Damascus, December 21 (QNA) - The repeal of the so-called Caesar Act sanctions on Syria earns exceptional economic significance, ushering in a new era of potential incremental recovery after years-long restrictions that had impacted all facets of the Syrian economy, Syrian economists highlighted to Qatar News Agency (QNA).

Despite the utmost consequentiality of this decision, the economists affirm that the repeal of this act does not ensure a spontaneous economic recovery, but remains hinged on carrying out effective structural overhauls.

Professor of Financial Management at Istanbul Basaksehir University, Dr. Firas Shabo, sees that this repeal would lessen concerns related to sanctions and give the foreign exchange market a measure of relative short-term stability, with this improvement considered limited and non-spontaneous unless followed by balanced monetary policies and reforms in currency and liquidity management by the central bank.

The roots of the exchange rate weakness are not limited to sanctions alone, but are also linked to weak domestic production, a decline in foreign currency reserves, and fluctuations in liquidity, he clarified.

Dr. Shabo further noted that lifting sanctions could help facilitate remittances from expatriates through official channels, allow certain international investments and aid to reach the country, and ease trade financing through letters of credit and regular imports.

The actual foreign currency flows will remain constrained by Syrian banks' ability to reconnect with the global financial system and open correspondent banking channels with international banks, a process that requires deep reforms in banking compliance and may take longer to materialize, he emphasized.

Regarding the stimulation of production, Dr. Shabo further emphasized that the lifting of sanctions opens an important window but is not the sole factor for achieving a rapid recovery.

He evinced that this requires the availability of financing for industrial and agricultural projects, access to modern technology and equipment, stable domestic and foreign demand, and structural reforms in laws and institutions.

Lifting the Caesar Act is a necessary but not sufficient condition for the return of investment. Investment remains contingent on building trust in the economy and financial institutions, providing a stable and transparent business environment, ensuring a reliable banking system capable of transferring profits, and establishing guarantees for managing political and economic risks, Dr. Shabo highlighted.

Shabo added that electricity, energy, transportation, and communication sectors, as well as real estate, housing, foodstuffs, and logistics, are mostly the key areas that would benefit from the upcoming period, stressing that the impact on citizens' daily lives would be incremental.

Faculty Member at Yarmouk Private University and Lecturer at the Faculty of Economics, Damascus University, Dr. Mohammed Taiser Al Faqieh, affirmed that this repeal extricates the Syrian economy from semi-full isolation to the possibility of regional and global integration based on certain conditions.

The depth of this transition is not literally connected with the act per se, but with the pathway the financial and productive policies will pursue later, Al Faqieh outlined.

He noted that the near-term impact may appear in a relative improvement in the exchange rate, driven by expectations and improved public and investor sentiment, strengthening demand for the local currency and reducing reliance on the dollar as a safe haven.

Al Faqieh further elaborated that reopening official remittance channels would increase foreign currency supply in the formal market, lower external trade costs and associated risks, and positively support economic activity.

The medium-term orientation of the exchange rate will remain contingent on the economy's ability to generate stable foreign currency inflows through exports, remittances, and investments, alongside narrowing trade and fiscal deficits by expanding the productive base and improving public spending efficiency, Al Faqieh emphasized.

Al Faqieh said sanctions repeal bolsters the efficiency of financial transfer channels by reconnecting banks to the international payments system, reducing compliance risks for correspondent banks, and strengthening the role of official exchange companies, enabling the central bank to play a more effective regulatory role in managing foreign currency supply.

On the real economy, he predicts lower import costs for production inputs, spare parts, and equipment, easing constraints on industrial, agricultural, and service sectors, particularly agriculture, food, pharmaceuticals, textiles, and energy.

Al Faqieh noted that this move is a necessary but not sufficient condition for attracting investment, which remains dependent on political and security stability, a clear legal framework, tax transparency, and anti-corruption efforts.

He also pointed to early positive signals in energy, transport, and infrastructure through public- private partnerships, with light industry and logistics likely to see gradual gains, while energy and reconstruction require longer timelines due to high costs and financing entanglements.

For his part, Dr. Hasan Ghura, Economic Researcher at Jusoor for Studies, highlighted that lifting this act would herald an opportunity for eventual enhancement of the Syrian economy, with a faster impact on market expectations and the inflow of some hard currency.

However, he notes, this move won't lead to full recovery or fast improvement in Syrians' livelihoods unless coupled with profound internal reforms and broader flexibility in other Western sanctions systems, as well as banking restrictions, Dr. Ghura underlined.

He emphasized that the potential improvement in the exchange rate throughout the first weeks could be driven by the plummeting risks of sanctions and the improvement of predictions for dealers, importers, and expatriates.

However, this potential sustainable improvement is contingent upon the return of regular remittances, control of the financial deficit, and improvement in energy supplies and domestic production, Ghura noted.

Ghura further explained that lifting this act mitigates legal risks on a portion of remittances and investments, heralding an eventual return of official channels in lieu of parallel markets, but the act per se won't spontaneously repeal other U.S. and European sanctions and never ensures full restoration of correspondent banking without enhanced compliance and financial governance.

This lifting will initially give momentum to reduce the costs of importing inputs and improve energy supply availability, in addition to expanding the exportation of some agricultural and industrial commodities, he pointed out.

Dr. Ghura stressed that, in terms of the most investment-ready sectors, energy, oil, and gas come first due to reduced contracting risks, followed by reconstruction and infrastructure, as well as agriculture, food industries, communications, and services, with a potential eventual return of religious, cultural, and medical tourism.

The impact of this lifting will be positive in the short term, in terms of ample supply of commodities, coupled with a limited decline in shipping costs, Dr. Ghura predicted, explaining that clear improvement in income and job opportunities requires prolonged time that could literally extend to many years if the decision is leveraged within an integrated reforming path.

Syrian Economic Researcher Hayyan Hababa stressed that repealing this act will definitely transform numerous investment contracts, once signed only on paper, into effectuation after they had been put on hold due to concerns over financial compliance on the part of foreign investors.

This move is anticipated to be followed by funds pouring in via official channels from Syrians in the diaspora to fund existing investments or launch new ventures, thereby stabilizing the local currency and controlling the monetary market, Hababa highlighted.

Hababa elaborated that lifting this act would help rapid investments tap into the Syrian markets, especially in rebuilding sectors, effectuating a large scale of associated activities. (QNA)