Central Bank Governor: We have enough cash reserves to pay salaries after 400% increase

The new governor of Syria’s central bank, Maysaa Sabreen, said the bank had enough money to pay salaries after a 400% increase.

The Syrian official told Reuters she wanted to boost the institution’s independence over monetary policy decisions, in what would be a major shift from the heavy-handed control exercised under the Assad regime.

Sabreen, who was previously the second-in-command at the central bank, took over from the former governor, Mohammed Issam Hazim, late last year.

Amending the laws

She told Reuters in her first media interview since taking office that the Syrian central bank was preparing draft amendments to its laws to strengthen its independence, including allowing it more freedom to make decisions on monetary policy.

The changes would need to be approved by Syria’s new ruling authority, although the process is unclear at this stage. Sabreen gave no indication of the timing.

Economists see central bank independence as crucial to long-term macroeconomic and financial sector stability.

While the Syrian central bank has always been an independent institution on paper, under Assad’s regime policy decisions were de facto determined by the government.

Sabreen added that the Syrian central bank was also looking at ways to expand Islamic banking services to attract Syrians who have shunned conventional banking services.

Islamic banks

“This could include giving banks that offer conventional services the option to open Islamic banking branches,” Sabreen, who has worked at the bank for 20 years, told the global agency from her office in bustling central Damascus.

Islamic banking is in line with Sharia law, and prohibits the charging of interest as well as investment in prohibited businesses such as alcohol, pork, weapons, pornography or gambling. Islamic banking is already well established in the Muslim-majority country.

Limited access to international and domestic finance has meant that the Assad government has used the central bank to finance its deficit, fuelling inflation.

Sabreen said she is keen to change all that. She explained that the Syrian Central Bank wants to avoid having to print the Syrian pound because this would affect inflation rates.

When asked about the size of Syria’s current foreign exchange and gold reserves, Sabreen declined to provide details, saying that the balance sheet review was still ongoing.

26 tons of gold

Four experts familiar with the situation said in December that the central bank had about 26 tons of gold in its vaults, worth about $2.2 billion, about $200 million in foreign currency and a large amount of Syrian pounds.

The Syrian central bank and several former governors are under US sanctions imposed after Assad’s violent suppression of protests in 2011 that turned into a 13-year war.

Sabreen said the central bank had enough money in its vaults to pay civil servant salaries even after a 400% increase promised by the new administration. She did not provide details.

Fares Al-Rifai - Zaman Al-Wasl