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Syria Development Planning
Development planning began in 1947, when a British firm was
hired to survey the Syrian economy and make suggestions for
investments. Presumably, the report guided the government's
limited development expenditures for several years. In 1955 an
economic mission from the World Bank suggested a six-year, LS1.9
billion development program and formation of a planning agency.
In the same year, a planning organization that immediately
presented a seven-year, LS660-million development plan was
established. Although this plan was adopted, it was discarded in
1956. In 1958 a ten-year plan was prepared, incorporating the
results of the 1957 aid agreement with the Soviet Union. This
plan was also discarded in order to mesh plans with Egypt.
After Syria's union with Egypt, Syria's First Five Year Plan
(beginning in July 1960 and ending June 1965) within a broader
ten-year program was adopted. As in the Egyptian plan, Syria's
gross output of goods and services was to double in ten years,
requiring a yearly increase of 7.2 percent. Total planned
investment in the Five-Year Plan, including that by the private
sector, was LS2.7 billion. Irrigation and agriculture were
allocated 20 percent of the investments, transportation and
communications 20 percent, and industry--particularly the oil and
electric power industries--19 percent. Foreign aid was to supply
nearly one-quarter of the financing (nearly 40 percent of public
sector investments), supplemented by a small amount of internal
borrowing. However, withdrawal from the union with Egypt,
political instability, private investors' fear of
nationalization, and inadequacies of the government structure
combined to keep actual investment to less than 60 percent of the
plan.
The Second Five-Year Plan (1966-70) maintained the same
growth target (an annual average increase of 7.2 percent for
GDP), but substantially increased planned public sector
investments to achieve the socialist economy envisioned by
Syria's leaders. Planned development expenditures were LS4.96
billion, of which the public sector was to contribute LS3.45
billion and the private sector LS1.5 billion. Dependence on
foreign aid increased, amounting to a planned LS1.94 billion or
56 percent of public sector investments (39 percent of total
investments). Planned allocations included LS1.39 billion to
irrigation and agriculture (primarily the Euphrates Dam and other
irrigation projects), LS612 million to fuel and electric power,
LS894 million to transportation and communications, LS399 million
to manufacturing and mining, and LS1.28 billion to housing,
construction, and public works. More than two-thirds of private
investments were to be in housing, construction, and agriculture.
Implementation of the second plan fell short of goals, partly
because of the June 1967 War and the resources devoted to
national security. Economic growth was about two-thirds of that
projected under the plan and investments were about 70 percent.
Public sector development expenditures lagged considerably during
the first three years, and only large investment in 1969 and 1970
partially salvaged the situation. Private sector investment
(largely in housing and construction) appeared to be closer to
what was planned than public sector investment. Export growth
exceeded the plan but was less than import growth, causing a
deterioration in the balance of payments.
The Third Five-Year Plan (1971-75) aimed at an 8.2 percent
growth rate for GDP (in constant prices) and investments totaling
LS8 billion, of which LS6.4 billion was planned for the public
sector and LS1.6 billion for the cooperative and private sectors.
Public sector allocations were 25 percent for completion of the
Euphrates Dam, 10 percent for agricultural and other irrigation
projects, 18 percent for industry and mining, 16 percent for fuel
and electric power, 12 percent for transportation and
communications, 9 percent for housing, water, and other public
works, and 10 percent for miscellaneous, including debt service.
Private sector investments were scheduled primarily for housing
and construction (LS903 million); much smaller amounts were
scheduled in other sectors. Domestic savings were expected to
increase sharply to finance investments. Surpluses of public
enterprises alone were expected to finance over three-quarters of
public investments.
Implementation of the third plan started slowly; development
expenditures were far less than planned by the outbreak of the
October 1973 War. The war damaged key industrial facilities,
particularly power stations and the oil refinery at Homs. The
plan was modified for necessary repairs and for additional
projects because substantial new aid became available. Over 50
percent of investments were concentrated in the last two years of
the plan.
The results of the third plan were mixed. GDP (in constant
prices) increased over the five years by 10.7 percent a year,
considerably more than planned because of relatively good weather
for crops, increasing production of and higher prices for crude
oil, and the high level of construction, particularly after 1973.
