Balance of payments
records small deficit

End-of-year inflows

reversed large shortfall

The balance of payments (BoP) has registered a deficit of $156 million in 2017 compared with a surplus of $1.24 billion in the previous year.

The deficit remains much lower than the annual average deficit of $1.88 billion recorded over the period 2011-2015.

The 2017 annual deficit was caused by a decline of $1.77 billion in the net foreign assets of banks and financial institutions, which was partly offset by a rise of $1.61 billion in those of the Central Bank (BDL).

Economist Roger Melki said that passenger traffic at the airport is improving significantly thanks to transit travel resulting from the boycott of the Damascus and Doha airports which could have some spillover on tourism. Visitors from the Diaspora have contributed to the improvement in tourism. “The numbers are still too low compared to the country’s potential estimated at four to five million tourists,” Melki said.

The deficit could also be eased if the political circumstances in Syria improve and if the US pressure on local banks turns out to be less severe, according to Melki. He said that the factors that would weigh in on the deficit include the slowdown in remittances and in capital transfers as well as the economic slowdown.

The BoP recorded a surplus of $854 million in December 2017. The surplus was driven by increases in the net foreign assets of BDL and of banks and financial institutions which grew by nearly $106 million and $748 million respectively.

The only annual surplus realized in the last seven years was registered in 2016 and was the result of the financial engineering operations carried out by the Central Bank that year, Melki said.

The surpluses recorded in 2008 and 2009 were due to the global financial crisis when local banks were successful in attracting deposits. In 2011, many factors contributed to the deficit trend that started that year such as the negative political developments locally, the unrest during the Arab Spring, and the Syrian war.