(MENAFN - Jordan Times) Syria banned most imports except raw materials and grains, local businessmen said on Saturday in a move to preserve foreign currency reserves under pressure from Western sanctions and ongoing political unrest.
The government decreed on Thursday that all imports that carry a tariff that exceeds 5 per cent are banned, meaning that most foreign goods are affected, from electrical goods to cars and luxury items, businessmen and traders in Damascus contacted by Reuters said.
Economy and Trade Minister Mohammad Nidal Al Shaar was quoted in the local press as saying the abrupt move in a country that imports billions of dollars of consumer items annually was "preventive and temporary".
It was aimed at "preserving the country's foreign reserves and redirecting [them] to the low income brackets of the population," he said.
The decision excludes raw materials needed for the country's hard-hit industries, along with wheat and grain purchases by the state for local consumption.
"It won't affect the imports of raw materials or foodstuffs and all the essential goods that citizens need in their daily life," Shaar added.
In the five years prior to the uprising, the authorities lifted Syria's Soviet-style ban on imports but imposed high tariffs. That did not dampen demand for foreign imports, especially cars, which began to enter the country for the first time in decades.
Before 2000, Syrians bought private cars and many luxury items through state-run firms that accounted for the bulk of the country's imports.
Blow to confidence
Traders said the import ban was bound to add to inflationary pressures and further damage business confidence, already hit by the impact of the social widespread unrest.
Some businessmen said it was a sign the unrest was beginning to exact a heavier toll, giving the lie to the rosy picture presented by officials of minimal impact from the turmoil on the economy due to Syria's insulation from capital markets and a diversified debt-free economy.
"There is no selling or buying, it's so bad now that traders and businessmen are neither selling in cash or credit. Prices of existing foreign imports will now soar," said one car dealer in Damascus' Sabaa Bahrat commercial area who preferred not to disclose his identity.
Businessmen said the list of items and the exact goods that would be excluded were expected to be announced in the coming few days in a detailed addendum to the Cabinet ruling.
Some said that even before the latest ban, many merchants had already scaled down letters of credit for imports as demand slumped and many are hoarding foreign currency as worries increase that new measures to cushion the economy from tighter Western sanctions could hit the local currency.
"This move will only worsen the situation and add to the uncertainty," said another businessman in the Halabouni district in the capital.
"[Investors and traders]... are holding tight and not buying any goods... but [also] not panicking so far," he added.
Economists and bankers say Syria's foreign reserves have been falling as the central bank pumps hard currency to stop falls in the Syrian exchange rate on the black market.
The official exchange rate stands at 47.4 Syrian pounds to the dollar, but dollars are changing hands on the black market at 51 pounds and above.
The Syrian economy has been hard hit by international sanctions aimed at pressuring President Assad, including a ban on all Syrian oil imports to the European Union. Analysts in the country say that foreign investment has reduced considerably.
After a series of piecemeal measures, European countries have acted more vigorously in recent weeks in hopes of reining in a bloody crackdown on protesters.
The unrest, has along with hurting productivity in crucial industries, dealt a big blow to the country's once thriving tourism industry and hit imports, economists and businessmen alike said.
The International Monetary Fund predicted this week that Syria's economy would contract 2 per cent this year, dumping the 3 per cent growth forecast it issued in April due to ongoing conflict and social unrest across the region.