Some large projects were completed during the Second Five-Year
Plan, such as the Euphrates Dam, a fertilizer plant, and the
beginning of a steel industry that added to and diversified the
industrial strength of the country. Public investments, however,
reached only about 70 percent of the target in spite of heavy
development expenditures in the final two years, and the pattern
by sectors was irregular. Even with the large expenditures in the
Euphrates basin, investment in agriculture and irrigation
stagnated in real terms. Public savings and surpluses of public
enterprises fell considerably short of goals. Without new and
unplanned foreign aid, public investments would not have even
approached targets as closely as they did. However, the high
level of investment after 1973 contributed to shortages of goods
and skilled workers plus serious inflation.
Aware of deficiencies,the government attempted to remedy
problems in planning and implementation. In 1968 the planning
structure was reorganized; as of 1986 it retained the same form.
The Supreme Planning Council, consisting of the prime minister
and the highest officials concerned with the economy, determined
broad strategy and general objectives from which the State
Planning Organization (SPO) drew up detailed guidelines. Planning
units in ministries developed sectoral plans in collaboration
with appropriate SPO officials. The process then was reversed--
the sectoral plans passing the SPO for final formulation, with
subsequent approval by the Supreme Planning Council. SPO prepared
the annual development budget for inclusion with the government's
current budget expenditures and shared responsibilities with
another organization under the prime minister's office in the
follow up of the plan. The Central Statistical Bureau also
supported the prime minister in providing data for planning and
implementation. Statistical services had improved considerably by
the mid-1980s, but collection and processing still needed
improvement to meet the requirements of officials and planners.
The reforms made failed to raise the government's management
of the economy to the level outlined in the Third Five-Year Plan.
Deficiencies remained in project identification, preparation,
implementation, and coordination. Management of public sector
businesses was generally weak, reducing the profits available to
the government for development expenditures and often leaving
industrial capacity underutilized. In spite of efforts of the
Ministry of Finance to reform the tax system and increase
efficiency of domestic resource mobilization, deficiencies in
labor, wage, and price policies hampered development. Corruption
became so widespread that the government initiated a program
against it. Some economists viewed the government's
administrative problems as so complex that many years of serious
reform would be required to achieve satisfactory efficiency.
Preparation of the Fourth Five-Year Plan (1976-80) required a
reassessment by the country's economic leaders. In particular,
the reduced availability of economic resources (caused in part by
a slowing of foreign aid, loss of pipeline transit fees and
concessionary crude oil supplies from Iraq, military expenditures
for peacekeeping in Lebanon, and care for the large number of
refugees from Lebanon) forced a program of austerity. The
reassessment contributed to a cabinet change in August 1976, in
which the new cabinet was charged with improving economic
management and particularly with strengthening public sector
performance.
The original draft of the fourth plan, completed by 1975, was
overly optimistic. A drastically revised draft was finished in
June 1976 but was further revised downward during the year.
Because of the shortages of agricultural workers in the northeast
and technicians and managers in industry, the new cabinet
reportedly viewed the revised plan as still too optimistic about
GDP growth, expansion of irrigation, and production increases
from manufacturing and extractive industries. The revised plan
was approved and became law in April 1977, although as a
tentative plan subject to further revision.
The approved Fourth Five-Year Plan anticipated an increase in
real terms of 12 percent a year in agricultural output, 15.4
percent a year in mining, manufacturing, and electric-power
production, and 16 percent a year in construction. Total planned
investments were LS54.2 billion, of which LS44.8 billion was to
be generated by the public sector. Agriculture and irrigation
received the largest allocation, LS12.9 billion, of which LS10.4
billion was by the public sector, including LS7.4 billion for
irrigation in the Euphrates basin and LS1.1 billion for fifty-
eight small dams and irrigation and drainage projects elsewhere.
Mining and manufacturing were allocated LS11.3 billion, of which
public sector investments were LS9.9 billion. Fuel and electric
power, all in the public sector, received LS7.9 billion. Housing
was allocated LS8.1 billion, almost evenly divided between public
and private investments. The transportation and communication
systems, primarily public sector, were allocated LS5.6 billion.
Investments in public works, local government, trade, and other
services (largely public sector) made up the remainder.
Despite the infusion of funds from Arab oil-producing states,
Syrian officials had concluded that the targets set for the
Fourth Five-Year Plan were unrealistic and that the plan
contained too many large and overly ambitious projects.
