers of power. The policies of Bashar and his technocrat elite are filtered through these "strongmen", who in recent months have repeatedly toned down policy and limited implementation. In addition, at a lower level, Syria's creaking bureaucracy is unwilling to accept radical change.

The EIU expects Bashar to offer up a range of more liberal political and economic policies during the forecast period. These are likely to encourage modest political pluralism, a freer press, more private ownership, the development of capital markets and a more balanced relationship with Lebanon. However, at every step of the way, Bashar will find the political old guard impeding progress. He may continue to work within this framework over the forecast period, balancing his reform initiatives with the interests of the old guard to secure their support. Controlling politics in Syria is a complex business, weaving together the clan and sect loyalties of senior officials, and offering patronage in return for political loyalty. Bashar's emphasis on liberalisation and deregulation is clearly at odds with the existing system. Any attempt to dismantle it will provoke fierce resistance and therefore there is the possibility of conflict arising. Contingent on the strength of his domestic position, Bashar may take a gamble and seek to purge some of these figures. There is also the constant threat that some of these "strongmen" may decide to seize power for themselves, if for example they perceive a threat to their economic interests or their own powerbase brought about by reform. Ultimately, Bashar's best hope of surviving may be as a compromise figure. The Alawite military commanders are a fractious group and each may ultimately prefer Bashar as president to a rival's succession. Nevertheless, the ever-present fear of confrontation, and its implications, will lead to continued political uncertainty.

Syria's other main foreign-policy concern, Lebanon, is almost seen as a domestic policy issue. Syria has politically dominated Lebanon for a decade, taking all foreign and defence policy decisions for the country, and approving all senior politicians. Under Hafez al-Assad, no opposition was allowed to Syria's dominant position in Lebanon. The arrival of Bashar has seen this policy ease slightly. Many within Lebanon resent Syria's presence and are calling for a withdrawal of its troops. These calls became more vocal, notably from Christian groups following the Israeli pull-out from south Lebanon in May. The parliamentary election held in Lebanon from late August to early September appears to have been surprisingly fair and a reflection of the will of the people-deeply disillusioned with a government that had failed to address Lebanon's mounting economic problems. The results which came as a complete surprise to most Lebanese have opened the way for the return of the former prime minister, Rafiq al-Hariri, who together with a loose coalition of candidates inflicted a heavy defeat on the government. These events were seen as a reflection of Bashar's influence who is clearly seeking to redraw his country's relationship with Lebanon. While the stance taken by Bashar towards Lebanon is yet to be firmly established, it appears that he wishes to play a less intrusive role than his father. It can thus be expected that over the forecast period Syria will ease its control over Lebanon and seek to steer the relationship towards a more state-to-state level. However, as with other issues, Bashar must maintain his credibility amongst the Damascus elite, and therefore cannot be seen to be acting weakly with regard to Lebanon. If there is any direct threat to Syria's position, for example, from the Lebanese Christian community, he will have to counter it using the same brutal methods frequently employed by his father. Failure to do so may risk his position at home.

Bashar's anti-corruption drive will continue, although it can only be taken so far before it begins to impinge on the networks of nepotism and kickbacks at the heart of the Baathist system. For Bashar to challenge this system successfully, he would have to undertake a fundamental reworking of the political economy. He is unlikely to be in a position to effect such a change during the forecast period. However, the anti- corruption drive will remain as a useful mechanism to be used on a selective basis, although it is not clear how much of a positive effect it will have on the investment climate, given that it is perceived largely as a witchhunt hostile to those who do not support Bashar.

Our outlook for oil-Syria's most important export commodity and by far the most important factor for its economy-remains good. Prices have remained high despite repeated attempts by OPEC to stabilise them by increasing output in 2000. Since our previous report, OPEC has agreed to raise output on two separate occasions-by 800,000 barrels/day in September and by a further 500,000 b/d in October. In early September benchmark Brent Blend was trading above US$35/barrel, but has since fallen, and as of November 6th was trading at US$30.69/b. With demand in East Asia showing no sign of easing, oil prices will remain strong for the rest of 2000 and into 2001. In 2001 the gradual slowdown in the US economy, coupled with higher oil production, will dampen market sentiment, putting prices under downward pressure late in the second quarter, as rising output meets the seasonal weakening of demand. We have therefore revised our previous assumptions for benchmark Dated brent and now expect an average price of US$29.06/b for 2000, US$25.36/b in 2001 and US$19.13/b.in 2002.

