Taysir Raddawi replaced Abdullah Dardari as the head of the State Planning Commission last year. Jihad Yaziji of the Syria Report interviewed him and has kindly allowed me to rip off the interview. (Subscribe to Syria Report: unsolicited advertisement) Syria Comment has been debating whether the positive IMF economic report is accurate and how high unemployment in Syria is. Raddawi answers these question with some straight talk. The IMF report was too positive and unemployment is much higher than the 10% reported by the Syrian Central Bureau of Statistics, he says.
Syria still far from social market economy – Raddawi
25 June 2007
Syria is still far from its target of a social market economy, says Taysir Raddawi, the head of the State Planning Commission.
The Syrian Government says it wants to have a social market economy. How realistic is that?
As such, the idea of a social market economy is excellent. Having a strong and dynamic market economy coupled with social justice and redistribution is the ideal solution. However, in order to redistribute wealth, you need first to have…wealth, i.e. economic surpluses. Syria is very far from reaching that stage. So I don’t really think we can talk of Syria being, yet, anywhere close to a social market economy. We now need significant growth, an efficient regulatory framework for business, less intervention from the State.
However, the IMF has just released a preliminary report on the status of the Syrian economy, which is very positive.
Indeed, it is very positive, maybe too much. There is no doubt that there has been economic growth last year and that the situation is improving. However, I doubt that the levels of GDP growth mentioned by our official statistics and by the IMF are as high as reported. Unfortunately, our statistical tools are very poor, as the IMF rightly pointed out, and it is really difficult to give an accurate estimate. However, my feeling from the activity on the ground is that growth is not as high as reported by the Central Bureau of Statistics.
What do you say then of the falling inflation and unemployment rates?
It all has to do with how you calculate and what standards you use. According to the International Labour Organization standards, which count as unemployed only the persons that have worked less than one hour a week, unemployment is at 10 percent or lower. But if you were to consider that any person working for less than 2 days a week is unemployed, then the rate easily shoots up to twice that level.
The reform of the public sector remains an important issue in Syria. What directions should this reform take in your view?
My only red line is that we cannot layoff anyone. Unemployment in the country is so high that you cannot afford to have more people without job. Apart from that I have no ideological precondition. There are too many companies that bring no added value and that are of no strategic value for the State. So, in my view, there are two main options for the reform of the public sector: Companies that are of a strategic nature or that generate profits must remain in the hands of the State. Companies that are losing and representing a drain on public finances as well as non strategic firms should be sold, partly, to their employees and to private capital.
Another key issue is that of public finances and subsidies. What are the options for Syria?
Subsidies are costing a lot to the state and distort economic activity. So at one time they will need to be scrapped. However, this process can only be gradual and after we make sure we have a good social safety net. The World Bank has recently prepared a report suggesting that we increase the price at which we sell diesel, which is the most expensive subsidized item, by 150 percent (it currently sells at SYP 7.30 a litre) and that in compensation we pay every Syrian citizen an annual amount of SYP 1 700.00. That’s an option we are working on at the moment.
What is the path to growth for the Syrian economy then?We need a strong and efficient market economy. We also have to support small and medium enterprises, in particular those that create a lot of jobs and bring significant technological added value. We can also think of setting-up Special Economic Zones, such as those in China, which were extremely successful.