Syrian President Hafez al-Assad has pledged that his country will forge ahead with the privatisation of the banking sector in an effort to bolster its economy.

“After four decades of state monopoly over the banking sector and executive supervision of monetary policies, the currency and credit council is now in charge of drafting and executing this policy,” Assad says.

“Private banks have begun to operate in Syria under the supervision of the Central Bank,” he adds. “We want to develop the banking industry until we reach a competent and efficient system that participates in financing investments and external trade.”

The Syrian parliament approved a law in 2001 permitting the creation of private banks in Syria, where the sector was nationalised in 1963, to boost banking services and encourage investment as part of economic reforms.

Under this law, the capital of each new bank will be limited to 49% for foreign banks and 51% for private Syrian investors.

Since then two private banks – la Banque de Syrie et d’Outre-mer (BSOM) and the Banque Europeene pour le Moyen-Orient (BEMO)-Saudi Fransi – opened for business in Syria.

A third bank, Jordan’s International Bank for Trade and Finance (IBTF), is due to be launched imminently.

A fourth bank is in the offing and, according to banking sources, it could be either the Amman-based Arab Bank or Lebanon’s Byblos Bank.

“The permission to allow four private banks to operate in Syria is only a beginning,” Assad says.

He stressed that “banking reforms constitute an essential element for economic development … and will be based on the creation of a legal framework, laws on banking secrecy, the fight against money-laundering and currency exchange reforms”.

Assad also expects that Syria’s domestic gross product will grow by US$5bn from its current level of US$20bn by 2010-15 while its volume of trade will increase from US$13bn to US$20bn.