Assumptions
                                         2000    2001   2002
International assumptions
OECD GDP growth (%)                       4.1     3.1    2.7
World trade growth (%)                   10.4     8.0    7.3
World oil price (US$/b)                  29.1    25.4   19.1
Non-oil commodities (%)                   2.3     6.2    6.5
DM:US$ (end-period)                      2.20    1.94   1.79
„:US$ (end-period)                      106.0   102.5  101.5
US$ 3-month commercial paper rate (%)     6.4     6.6    5.3
Domestic policy indicators
Domestic interest rate (%)                7.0     7.0    7.0
Exchange rate SŁ:US$ (av)                11.2    11.2   11.2
Exchange rate SŁ:US$ (end-period)        11.2    11.2   11.2

With the country so acutely dependent on oil earnings, concern is growing about the outlook for the next decade, when reserves are expected to be exhausted. To counter these trends, the government has sought to squeeze more oil out of existing fields and look to new prospective developments. Additionally, at end-October it was announced that Iraq was to begin exporting 200,000 b/d of Basra light oil to Syria from mid-November for use in Syrian domestic refineries. Such a move would require approval by the UN sanctions committee, which is unlikely to be forthcoming. However, it remains possible that Syria could still import Iraqi oil outside of the UN oil-for-food program. Jordan currently receives between 70,000-90,000 b/d of crude oil from Iraq outside the program, but these transactions are tacitly approved by the Sanctions Committee. Any imports of Iraqi oil-which would be sold at a discounted price-would free-up a similar amount of Syrian oil that could then be used to boost falling export levels. However, until these developments are confirmed by Syria-and tangible proof is available-we remain reserved about factoring these changes into our forecasts.

With world crude prices still at historically high levels, the government took advantage of this windfall in the third quarter of 2000 to launch several expansionary and apparently extra-budgetary fiscal packages. These included an increase to state-sector salaries of 25%, and a US$1.08bn initiative aimed at reducing unemployment by creating 440,000 jobs over the next five years. With oil prices expected to remain high in 2000-01, the government will be in a better position to afford its own spending plans. This positive outlook for oil prices, coupled with Bashar's need to win political support, should allow for the continuation or even expansion of current spending levels over the forecast period. However, even such general analysis should be treated with great caution, as it is impossible to tell what problems the absence of data may be obscuring.

We therefore expect private consumption to increase over the forecast period, driven by high oil revenue, the subsequent increase in government spending and a high population growth rate. Investment spending will see some modest growth, as construction of a number of energy projects gathers pace. This will become more apparent in 2001-02. Crucially, however, as we no longer expect a peace deal with Israel to be in place over the forecast period, this will affect local consumption, with lower than expected tourist numbers and the postponement of spending on tourism infrastructure. Assuming relatively good harvests in the forecast period, the agricultural sector-affected by this year's drought-should see growth boosting exports of cotton, fruit and vegetables. A significant boost to export and import growth could be in prospect-dependent on whether Syria agrees to begin importing oil from Iraq-but until this is demonstrated these changes will not be factored into our forecasts. As a result of these factors, we expect the Syrian economy to grow by 1.5% in 2000, rising to 2.4% in 2001 and 2.6% in 2002.

Growth and inflation
(% real change)
                              2000   2001   2002
GDP                            1.5    2.4    2.6
Gross fixed investment         1.0    2.0    3.0
Exports of goods & services    0.5    1.0    2.2
Imports of goods & services    1.5    1.9    1.9
Consumer prices (av)           0.5    1.7    2.1

Official invisible data are unreliable, rendering analysis highly problematic. In the absence of other comprehensive data sources, we have incorporated the Central Bank's figures into our historical series; on this basis, we expect Syria to record a current-account surplus of US$1.28bn (7.8% of GDP) in 2000, US$818m (4.9% of GDP) in 2001, falling to US$2m (0.01% of GDP) in 2002. Our considerable concerns over the reliability of historical data should be noted, as should our suspicion that there are large amounts of invisible flows that are not registered (we suspect, for example, that remittances from Syrian workers in Lebanon have been underestimated historically). All projections that draw on these data must therefore be treated with caution.

