They may also signify that agricultural employment is highly variable depending on supply conditions in agriculture, and demand conditions in other parts of the economy. The published statistics do not allow a classification of the labour force or population by rural and urban areas. Earlier studies Sarris, estimated the proportion of the population living in rural areas at Nevertheless, it is estimated that with the growing population, there are about to new entrants to the active labour force each year, and absorption of these is becoming an increasing problem with the slowdown of the economy.
The above statistics are only a rough indication of the actual employment situation. Many public employees have more than one job. Many more people working in agriculture are unpaid and uncounted family members. In addition, there is seasonal migration of workers depending on the harvests, and of agricultural workers seeking casual work in the towns during the off-peak seasons.
There has also been a substantial migration of people to neighbouring oil-rich Arab countries. In the mids, it was estimated that the number of Syrian nationals living abroad was about 2 million.
This is higher than the 1 thousand Syrians estimated here to be living abroad in , and may have to do with the decline in economic activity in the oil rich Arab countries during the post period. This must have had significant implications for the size of private transfers from abroad. Private wages are related to the public sector wages. These in turn are legally mandated to increase every two years by 9 percent, and in addition, ad hoc further increases are given.
In there was a 30 percent such increase, and in another 25 percent. In real terms [namely deflated by the retail price index, which in Syria is the definition of the Consumer Price Index CPI ], average real wages of civil servants have fallen between and by 21 percent IMF, b, Table 33 , at the same time that total civilian employment has risen by This must have led to increasing pressures on civil servants to seek additional income-earning activities. Agriculture is the largest productive sector, as seen above, and its direct and indirect impact on the economy is considerable. Syria has achieved self-sufficiency for the main agricultural products, and the Government sets procurement prices for the strategic products at prices that are deemed to be attractive to farmers.
Exporters of agricultural products are allowed to retain percent of their export proceeds, unlike other exporters. There was an agricultural production tax, applied to agricultural products at the processing stage at rates that ranged from 10 to 12 percent. Over the past decade a number of exemptions were introduced and the tax was finally abolished for all products in Commercial credit and inputs are provided to farmers through the Agricultural Co-operative Bank ACB , and the state plays a significant role in setting the cropping patterns through the planning mechanism.
While these policies have been successful at diversifying the production structure, and increasing production, in recent years of declining international prices they have been putting an increasing strain on the budget. Of particular importance from a macroeconomic perspective is the high level of stocks cotton, sugar beet, and wheat , that may be placing a high cost on the budget. Manufacturing accounts for 35 percent, and utilities for the remaining.
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The petroleum sector boomed in the past fifteen years with oil production more than doubling between to , due to discovery and production of light crude oil. Syria became a net oil exporter in the late s, but due to increasing domestic consumption and stagnant production, is facing the prospect of becoming a net oil importer by Considerable recent natural gas finds have led to expanding production, and the construction of several plants to manufacture gas-using products, such as cement and nitrogenous fertilizer.
All gas is consumed locally, with two thirds used by gas-fired power stations, and the rest as fuel in industrial plants and for fertilizer production. In manufacturing, the main activities are based on food processing, cotton, textiles, sugar, and fertilizers.
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Hence agriculture is an important provider of raw materials for this sector. Manufacturing provides 15 percent of total employment about thousand jobs in , and 81 percent of this is in the private sector. Construction activity boomed between , and slowed markedly since then. This is the result of overconstruction in the preceding years, particularly high-income housing, as a result of remittances and other foreign capital inflows, in expectation of future demand and incomes that did not materialize.
As a result many buildings are vacant or unfinished in many parts of Syria. A contributor to this slowdown is the rental law, which renders it unprofitable for landlords to rent their properties, and results in many houses being empty rather than rented. The services sector accounts for 45 percent of GDP. Thirty-eight percent of service GDP is accounted for by public sector activities, including government administration.
The private services are dominated by wholesale and retail trade, as well as transport and communications. The public sector of Syria consists of central, regional and municipal governments, a number of non-financial public enterprises, and financial institutions. The budgetary accounts consolidate the gross financial transactions of the central government with the net transactions of the regional and municipal governments, as well as the operating surpluses of some public enterprises.
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Military expenditures are included in the budget as current expenditures for military and security. Some significant public sector operations are not included in the budget. To a large extent borrowing from the banking system finances losses of public enterprises. The following major observations can be made. First, the oil related revenues make up about 45 percent of total revenues. Second, the biggest contributor to the overall fiscal negative balance is the deficit of the PSF. Third, the bulk of the financing of the overall deficit has come from the external sector, largely through borrowing to finance development projects.
On the revenue side, of the non-oil tax revenues, taxes on business mostly public which make up 70 percent of these taxes make up about 32 percent of the total, taxes on wages and salaries only 6. Export taxes are small, making up only 1. Temporary exemptions, renewed on annual basis, were introduced for fruits and, more recently, for raw and processed cotton. In the export taxes were cancelled for all agricultural products.
