IMF says Syria economy shows signs of recovery, but poverty remains widespread,

Syria’s economic recovery is accelerating, with double-digit growth expected in 2026 and continued strong growth projected for 2027, but widespread poverty and major weaknesses in the banking and public finance systems remain significant challenges.

The International Monetary Fund (IMF) made the assessment following a staff mission to Damascus from 19-23 July 2026, to assess economic conditions, review reform progress and discuss policy priorities and further technical assistance.

According to the IMF, Syria’s recovery is being driven by improving agricultural production, expanding hydrocarbon output, increased electricity provision, growing trade and services, refugee returns, a surge in visitors and government spending.

However, the Fund warned that economic growth remains uneven across regions and poverty, although somewhat reduced, continues to affect large sections of the population.

The IMF said inflation, which slowed to low double digits in 2025, has risen sharply in 2026 due to higher import prices for fuel and food amid regional conflict, stronger domestic demand, public sector wage increases, higher utility prices and rising housing costs.

The Fund expects inflation to ease in 2027 if pressures on import prices decline and the authorities maintain sound fiscal and monetary policies.

It also reported significant improvements in Syria’s fiscal position, noting that the central government budget recorded a small surplus in 2025.

Revenues are expected to rise substantially in 2026, supported by increased tax and customs collections, higher hydrocarbon revenues and one-off revenues from telecommunications licence and fuel transit fees.

IMF, however, urged the authorities to maintain fiscal discipline and strengthen public financial management, including tighter oversight of off-budget operations, quasi-fiscal activities and government liabilities.

It also called for stronger tax and customs administration and limits on tax exemptions to create fiscal space for development spending and expand social protection for vulnerable populations.

The Fund said Syria’s substantial humanitarian and development needs make continued international financial support critical, particularly to support returning refugees and internally displaced people through employment creation, improved public services and the restoration of housing and infrastructure.

IMF further identified rehabilitation of the banking sector as an urgent priority, saying the dysfunctional banking system is severely limiting the effectiveness of monetary policy and restricting domestic and international financial transactions.

It called for new central banking and banking laws, stronger bank supervision and resolution powers, and comprehensive assessments of banks’ financial health.

The Fund also urged Syria to strengthen its anti-money laundering and counter-terrorist financing framework as part of efforts to reintegrate the country into the international financial system and facilitate investment and financial flows.

The IMF said it will continue providing technical assistance to Syria in areas including public financial management, tax and customs administration, public debt management, financial sector legislation, banking rehabilitation, banking supervision, anti-money laundering measures, monetary policy and economic statistics.

It said improvements in the availability and quality of economic data will be essential for a more detailed assessment of Syria’s economy and for the eventual resumption of Article IV consultations with the country.