Q What has been the impact of the government’s 2004 reform of the financial services sector?

A It is important to bear in mind that the reforms actually began in 2001 when the government issued a decree authorising the private sector banks to operate in Syria. In 2004, the reforms took effect, with the start-up of the first of these new entrants. Since then, the number of banks in the country has increased to 18, of which six are public sector entities and double that number are private sector initiatives, including two Islamic banks.

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State-owned banks have also benefited from their presence with the introduction of competitive banking models. One should not ignore the strides that have been made in opening up the insurance sector, which has been registering 25% to 30% annual growth. Since the liberalisation of the insurance market in 2006, this dynamic sector has doubled in size.

Q Are further financial liberalisation measures in the pipeline?

A Now our focus is on the securities market. This will bring a much closer integration of the country’s overall financial sector and will help to overcome the obstacles to growth we faced in the past. For now, we have taken the reform measures as far as we can.

Q Will Syria play a major role in the Middle East financial services market?

A We would expect to see Syria competing with other centres such as Dubai and Bahrain, but we believe this objective will take five years or more to achieve.

Q Has there been much investor interest in Syria’s new stock exchange?

A We believe that over time there will be considerable interest in the new securities market. The important thing is that the exchange opened as planned in spite of the global crisis. We see the securities market as a way to help our society achieve a higher level of development. The exchange is a tool to encourage investment in the Syrian economy.

Q The exchange imposes some restrictions on share dealing. Will this be reviewed?

A Some of the regulations might appear restrictive, but we wanted to ensure that the market functioned in an orderly fashion. The regulatory framework will come under review in due course and probably be eased, but the message we wish to get across is that the market must operate in everyone’s interest.

Q How do you expect the economy to perform in 2009?

A This year will not be as good as 2007, when GDP grew by 6.5%, up from 5.1% in the previous year. Growth slipped to 6% in 2008 and this year our objective is to repeat last year’s performance. But even if it goes below 6%, the country will continue to develop. Syria is suffering from a three-year drought and the influx of 2 million Iraqi and Palestinian refugees. These factors will have a negative impact on the economy.

Q Do you have any financial sector innovations in the works?

A We are keen to keep the reform process moving ahead despite resistance from some of the political opposition forces. Our five-year plan underpins our resolve to see this through and a crucial factor is President Assad’s support for our efforts.

On the financing side, in the past we always funded a deficit by going to the central bank or reducing budget expenditure. This policy has undergone a change and we are thinking of issuing Treasury bills. We now have the legislation in place to enable us to issue domestic currency T-bills. For now, there are no plans to tap the international capital markets.

CURRICULUM VITAE

DR MOHAMMED AL HUSSEIN

2003Syrian government

Finance minister

2001Syrian government

Deputy premier for economic affairs

2000Syrian Economic Bureau

Chairman