Enab Baladi, Wasim al-Adawi
The Syrian government has entered a new phase of public spending controls after the General Secretariat of the Presidency issued a circular directing ministries and administrative and economic public bodies to halt unnecessary new spending commitments, reduce expenditures that can be streamlined to the lowest possible level, and reprioritize investment projects. The measures seek to curb spending growth during the remainder of 2026.
The circular includes direct measures to reduce operating expenses, including:
– Cutting fuel allocations for government vehicles and machinery by 30%.
– Limiting unnecessary travel, official missions, conferences, hospitality, printed materials, and subscriptions.
– Halting the purchase or replacement of furniture, equipment, and administrative vehicles except where a need can be demonstrated.
– Prohibiting new rental contracts or the renewal of existing contracts where state-owned alternatives are available.
– Postponing nonurgent maintenance and rehabilitation work, and reviewing investment projects according to their economic and financial viability and their contribution to public services.
The need for spending controls is directly linked to budget figures for the first half of this year. Official data issued by the Ministry of Finance and the “Citizens’ Budget for 2026” show that revenues rose by 111% to $2.7 billion, while public spending increased at a faster rate, rising by 331% to more than $3.7 billion.
This gap produced a fiscal deficit of $1.005 billion in just six months, equivalent to 56% of the approximately $1.8 billion annual deficit projected in the 2026 budget.
“No Room Left to Maneuver”
The circular issued by the General Secretariat of the Presidency, which represents the austerity plan submitted by Syria’s Ministry of Finance, amounts to “an official acknowledgment that there is no room left to maneuver in public finances for 2026,” according to Syrian economist and banking expert Dr. Muhammad Tayseer al-Faqih.
Speaking to Enab Baladi, the expert said the circular, in these circumstances, represents an emergency attempt to prevent the fiscal gap from widening during the second half of the year. It also seeks to prevent this pressure from spilling over more heavily into the 2027 budget, potentially pushing the deficit to levels the national economy would struggle to bear.
Reordering State Priorities
The circular goes beyond cutting specific expenditures. It establishes a mechanism for reprioritizing investment projects approved by public bodies, reviewing them according to their necessity, completion rate, existing contractual commitments, and financial, economic, and public service impact.
The presidential circular divides projects into three main categories:
First: Priority projects, including those related to maintaining essential services, public safety, and the protection of assets and critical infrastructure; projects whose suspension would cause definite harm; and projects that generate an economic or financial return. Their continued implementation within existing budget allocations requires confirmation of their priority and viability, as well as the availability of the necessary funding.
Second: Projects that can be postponed without substantially affecting public services or economic activity, or causing significant financial losses or contractual liabilities. New spending commitments or obligations for these projects are temporarily suspended.
Third: Projects that are not priorities, either because their implementation is unnecessary at the current stage or because their economic, financial, or public service benefits do not justify their cost under current conditions. New spending commitments and obligations for these projects are halted, with the Ministry of Finance tasked with identifying the resulting uncommitted budget allocations.
While the circular remains in force, no new contracts or obligations may be entered into for investment projects whose implementation has not begun, unless they are classified as priority projects.
Fuel and Nonessential Spending
For operating expenses, the circular requires a 30% reduction in gasoline and diesel allocations for government vehicles and machinery, calculated against the quantities allocated to each vehicle or machine when it takes effect. Vehicles allocated no more than 70 liters per month and vehicles used for collective transportation are exempt.
It also calls for official trips to be coordinated and combined wherever possible. The Ministry of Energy is responsible for overseeing fuel conservation measures and submitting a monthly report to the General Secretariat of the Presidency detailing public bodies’ consumption and the percentage savings achieved through the circular.
Dr. Muhammad al-Faqih sees these measures as fundamentally a direct attempt to curb operating expenditure. However, he believes some provisions may fail to deliver the expected savings unless accompanied by oversight mechanisms capable of measuring actual consumption.
He cited the decision to cut fuel allocations by 30%, arguing that the reduction could, in practice, be merely a formality if ministries’ baseline figures already contain inflated allocations, or if accounting records can be adjusted to cover the movements of officials’ vehicle fleets without a corresponding reduction in actual consumption.
Al-Faqih proposed that the Ministry of Finance identify the savings and recommend transferring them between budget items or reallocating them where appropriate, in accordance with the Basic Financial Law and applicable regulations.
Al-Faqih directly linked this measure to efforts to reduce the recorded budget deficit. He argued that centralized management of savings would prevent public bodies from spending the money saved on other items and allow it to be directed toward reducing the deficit recorded in the accounts and the burden of short-term debt instruments on the treasury.
On that basis, al-Faqih classified the circular as an “emergency measure to manage liquidity,” rather than part of a comprehensive fiscal and structural reform plan.
Risk of Government Projects Stalling
Despite the broad scope of the cuts, the circular exempts salaries, wages, and expenditures needed to maintain health, education, water, energy, security, and public safety services, as well as essential operational and preventive maintenance. These expenditures must be justified and supported by documentation.
Al-Faqih believes the project-related exemptions in the presidential circular are necessary in practice. However, the challenge lies in public bodies’ ability to distinguish between projects that should continue and those that can be postponed, particularly amid rising material costs and exchange rate fluctuations.
He said the prohibition on requesting increased allocations for existing projects could help “curb the inflation of budget figures on paper,” but could also cause vital government projects to stop or stall.
Companies and contractors may refuse to continue implementing infrastructure and construction contracts at old prices as the cost of essential materials rises and exchange rates fluctuate, he said. This could cause projects to stall and increase the cost of completing them later, rather than achieve the intended savings.
Allocations for investment spending in the 2026 budget total approximately $2.8 billion. However, Faqih believes that reducing operating expenditure and halting new allocations could affect the public sector’s ability to maintain spending on services such as electricity, water, and public hospitals, as well as companies that depend on government contracts for business.
In his assessment, a contraction in government spending could create additional pressures toward what he calls “stagflation,” given the state’s role as a major buyer and a direct source of liquidity in the domestic market.
He noted that lower spending does not necessarily mean lower prices. Reduced government demand could coincide with continued increases in production costs and prices, leaving the economy facing pressure on both fronts.
Emergency Austerity Leaves Underlying Problems Unresolved
Despite the wide range of items covered by the circular, Faqih believes the current measures fall short of structural fiscal reform.
He said meaningful reform requires a comprehensive restructuring of the tax system, addressing imbalances in state-owned economic enterprises, and developing sustainable alternatives for economic development, rather than relying heavily on deficit financing and piecemeal efforts to curb operating expenditure.
Al-Faqih believes the government’s current priority appears to be meeting unavoidable obligations, such as salaries, wages, and energy payments, while protecting essential social and public service sectors to prevent greater fiscal exposure.
In his view, however, this does not address the causes of the gap between revenues and expenditure. It only slows its widening during the remainder of the year.
Oversight and the Circular’s Effectiveness
Implementation of the circular remains dependent on the ability of the Ministry of Finance and oversight bodies to monitor actual spending, beyond simply issuing instructions.
Al-Faqih believes the ministry and oversight institutions lack the digital auditing mechanisms and comprehensive electronic systems needed to monitor the spending of budget allocations in real time.
He warned that this shortcoming could allow public bodies to engage in what he called “administrative maneuvering,” by reclassifying expenditures, splitting contracts, or changing their descriptions. This could make them formally compliant with the circular without necessarily producing an actual reduction in spending.
In al-Faqih’s assessment, the success of these measures depends not on the scale of the spending items frozen, but on the state’s ability to turn austerity from administrative spending cuts into fiscal reform that addresses the revenue and expenditure gap at its roots.
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