Current account
(US$ m)
                              2000     2001    2002
Goods: exports fob           4,675    4,350   3,748
Goods: imports fob          -3,586   -3,766  -3,950
Trade balance                1,089      585    -202
Services: credit             1,586    1,633   1,682
Services: debit             -1,498   -1,468  -1,488
Services balance                87      165     194
Income: credit                 351      350     350
Income: debit                 -944   -1,001  -1,061
Income balance                -593     -650    -711
Current transfers: credit      700      725     725
Current transfers: debit        -5       -6      -5
Current transfers balance      695      719     720
Current-account balance      1,278      818       2
  % of GDP                     7.8      4.9     0.0

Concern still remains, however, about Syria's reliance on a narrow range of export commodities which leaves its trade account exposed to shifts in the volatile international markets, while its history of arrears and political isolation still restricts its access to other sources of international capital. Continued political uncertainty also encourages Syrians to leave their own hard-currency holdings abroad, creating a foreign payments profile that is opaque, inflexible, and vulnerable to domestic and external shocks. In addition, consistent failure to issue timely or reliable data lends to fears that Syria may be hiding a weaker external position than available figures suggest.

Financing
(US$ m)
                                          2000   2001  2002
Current-account balance                  1,278    818     2
Principal repayments due                  -952   -916  -909
Financing requirement                      327    -97  -907
Medium- & long-term debt inflows           100    150   175
  Commercial bank loans                      0      0     1
  Official guaranteed loans                100    150   175
  International bond issues                  0      0     1
Net direct investment flows                125    175   196
IMF credit                                   0      0     0
Increase in interest arrears (if any)       84     88    90
Other capital flows (net)               -1,207   -991  -247
Change in international reserves          -150    -50   -26

We expect Syria's external debt to total US$23.4bn by end-2002, as interest on arrears continues to rise. Syria's total debt service will reach US$685m in 2000, US$680m in 2001 and US$617m in 2002-the large majority of which will be interest payments on short-term debt. Syria will make payments on its non-disputed external debt, most of which is owed to official creditors and is long- or medium-term debt. Whereas Syria's debt service due as a percentage of export earnings is high, its actual repayments-which are small-will reach around 10% of its export earnings.

External debt
(US$ m)
                                 2000     2001    2002
Total foreign debt stock       22,897   23,147  23,420
 of which: 
  short-term debt               6,550    6,723   6,900
Total foreign debt service        685      680     617
 Principal repayments             230      190     190
  of which: 
   official creditors             218      178     178
   private creditors               12       12      12
 Interest payments                455      490     426
  of which: 
   official creditors              75       85      86
   private creditors                2        4       5
Total debt (% of GDP)           140.4    137.7   132.9
Debt-service ratio, paid (%)     10.3     10.7    10.7

Banking sector risk retains its "D" rating, but its score improves from 70 to 66 as commercial banks' foreign assets continue to improve on the back of trade and current-account surpluses, improving the means/spending ratio. Both the economic policy and economic structure risk sub-component scores improve, but any further advancement continues to be held back by the deep-seated structural problems of Syria's poorly developed, state-run banking sector. We remain as yet unconvinced by moves made to reform the banking sector, regarding them to be more cosmetic than fundamental and, while further reform is reported to be forthcoming, it is unlikely to result in major improvements regarding the sector's lack of independence, flexibility and transparency.

Specific investment risk ratings
                                           Economic   Economic
Risk         Overall  Overall   Political   policy   structure   Liquidity
ratings       rating   score      risk       risk       risk       risk
Currency
 risk
  November      C        44         D          C         C           C
  August        C        50         D          C         C           C
Sovereign
 debt risk
  November      C        60         D          C         C           D
  August        D        65         D          D         C           D
Banking
 sector
  risk
   November     D        66         D          C         D           E
   August       D        70         D          C         D           E

Risk ratings summary
                                         Economic    Economic
Risk      Overall   Overall  Political    policy    structure   Liquidity
ratings    rating    score      risk       risk        risk       risk
November     D         65        D           C          D           D
August       D         68        D           D          D           D

Quarterly indicators
                                                       2000
                                              1 Qtr   2 Qtr  3 Qtr
Exchange rate, (other rates apply; SŁ:US$)
Average                                       11.23   11.23  11.23
End-period                                    11.23   11.23  11.23
Energy indicators
Petroleum production ('000 b/d)                 530     520    500
External trade (US$ m)
Goods: exports fob                                -       -      -
Goods: imports cif                                -       -      -
Trade balance                                     -       -      -
Financial indicators (US$ m)
Commercial banks' foreign assets                  -       -      -
Commercial banks' foreign liabilities             -       -      -
Commercial banks' net foreign assets              -       -      -
Assets with BIS-reporting banks              14,267       -      -
Liabilities with BIS-reporting banks            527       -      -
IMF credit (net)                                  0       0      0
External bank loans                               -       -      -
External bond issues                              -       -      -
                                                        1999
                                          1 Qtr    2 Qtr   3 Qtr    4 Qtr
Exchange rate, (other rates apply;
 SŁ:US$)
Average                                   11.23    11.23   11.23    11.23
End-period                                11.23    11.23   11.23    11.23
Energy indicators
Petroleum production ('000 b/d)             540      540     537      530
External trade (US$ m)
Goods: exports fob                          689      814     980      978
Goods: imports cif                          740      963     784    1,345
Trade balance                               -52     -149     196     -367
Financial indicators (US$ m)
Commercial banks' foreign assets         23,045   23,823  25,079   25,458
Commercial banks' foreign liabilities       327      319     359      438
Commercial banks' net foreign assets     22,718   23,504  24,720   25,020
Assets with BIS-reporting banks          11,983   12,343  12,498   13,437
Liabilities with BIS-reporting banks        550      530     549      532
IMF credit (net)                              0        0       0        0
External bank loans                           -        -       -        -
External bond issues                          -        -       -        -
Symbols
0, 0.0   nil or negligible
-   not applicable or not available

