Syria is quickening the pace of its long-heralded banking sector reforms according to a government minister. As a result, Damascus hopes domestic banks will win business from Syrians who have felt uncomfortable about doing business with banks in Lebanon since tensions between the two countries mounted after the assassination of former Lebanese Prime Minister, Rafik Harari.

Syrian business people have become accustomed over recent years to using Lebanese banks that are more sophisticated than their counterparts in Syria for a variety of purposes, including foreign-currency letters of credit servicing (DC World News, 24 March 2005).

Reasons for reform

Indications that Damascus is getting serious about speedier banking sector reforms came from Syria's minister of state for planning affairs Dr Abdullah Dardari. During a conference in Doha, Qatar on Arab economic competitiveness earlier this month, he said Damascus was pushing ahead on banking sector reforms, faster than projected, for two reasons.

"First is the regional crisis which pushes us to take advantage of the situation, turning a challenge into an opportunity; and secondly because it is clear that a more efficient banking sector is a prerequisite for the success of the longer-term measures," he said.

Hard currency L/Cs

Dardari reckons the Syrian banking sector will now finance all of Syria's foreign trade in hard currency, which will be freely traded and available.

Banks will open L/Cs in hard currency, and provide long-term credit in hard currency, including project finance he says.

Deregulation

The minister says Syria is moving towards total banking deregulation and planning to strengthen banking sector regulations and institutions, including the Central Bank.

Alongside banking sector reforms Dardari says Damascus is "practically eliminating" public monopolies in industry and allowing the private sector to work in almost every sector by the first half of May.

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