Golden window: Syria to overhaul financial system after sanctions relief, says central bank chief

With US and EU sanctions relief approved, Syria is embarking on an urgent race to overhaul its financial system, the country’s senior monetary official said.

In an exclusive interview with The National, central bank governor Abdul Kader Husriyeh, who was appointed in April, laid out the main priorities for Syria to reclaim a foothold in the global economy.

He outlined plans to update monetary policy; review banking legislation; strengthen anti-money laundering measures; and engage with foreign depositors, including sovereign entities.

Having already secured diplomatic and political capital, the strategically located country bordering Turkey, Israel, Iraq, Jordan and Lebanon has a three-point plan ready for when the sanctions are officially lifted: restoring financial transfer channels, attracting foreign deposits and reintegrating the banking system into global payment networks.

“With Syria's liberation on December 8, 2024, and the subsequent policy shift by President Donald Trump and the European Commission to lift these sanctions, a rare and pivotal opportunity has emerged,” Mr Husriyeh told The National in Dubai.

“This moment offers a golden window to integrate Syria into the international financial system and lay the foundation for sustainable economic recovery and growth.”

US President Donald Trump, during a Gulf tour earlier this month, announced the lifting of sanctions ahead of a landmark meeting with Syrian leader Ahmad Al Shara in Riyadh. The EU quickly followed suit.

Syria’s financial system has historically remained isolated from the global financial system. Following the 1963 shift to a centrally planned economy, Syria operated under tight state control for decades, said Mr Husriyeh.

This isolation was further entrenched by international sanctions, which began in 1979 when Syria was designated as a “state sponsor of terrorism”.

Comprehensive restructuring

The first effect of the US and EU step would be a breath of economic relief after years of suffocation, as sanctions had hindered trade, investment and the Syrian lira. But the success of the economic redevelopment would hinge on a streamlined government programme.

The central bank governor affirmed that the road map is already set and is based on two pillars: updating monetary policy and rebuilding the financial system.

“The shift from short-term interventions to a rules-based policy is imperative,” he said. “Looking ahead, we are working towards adopting an 'inflation targeting' regime, supported by institutional independence for the central bank in line with international standards, transparency in liquidity management, and improved data quality.

“Additionally, exchange rate stability has now become a necessity. Exchange rate volatility not only creates economic distortions but also undermines investor confidence and weakens the effectiveness of policies,” added Mr Husriyeh, a technocrat who has worked as a consultant for various international groups.

However, his task is daunting. The economy has shown no signs of emerging from the collapse that followed the outbreak of civil war in 2011, with the Syrian pound losing about 90 per cent of its value.

Since the late president Hafez Al Assad took charge of Syria in 1970, the country has had major economic and financial setbacks, largely because of the adoption of a common economy and expropriation policies that turned Syria into an economic backwater.

Bashar Al Assad ushered in economic liberalisation soon after inheriting power in 2000, but the benefits largely flowed to those who became oligarchs – often using frontmen and junior partners to conceal their monopolies – before the economy began relying in the last decade on sales of the Captagon drug amid isolation.

“Syrian banks need to transition from mere deposit-holding institutions to engines of lending and investment. This requires comprehensive restructuring: enhancing capital adequacy standards, improving governance, and directing financing towards productive projects – particularly in infrastructure and the private sector,” said Mr Husriyeh.

“Some regional banks from Saudi Arabia, Turkey, and the UAE have expressed initial interest in investing once sanctions are effectively lifted, indicating a genuine appetite for financial engagement”.

The overthrow of the Bashar Al Assad regime in December by Hayat Tahrir Al Sham raised eyebrows and questions about the future of a country now ruled by what was once an armed faction, now rebuilding a country from scratch.

However, Mr Al Shara quickly secured regional and international support, pledging a new chapter of transparency, despite a harsh transition marked by efforts to contain violence and maintain stability in a deeply diverse nation.

Securing reserves

Building on that support, the country of 25 million people, with an economy traditionally reliant on agriculture, oil, and state-controlled industries, is now seeking financial assistance from wealthy and experienced nations, particularly in the region.

Asked whether his country was expecting financial deposits, the central bank governor said discussions were continuing “with some friendly nations on this matter”, adding that the government looks forward to “agreements that would help secure reserves to support monetary stability and boost confidence in the banking sector”.

On Thursday, US authorities announced they are working to lift sanctions on Syria as quickly as possible. Hours before that, the International Monetary Fund said it is ready to provide Syria with technical assistance.

The World Bank has already cleared Syria of its $15.5 million outstanding debt after Saudi Arabia and Qatar paid for it, in another positive sign for the nation's damaged economy. At the same time, the Syrian government and DP World, the Dubai-based global ports operator, have signed an initial agreement worth $800 million to develop Syria's port of Tartus.

“Sanctions have been a significant obstacle to mobilising the necessary resources. With their removal, we anticipate improved access to financial support, including concessional loans, development project funding, technical expertise, and assistance for reconstruction efforts critical to revitalising the Syrian economy,” said Mr Husriyeh.

He laid out the plan for when the sanctions are lifted. First, reactivating relationships with regional and international banks and restoring financial transfer channels. Second, attracting foreign deposits and investments. Third, reintegrating Syria’s banking system into global payment and settlement networks.

“We will be working on activating dialogue with the World Bank, the Islamic Development Bank, and the Arab Monetary Fund by submitting bankable projects, providing transparent financial data, and reinforcing good governance to resume long-term development programmes,” he said.

“Our domestic resources will not be sufficient for reconstruction. We need external capital flows from both the public and private sectors. To achieve this, a transparent investment environment must be built, one that strengthens investor protection and rigorously combats money laundering. Syrians in the diaspora, with their skills and capital, represent a key partner in this process.”

Mr Husriyeh took over from Maysa Sabreen, who had been appointed caretaker governor in late December. He was born in 1961 and previously lived between the UAE and Syria.

He previously worked for accountancy firms EY and Arthur Andersen and was also a member of the financial committee of the International Federation of Red Cross and Red Crescent Societies in Geneva. He was also a consultant on reforms to Syria's central bank in co-operation with the United Nations Development Programme.

For the monetary official, the whole system has to be overhauled.

He said Syria is now reviewing the banking law, “enhancing the central bank’s independence”, updating regulations to encourage diversification of Islamic finance instruments, and updating lending and collateral legislation. It is also expanding the legal framework for oversight of non-banking financial institutions.

On top of that, Syria will be updating the national legislation to be in line with the Financial Action Task Force recommendations.

“We will be strengthening the Anti-Money Laundering Commission, and international co-operation in information exchange and financial reporting has been intensified,” said Mr Husriyeh.