AMMAN (Reuters) - Syria has banned imports of most foreign manufactured goods 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 five percent are banned, meaning that most foreign goods are affected, from electrical goods, to cars and luxury items, businessmen and traders in Damascus, who were contacted by Reuters said.
The decision however excludes raw materials needed for the country’s hard-hit industries, along with wheat and grain purchases by the state for local consumption.
The country has been rocked since March by pro-democracy protests aimed at overthrowing President Bashar al-Assad which have intensified and claimed hundreds of lives.
In the five year’s prior to the uprising, after the authorities lifted Syria’s Soviet-style ban on imports but imposed high tariffs. Nonetheless the moves did not dampen demand for foreign imports, especially cars that 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.
Traders said the import ban has already sent shock waves across the country’s business community and was bound to add to inflationary pressures and further damage business confidence, already hit by the impact of social unrest.
“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’s Sabaa Bahrat commercial area, who preferred not to disclose his identity.
“This move will only worsen the situation and add to the uncertainty,” said another businessman in the Halabouni district in the capital, adding there was a wait-and-see mood among investors and traders.
“They are holding tight and not buying any goods and sitting and waiting but not panicking so far,” he added.
Businessmen said that the economy faces currency pressures as a result of the protests and could deplete foreign reserves that had stood at around $18 billion earlier this year.
But economists and bankers say reserves have been falling as the central bank pumps foreign currency to stop falls in the Syrian exchange rate on the black market.
The official exchange rate stands at 47.4 pounds to the dollar. But dollars are changing hands on the black market at 51 pounds to the dollar and above.
The Syrian economy has been hard hit by international sanctions aimed at pressuring Assad, including a ban on all Syrian oil imports to the European Union. Analysts in the country say that foreign investment has reduced considerably.
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 (IMF) predicted this week that Syria’s economy would contract 2 percent this year, dumping the 3 percent growth forecast it issued in April due to ongoing conflict and social unrest across the region.
Reporting by Suleiman Al-Khalidi; Editing by Ed Lane
Our Standards: The Thomson Reuters Trust Principles.