Economic structure
                                      1999(b)   2000(b)   2001(c)  2002(c)
GDP at market prices
Nominal GDP (US$ m)                    16,169    16,313    16,813   17,617
Nominal GDP (SŁ m)                    743,787   758,550   790,229  828,009
Real GDP (SŁ m at 1985 prices)        666,977   676,831   693,311  711,516
Expenditure on GDP (% real change)
GDP                                      -1.5       1.5       2.4      2.6
Private consumption                      -2.5       1.5       3.0      2.5
Government consumption                    1.2       5.0       3.0      2.0
Gross fixed investment(d)                 0.0       1.0       2.0      3.0
Exports of goods & services              -1.2       0.5       1.0      2.2
Imports of goods & services              -1.0       1.5       1.9      1.9
Origin of GDP (% real change)
Agriculture                              -7.5       1.0       3.0      3.0
Industry                                  1.0       1.0       2.0      2.5
Services                                  1.5       1.9       2.2      2.4
Ratios, GDP at market prices (%)
Gross fixed investment/GDP               19.4      17.5      15.6     14.0
Exports of goods & services/GDP          31.2      30.9      30.5     30.3
Imports of goods & services/GDP          31.6      31.6      31.5     31.3
Gross national savings/investment       102.1     110.8     107.4    100.0
Ratios, GDP at factor cost (%)
Agriculture/GDP                          30.4      30.3      30.4     30.5
Industry/GDP                             17.3      17.2      17.1     17.1
Services/GDP                             48.0      48.2      48.1     48.0
Energy indicators
Petroleum production ('000 b/d)        535(a)       513       498      495
Petroleum reserves (m barrels;
 end-period)                         2,500(a)     2,500     2,500    2,500
Money supply (% change)
M1                                    11.1(a)      15.0      11.0      7.0
M2                                    12.5(a)      14.1      10.4      7.0
Prices and exchange rates
Interest rate (%; av)                     7.0       7.0       7.0      7.0
Consumer prices (% change; av)        -2.7(a)       0.5       1.7      2.1
Exchange rate SŁ:US$ (av)           11.225(a)    11.225    11.225   11.225
Exchange rate SŁ:US$ (end-period)   11.225(a)    11.225    11.225   11.225
Population and income
Population (m)                       16.11(a)     16.64     17.19    17.76
Population growth (%)                  3.3(a)       3.3       3.3      3.3
Labour force (m)                         4.41      4.55      4.68     4.82
GDP per head (US$)                      1,000       980       980      990
                                             1996(a)   1997(a)  1998(a)
GDP at market prices
Nominal GDP (US$ m)                           15,878    16,549   17,114
Nominal GDP (SŁ m)                           674,817   731,471  775,786
Real GDP (SŁ m at 1985 prices)               612,896   628,148  677,173
Expenditure on GDP (% real change)
GDP                                              7.3       2.5      7.8
Private consumption                              4.2      -0.8      6.5
Government consumption                           0.2       1.2      2.2
Gross fixed investment(d)                        0.1      -5.0      3.3
Exports of goods & services                      9.8      12.8      1.9
Imports of goods & services                     -3.9      -0.2     -6.3
Origin of GDP (% real change)
Agriculture                                     17.9      -3.3     22.2
Industry                                        25.6      15.3      2.4
Services                                         2.4       0.9      1.9
Ratios, GDP at market prices (%)
Gross fixed investment/GDP                      24.2      21.3     21.0
Exports of goods & services/GDP                 32.6      33.0     31.1
Imports of goods & services/GDP                 39.0      34.5     31.5
Gross national savings/investment              100.6     103.5    100.4
Ratios, GDP at factor cost (%)
Agriculture/GDP                                 30.1      28.5     32.4
Industry/GDP                                    15.7      17.7     16.9
Services/GDP                                    49.8      49.2     46.6
Energy indicators
Petroleum production ('000 b/d)                  610       570      550
Petroleum reserves (m barrels; end-period)     2,500     2,500    2,500
Money supply (% change)
M1                                               7.0       6.9      8.1
M2                                               7.3       7.7      9.4
Prices and exchange rates
Interest rate (%; av)                            7.0       7.0      7.0
Consumer prices (% change; av)                   8.3       2.3     -0.5
Exchange rate SŁ:US$ (av)                     11.225    11.225   11.225
Exchange rate SŁ:US$ (end-period)             11.225    11.225   11.225
Population and income
Population (m)                                 14.62     15.10    15.60
Population growth (%)                            3.3       3.3      3.3
Labour force (m)                                4.04      4.16  4.29(b)
GDP per head (US$)                             1,090     1,100    1,100
(a) Actual. (b) EIU estimates. (c) EIU forecasts. (d) No data on
stockbuilding is available.