Of the remainder, the majority comes from non-petroleum surcharges on natural gas, tobacco and construction materials, and stamp fees. The non-tax revenues consist mostly of public enterprise surpluses. Taxes related to agriculture include the unimproved land tax, the livestock tax, and the tax on agricultural products applied at the processing stage and ranging from 10 to 12 percent.
This tax has been cancelled in All these taxes accounted in for only 3. The share of import taxes in total taxes has been declining since , basically because the valuation of imports is still done at highly overvalued exchange rates. In spite of a weighted average nominal tariff rate of 35 percent, the import duties accounted for only 2. This is low, given that imports amounted in to about 30 percent of GDP. This suggests that there are considerable exemptions from the tariffs or that there is some tariff avoidance.
Concerning public expenditures, about 67 percent of current expenditures are for wages and salaries, of which more than half is for defense and security. Subsidies, mostly transfers to the PSF, rose from 1. In and a large amount about 0. Concerning development expenditures, agriculture has been receiving amounts ranging from 1. The management of public finances has been conservative, and this, along with the availability of external financing, has allowed the government to reduce its domestic debt since Steady sources of financing for the government include the sale of investment certificates to the public, the build-up of household savings through deposits to the Post Office Savings Fund POSF , and the obligation of commercial and specialized banks to invest in government paper an equivalent of 7.
All financial institutions are state-owned. The ACB finances all agricultural production activities, deals directly with farmers, and organizes the distribution of inputs to farmers according to detailed plans drawn by the Ministry of Agriculture and Agrarian Reform MAAR. Monetary policy is conducted mainly through an annual credit plan formulated by a ministerial committee, that establishes credit ceilings for the central government, the public enterprises and the private sector. The plan is implemented flexibly to allow for unforeseen developments. Instruments such as discount rates and reserve requirements have not been used in recent years.
All interest rates are set administratively and have not changed for many years. Foreign assets make up a substantial part of total monetary assets of the banking system. Claims on public enterprises are the second largest item, accounting for about 70 percent of outstanding loans. The money supply [consisting of money, currency outside banks and demand deposits and quasi-money ] has grown between and at an average annual rate of 9.
This may account partly for the inflation observed between see Table 1. Public enterprises receive more than two thirds of total bank credit. The GOCTP, whose share of total credit to public enterprises declined by more than 20 percentage points over , still had over 50 percent of the outstanding credit to the public sector. By contrast, total credit to the agricultural sector in , the bulk of which is ACB loans to farmers, amounted to only 16 percent of the total credit to these two organizations. This situation implies that the marketing and price policies towards cereals and cotton, which include three of the seven strategic crops, and the corresponding marketing organizations have significant monetary implications for the economy, as well as implications about the availability of credit to the rest of the economy.
Diminished requirements for credit to these two sectors will most likely release considerable amounts of credit for use by other public and especially private sectors. This is characteristic of financially repressed economies. The computed per capita currency outside banks declined in real terms deflated by the retail price index between and by 12 percent, but then recovered during Still in the real per capita currency outside banks was 3 percent below its peak between in As this indicator is a proxy for domestic economic activity, and should increase when economic activity is growing, its decline in real terms suggests that the Syrian economy has been in stagnation since The other major feature of the banking system is the meagre incentives it offers for private formal savings.
As real interest rates have been negative for much of the last two decades, the private individuals have found other ways to utilize their savings. This tends to deprive the economy of much needed formal capital for domestic investments. It is clear that formal private savings mobilization has still a long way to go, and substantial room to grow in Syria.
The major factor in this development was the increase in oil related exports, while private exports have remained steady. While the trade balance has been positive in the last few years, the service account has been negative for a long time, and is largely counterbalanced by workers remittances. The capital account has been positive all throughout the period , largely because of substantial receipts of short term and long term loans.
On the export side, crude oil accounted for 63 percent of total exports, with fruit and vegetables second at Other primary agricultural products mainly lentils, raw hides and skins, wool, and tobacco accounted for another 3.
Thus, about 82 percent of total exports are accounted for by primary products, a very high ratio by world standards. Among non-primary products 7. Thus the bulk of non-oil exports is agricultural raw materials or based on agricultural inputs. Non-oil public sector exports mainly raw cotton and miscellaneous manufactures comprised 31 percent of total exports during However, in the private sector share of non-oil exports reached 80 percent.
A number of incentives to stimulate private sector exports were introduced during , such as the permission to import a larger number of inputs used in export production, the depreciation of the neighbouring countries exchange rate used to value the surrendered portion of the non-agricultural export proceeds, and the removal of the tax on exports of many agricultural products.
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However, these incentives have not been sufficient to generate significant growth of exports, because exporters are still constrained by cumbersome administrative procedures, the absence of a duty drawback scheme for imports used in export production, the inability to import goods that are produced domestically at higher cost such as cotton yarn , and the 25 percent foreign exchange surrender requirement. Agricultural exports are directed mainly to Arab countries. There seems also to be considerable border trade with Lebanon and other neighbouring countries that is unrecorded.