MIDDLE EAST - Syria's economy is expected to expand by double digits in 2026 and maintain strong growth in 2027, the International Monetary Fund (IMF) said following a staff mission to Damascus.
The IMF press release on August 4, 2026, cited an improving economic outlook driven by a recovering agriculture sector, higher hydrocarbon production, stronger trade and services, and continued refugee returns.
The IMF staff team, led by Ron van Rooden, visited Damascus from July 19 to 23 to assess economic conditions, review the government's reform progress and agree on a new package of technical assistance, marking another step in the Fund's intensified engagement with Syria.
The mission comes as Syria seeks to rebuild its economy after years of conflict and isolation. While the IMF projected a significant acceleration in growth, it warned that poverty remains widespread, economic gains are uneven across regions, and substantial structural reforms will be needed to sustain the recovery.
Recovery Progress Despite Regional Tensions
According to the IMF, Syria's economy began recovering in 2025 as consumer and investor confidence improved following the country's political transition, accompanied by the return of approximately 1.5 million refugees and gradual reintegration into regional and global markets.
Although a severe drought weighed on agricultural output last year, the Fund said stronger rainfall in 2026 is supporting a robust rebound in farming, while hydrocarbon production, electricity generation, trade and services continue to expand.
The IMF also attributed the stronger outlook to increasing numbers of returning refugees and visitors, alongside government policies aimed at restoring macroeconomic stability and encouraging private sector-led growth.
Despite ongoing conflict across the wider region, the Fund expects Syria's recovery to continue into 2027.
Inflation Pressures Persist
While economic activity has accelerated, inflation has risen sharply during 2026 after easing to low double-digit levels in 2025.
The IMF said higher global prices for fuel and food, partly linked to regional conflict, combined with strong domestic demand, public sector wage increases, rising utility prices and higher housing costs have contributed to renewed inflationary pressures.
The Fund expects inflation to moderate in 2027, provided import price pressures ease and authorities maintain prudent fiscal and monetary policies.
Public Finances Improve, but Reforms Remain Critical
The IMF said Syria's fiscal position has strengthened considerably.
The central government recorded a small budget surplus in 2025 after limiting spending to available resources while prioritizing essential services. Government revenues are expected to increase substantially during 2026, supported by stronger tax and customs collections, higher hydrocarbon income and one-off revenues, including telecom licensing fees and fuel transit charges.
However, the Fund cautioned that capital spending will likely remain constrained due to limited resources.
It urged authorities to continue strengthening public financial management, improve tax collection, reduce tax exemptions and enhance oversight of off-budget operations and government liabilities.
According to the IMF, stronger revenue mobilization will be essential to create fiscal space for infrastructure investment and expand social protection programs targeting vulnerable populations.
Banking Reforms Identified as Urgent Priority
The IMF described Syria's banking sector as highly dysfunctional, warning that weaknesses in the financial system continue to limit the effectiveness of monetary policy.
Although the Central Bank of Syria successfully introduced a new currency, the Fund said comprehensive banking reforms are urgently needed to restore financial intermediation and improve domestic and international payment systems.
Key priorities include adopting new central banking and banking legislation, assessing banks' financial health according to international standards and strengthening financial supervision.
The IMF also stressed the importance of enhancing Syria's anti-money laundering and counter-terrorism financing (AML/CFT) framework, saying progress in these areas would support the country's reintegration into the international financial system and help facilitate removal from the Financial Action Task Force's grey list.
Technical Assistance Expands as Questions Remain Over IMF Financing
While the mission reflects deepening cooperation between Syria and the IMF, the Fund stopped short of announcing negotiations on a lending arrangement or economic adjustment program.
Instead, both sides agreed to expand technical assistance across fiscal management, banking sector rehabilitation, debt management, financial legislation, monetary policy and economic statistics.
The IMF said improving the quality and availability of Syria's economic data remains a priority, noting that statistical weaknesses continue to hamper comprehensive assessments of the economy. Better data would pave the way for the eventual resumption of Article IV consultations, the IMF's regular economic health checks requested by member countries.
The Fund also emphasized that Syria's reconstruction will require sustained international financial support beyond humanitarian aid, including investment in infrastructure, housing, employment and public services.
It added that Syria's ability to mobilize long-term development financing will depend partly on resolving its legacy debt and developing domestic capital markets.
Although the latest mission demonstrates growing engagement between Damascus and the IMF after years of limited interaction, Syria is not currently under an IMF financing program, and the Fund did not indicate that negotiations for one are underway.
Instead, the current focus remains on institution-building, policy advice and technical assistance aimed at laying the groundwork for future economic stabilization and, eventually, deeper financial cooperation.