Foreign payments
                                      1999(a)   2000(b)   2001(c)  2002(c)
Current account (US$ m)
Current-account balance                   270     1,278       818        2
Goods: exports fob                      3,806     4,675     4,350    3,748
Goods: imports fob                     -3,452    -3,586    -3,766   -3,950
Trade balance                             354     1,089       585     -202
Services: credit                        1,547     1,586     1,633    1,682
Services: debit                        -1,552    -1,498    -1,468   -1,488
Services balance                           -5        87       165      194
Income: credit                            356       351       350      350
Income: debit                            -899      -944    -1,001   -1,061
Income balance                           -543      -593      -650     -711
Current transfers: credit                 466       700       725      725
Current transfers: debit                   -2        -5        -6       -5
Current transfers balance                 464       695       719      720
Financing (US$ m)
Financing requirement                 -694(b)       327       -97     -907
 of which: 
  principal repayments due            -964(b)      -952      -916     -909
Medium- & long-term debt inflows       100(b)       100       150      175
Inward direct investment                   91       130       180      200
Outward direct investment              -15(b)        -5        -5       -4
Net direct investment flows             76(b)       125       175      196
Inward portfolio investment (net of
 fc bonds)                                  -         -         -        -
Outward portfolio investment(d)             -         -         -        -
Net portfolio investment flows              -         -         -        -
IMF credit                               0(b)         0         0        0
Increase in interest arrears            79(b)        84        88       90
Increase in principal arrears          794(b)       722       726      719
Other capital flows (net)             -505(b)    -1,207      -991     -247
Change in international reserves
  (- indicates increase)               150(b)      -150       -50      -26
International reserves (US$ m)
Total                                1,929(b)     2,079     2,129    2,155
  Foreign-exchange reserves          1,900(b)     2,050     2,100    2,125
  Gold, national valuation                 29        29        29       30
Commercial banks' foreign assets       25,458    26,094    26,746   27,415
Commercial banks' foreign
 liabilities                              438       175       166      158
Commercial banks' net foreign
 assets                                25,020    25,919    26,580   27,257
Months of import cover                 4.6(b)       4.9       4.9      4.8
Ratios (%)
Current-account balance/GDP            1.7(b)       7.8       4.9      0.0
Trade balance/GDP                      2.2(b)       6.7       3.5     -1.1
Exports of goods & services/imports
 of goods & services                    107.0     123.1     114.3     99.9
Exports of goods/exports of goods &
 services                                71.1      74.7      72.7     69.0
Imports of goods/imports of goods &
 services                                69.0      70.5      71.9     72.6
Services balance/GDP                   0.0(b)       0.5       1.0      1.1
Income balance/GDP                    -3.4(b)      -3.6      -3.9     -4.0
Current transfers balance/GDP          2.9(b)       4.3       4.3      4.1
Memorandum items (US$ m)
Flow of export credits                  17(b)        16        22       22
Capital flight                        -703(b)    -1,290    -1,076     -333
                                          1996(a)    1997(a)    1998(a)
Current account (US$ m)
Current-account balance                        81        483         59
Goods: exports fob                          4,178      4,057      3,135
Goods: imports fob                         -4,516     -3,603     -3,307
Trade balance                                -338        454       -172
Services: credit                            1,833      1,604      1,795
Services: debit                            -1,555     -1,489     -1,481
Services balance                              278        115        314
Income: credit                                534        421        389
Income: debit                              -1,017     -1,006       -995
Income balance                               -483       -585       -606
Current transfers: credit                     630        504        525
Current transfers: debit                       -6         -5         -2
Current transfers balance                     624        499        523
Financing (US$ m)
Financing requirement                        -978    -651(b)       -864
  of which: principal repayments due       -1,059     -1,134       -923
Medium- & long-term debt inflows              168        104         63
Inward direct investment                       89         80         80
Outward direct investment                     -15        -25     -45(b)
Net direct investment flows                    74         55      35(b)
Inward portfolio investment (net of fc
 bonds)                                         -          -          -
Outward portfolio investment(d)                 -          -          -
Net portfolio investment flows                  -          -          -
IMF credit                                      0          0          0
Increase in interest arrears                  189        154        179
Increase in principal arrears                 983        773        827
Other capital flows (net)                    -487    -459(b)    -265(b)
Change in international reserves
  (- indicates increase)                    51(b)      25(b)      25(b)
International reserves (US$ m)
Total                                    2,129(b)   2,104(b)   2,079(b)
  Foreign-exchange reserves              2,100(b)   2,075(b)   2,050(b)
  Gold, national valuation                     29         29         29
Commercial banks' foreign assets           16,084     19,819     22,780
Commercial banks' foreign liabilities         471        248        325
Commercial banks' net foreign assets       15,613     19,571     22,455
Months of import cover                     4.2(b)     5.0(b)     5.2(b)
Ratios (%)
Current-account balance/GDP                   0.5        2.9        0.3
Trade balance/GDP                            -2.1        2.7       -1.0
Exports of goods & services/imports of
  goods & services                           99.0      111.2      103.0
Exports of goods/exports of goods &
 services                                    69.5       71.7       63.6
Imports of goods/imports of goods &
 services                                    74.4       70.8       69.1
Services balance/GDP                          1.8        0.7        1.8
Income balance/GDP                           -3.0       -3.5       -3.5
Current transfers balance/GDP                 3.9        3.0        3.1
Memorandum items (US$ m)
Flow of export credits                       -236        -59         17
Capital flight                               -458    -194(b)  -1,582(b)
(a) Actual. (b) EIU estimates. (c) EIU forecasts. (d) No figures are
available.