Consequently, the Fifth Five Year-Plan (1981-1985) sought more
modest goals than its predecessors. The plan, announced only in
mid-1981 and published in 1982, called for few new major
projects, indicating the return of realism to Syrian development
planning. Although planners concentrated on completing projects
begun under the fourth plan, emphasis shifted from industry to
agriculture, with self-sufficiency in food the ultimate goal. The
large increase in food imports since the late 1970s and the
general neglect of the agricultural sector in that decade
produced a renewed commitment to agricultural development. The
Fifth Five-Year Plan sought a reduction in both public and
private consumption while continuing to increase investment. In
addition, the plan targeted a decrease in the trade deficit and a
reduction in the growth of public spending. Under the Fifth Five-
Year Plan, total planned investment was LS101.5 billion with
LS9.4 billion derived from foreign loans and aid. The private
sector was slated to provide LS23.3 billion. Agriculture received
LS17.2 billion, and mining and manufacturing's allocation was
LS27 billion, including LS4.6 billion for the extractive
industries and LS10.1 billion for electricity, gas, and water.
The transportation and communications sector received LS12.8
billion, the financial sector LS18.4 billion, and the service
sector LS20.6 billion. Although the Fifth Five-Year Plan's goals
were more realistic than goals of previous plans, targets proved
unattainable. In fact, the fifth plan achieved only 50 percent of
its goals in key areas. Factors largely beyond the control of the
government contributed to this failure. The oil crisis of the
1980s, which lowered the price and demand for petroleum, reduced
the value of Syria's crude oil exports. The crisis also produced
depressed economic conditions in the Arab oil-producing states,
leading to a marked decrease of workers' remittances and foreign
aid and grants from the Gulf states in the mid-1980s. In
addition, the 1983-84 drought damaged not only the production of
key crops but also adversely affected agriculturally dependent
sectors of the economy. Mounting defense expenditures and
government policies, including price controls and marketing
restrictions on agricultural production, also accounted for the
failure to achieve the projected goals of the plan. In general,
less than 70 percent of the amount allocated for investment
budgets in the early 1980s actually was spent. The Fifth Five-
Year Plan projected a 44.7 percent growth in real GDP (in 1980
prices), equivalent to an average annual increase of 7.7 percent,
but real GDP fell from 1982 to 1985.
Individual sectors clearly failed to meet or even approach
the targets. The value of agricultural production was slated to
grow an average of 7.8 percent a year under the plan. Despite the
state's renewed emphasis on agricultural development, production
decreased in the early 1980s as a result of drought conditions.
Increased production levels in 1985 occurred more as a response
to good weather than as an emerging trend toward increased
agricultural output. Structural changes in the economy and the
movement of the labor force away from the agricultural sector
weakened attempts to increase production. The mining and
manufacturing sector, targeted to rise 42.7 percent over the
five-year period, grew only about 8.5 percent in the early 1980s.
The sector experienced an overall decrease in the real value of
production from 1980 to 1985, despite increases in electric power
generation and manufacturing output. The plan also anticipated an
8.9 percent per year rise in investment and a 6.4 percent per
year increase in current expenditures. Allocated development
expenditure actually declined in real terms from the 1980 to 1985
budgets. Gross domestic investment, both public and private, grew
about 2.9 percent year. Current expenditure grew 9 percent per
year in real terms during the period of the Fifth Five-Year Plan.
The planned yearly increases for imports and exports were 3.4 and
6.5 percent, respectively, yet both actually fell. The trade
deficit and food imports, however, continued to grow. In early
1987, the Sixth Five-Year Plan (1986-1990) had still not been
published. However, Syrian government officials had revealed the
general goals of the plan in statements to the international
media. Like its immediate predecessor, the Sixth Five-Year Plan
stressed completion of existing projects and increased
productivity in ongoing ones, rather than the implementation of
major new development projects in a period of economic
retrenchment. Officials anticipated that total investment in the
Sixth Five-Year Plan would barely exceed the LS101.5 billion
allocated for the fifth plan. The government continued to
emphasize agriculture, including land reclamation and water
resource exploitation. Agriculture's share of investment was
expected to increase from the 16.9 percent of the fifth plan to
about 19 percent under the sixth plan. Industry's allocation was
also slated to rise slightly from 12.2 percent in 1981-1985 to
13.7 percent in the 1986-1990 plan.
Data as of April 1987
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