External trade
                              1999(b)   2000(b)  2001(c)   2002(c)
Goods: exports fob (US$ m)
Total                        3,464(a)     4,255    3,959     3,411
 of which: 
  crude petroleum               1,929     2,975    2,600     1,948
  cotton                            -         -        -         -
  textiles                          -         -        -         -
  fruit & vegetables                -         -        -         -
Services: credits (US$ m)
Tourism receipts                  947       966    1,013     1,062
Goods: imports cif (US$ m)
Total                        3,832(a)     3,985    4,184     4,389
 of which: 
  machines & equipment          1,586     1,642    1,675     1,708
  metals & metal products       1,102     1,153    1,176     1,211
  transport equipment             519       545      556       584
  foodstuffs                      522       506      481       516
Volume and prices (%)
Export volume of goods           -1.2       0.5      1.0       2.2
Import volume of goods           -1.0       1.5      1.9       1.9
Export prices                 21.3(a)      22.2     -7.9     -15.7
Import prices                 -0.6(a)       2.5      3.0       2.9
Terms of trade (1900=100)     54.6(a)      65.2     58.3      47.7
                             1996(a)    1997(b)   1998(b)
Goods: exports fob (US$ m)
Total                          3,999   3,916(a)  2,890(a)
 of which: 
  crude petroleum              2,541      2,157     1,325
  cotton                         355        360       366
  textiles                       277        378       380
  fruit & vegetables             171        247       273
Services: credits (US$ m)
Tourism receipts               1,206      1,004     1,195
Goods: imports cif (US$ m)
Total                          5,380   4,028(a)  3,895(a)
 of which: 
  machines & equipment         1,168      1,368     1,518
  metals & metal products        970      1,020     1,070
  transport equipment            525        555       535
  foodstuffs                     437        417       442
Volume and prices (%)
Export volume of goods           9.8    12.8(a)    1.9(a)
Import volume of goods          -3.9    -0.2(a)   -6.3(a)
Export prices                    2.2   -13.2(a)  -27.5(a)
Import prices                   18.8   -25.0(a)    3.2(a)
Terms of trade (1900=100)       55.1    63.7(a)   44.8(a)
(a) Actual. (b) EIU estimates. (c) EIU forecasts.

Trends in foreign trade
                                    1999(b)   2000(b)  2001(c)   2002(c)
Main destinations of exports
 (% share)
Germany                                   -         -        -         -
Turkey                                    -         -        -         -
Italy                                     -         -        -         -
Lebanon                                   -         -        -         -
France                                    -         -        -         -
Main origins of imports (% share)
Ukraine                                   -         -        -         -
Germany                                   -         -        -         -
Italy                                     -         -        -         -
Turkey                                    -         -        -         -
Principal exports (% share)
Crude petroleum                        55.7      69.9     65.7      57.1
Cotton                                    -         -        -         -
Textiles                                  -         -        -         -
Fruit & vegetables                        -         -        -         -
                                         1996(a)   1997(a)  1998(a)
Main destinations of exports (% share)
Germany                                     14.0      13.0     13.7
Turkey                                       9.3       8.1     12.7
Italy                                       17.5      17.5     11.8
Lebanon                                      6.9       7.4      9.1
France                                       9.6      11.7      8.9
Main origins of imports (% share)
Ukraine                                      8.4      13.1     15.6
Germany                                      6.2       5.5      6.4
Italy                                        8.1       6.7      6.2
Turkey                                       7.3       6.0      4.8
Principal exports (% share)
Crude petroleum                             63.5   55.1(b)  45.8(b)
Cotton                                       8.9    9.2(b)  12.7(b)
Textiles                                     6.9    9.7(b)  13.1(b)
Fruit & vegetables                           4.3    6.3(b)   9.4(b)
(a) Actual. (b) EIU estimates. (c) EIU forecasts.

External debt stock
                                      1999(b)   2000(b)   2001(c)  2002(c)
Foreign debt stock (US$ m)
Total                                  22,727    22,897    23,147   23,420
 Public medium- & long-term            16,343    16,347    16,424   16,520
 Private medium- & long-term                0         0         0        0
 IMF                                     0(a)         0         0        0
 Short-term                             6,384     6,550     6,723    6,900
  of which: interest arrears            2,234     2,318     2,406    2,496
   official creditors                   2,091     2,175     2,262    2,352
   private creditors                      143       143       144      144
Ratios (%)
Total debt/exports of goods &
 services                               398.1     343.7     365.2    405.2
Total debt/GDP                          140.6     140.4     137.7    132.9
International reserves/total debt         8.5       9.1       9.2      9.2
Debt per head (US$)                     1,411     1,376     1,346    1,319
Net debt (US$ m)
Total                                  20,798    20,818    21,018   21,265
Ratios (%)
Net debt/exports of goods & services    364.3     312.5     331.6    367.9
Net debt/GDP                            128.6     127.6     125.0    120.7
Medium- and long-term debt (US$ m)
Total                                  16,343    16,347    16,424   16,520
 Official creditors                    15,235    15,262    15,339   15,441
  Bilateral                            14,599    14,699    14,849   15,024
  Multilateral                            636       563       490      417
 Private creditors                      1,108     1,085     1,085    1,079
Memorandum items (US$ m)
Export credits                            414       431       452      474
Principal arrears                       9,031     9,753    10,478   11,197
 Official creditors                     7,913     8,545     9,181    9,811
 Private creditors                      1,118     1,207     1,297    1,386
Debt owed to BIS banks (US$ m)
Total                                  705(a)         -         -        -
 0-1 year                              410(a)         -         -        -
 1-2 years                               2(a)         -         -        -
 over 2 years                          293(a)         -         -        -
Memorandum items (US$ m)
BIS banks' undisbursed credit
 commitments                            59(a)       100       100        -
Crossborder liabilities of
 BIS-reporting banks                        -         -         -        -
                                           1996(a)     1997(a)     1998(a)
Foreign debt stock (US$ m)
Total                                       21,420      20,865      22,436
 Public medium- & long-term                 16,698      16,254      16,328
 Private medium- & long-term                     0           0           0
 IMF                                             0           0           0
 Short-term                                  4,722       4,611       6,107
  of which: interest arrears                 1,822       1,976       2,155
   official creditors                        1,685       1,838       2,011
   private creditors                           137         138         144
Ratios (%)
Total debt/exports of goods & services       327.3       343.1       421.8
Total debt/GDP                               134.9       126.1       131.1
International reserves/total debt           9.9(b)     10.1(b)      9.3(b)
Debt per head (US$)                          1,465       1,382       1,438
Net debt (US$ m)
Total                                    19,291(b)   18,761(b)   20,357(b)
Ratios (%)
Net debt/exports of goods & services      294.7(b)    308.5(b)    382.7(b)
Net debt/GDP                              121.5(b)    113.4(b)    118.9(b)
Medium- and long-term debt (US$ m)
Total                                       16,698      16,254      16,328
 Official creditors                         15,553      15,138      15,208
  Bilateral                                 14,523      14,420      14,499
  Multilateral                               1,030         718         710
 Private creditors                           1,145       1,116       1,120
Memorandum items (US$ m)
Export credits                                 439         380         397
Principal arrears                            6,637       7,410       8,237
 Official creditors                          5,727       6,447       7,218
 Private creditors                             910         963       1,020
Debt owed to BIS banks (US$ m)
Total                                          476         391         695
 0-1 year                                      150         104         469
 1-2 years                                      11          42          39
 over 2 years                                  315         245         187
Memorandum items (US$ m)
BIS banks' undisbursed credit
 commitments                                   171         186         179
Crossborder liabilities of
 BIS-reporting banks                         9,128      10,309      11,812
(a) Actual. (b) EIU estimates. (c) EIU forecasts.

External debt service
                                   1999(b)   2000(b)  2001(c)   2002(c)
Foreign debt service (US$ m)
Total paid                             539       685      680       617
 Medium- & long-term debt              247       307      279       281
  Official creditors                   234       293      263       264
  Private creditors                     13        14       16        17
 IMF debits & charges                    0         0        0         0
 Short-term debt (interest only)       292       378      401       336
Total due                            1,412     1,490    1,494     1,425
Ratios (%)
Debt-service ratio, paid               9.4      10.3     10.7      10.7
Debt-service ratio, due               24.7      22.4     23.6      24.6
Debt service paid/GDP                  3.3       4.2      4.0       3.5
Principal repayments (US$ m)
Total paid                             170       230      190       190
 Medium- & long-term debt              170       230      190       190
  Official creditors                   159       218      178       178
  Private creditors                     11        12       12        12
 IMF debits                           0(a)         0        0         0
Total due                              964       952      916       909
Interest payments (US$ m)
Total paid                             369       455      490       426
 Medium- & long-term debt               77        77       89        90
  Official creditors                    75        75       85        86
  Private creditors                      2         2        4         5
 IMF charges                             0         0        0         0
 Interest on short-term debt           292       378      401       336
Total due                              448       538      578       516
Ratios (%)
Interest paid/debt service paid       68.5      66.4     72.1      69.0
Interest paid/exports of goods &
 services                              6.5       6.8      7.7       7.4
Interest due/exports of goods &
 services                              7.8       8.1      9.1       8.9
Interest paid/GDP                      2.3       2.8      2.9       2.4
Memorandum items
Effective interest rate (%)            0.5       0.5      0.5       0.5
Effective maturity (years)            96.0      71.1     86.0      86.4
                                            1996(a)   1997(a)  1998(a)
Foreign debt service (US$ m)
Total paid                                      254       564      341
 Medium- & long-term debt                       124       426      176
  Official creditors                            111       412      168
  Private creditors                              14        13        8
 IMF debits & charges                             0         0        0
 Short-term debt (interest only)                130       138      165
Total due                                     1,427     1,491    1,347
Ratios (%)
Debt-service ratio, paid                        3.9       9.3      6.4
Debt-service ratio, due                        21.8      24.5     25.3
Debt service paid/GDP                           1.6       3.4      2.0
Principal repayments (US$ m)
Total paid                                       76       362       96
 Medium- & long-term debt                        76       362       96
  Official creditors                             65       350       91
  Private creditors                              12        11        5
 IMF debits                                       0         0        0
Total due                                     1,059     1,134      923
Interest payments (US$ m)
Total paid                                      178       203      245
 Medium- & long-term debt                        48        64       80
  Official creditors                             46        62       77
  Private creditors                               2         2        3
 IMF charges                                      0         0        0
 Interest on short-term debt                    130       138      165
Total due                                       367       356      424
Ratios (%)
Interest paid/debt service paid                70.0      35.9     71.9
Interest paid/exports of goods & services       2.7       3.3      4.6
Interest due/exports of goods & services        5.6       5.9      8.0
Interest paid/GDP                               1.1       1.2      1.4
Memorandum items
Effective interest rate (%)                     0.3       0.4      0.5
Effective maturity (years)                    219.3      46.2    169.5
(a) Actual. (b) EIU estimates. (c) EIU forecasts.

Central Bank of Syria, Quarterly Bulletin

Central Bureau of Statistics, Statistical Abstract; Statistics of the Foreign Trade of Syria

Notes including exceptions to standard definitions in the CRS Handbook

Sectoral output: based on constant market prices

Industrial production: excludes construction

Exports fob: data in the Foreign payments table are on a balance-of- payments basis; data in the External trade table are on a customs basis

All GDP US dollar calculations are derived from an EIU estimate exchange rate rather than the official rate