Syria's government-controlled banking system consists of five banks: The Commercial Bank of Syria, the Agricultural Cooperative Bank, the Industrial Bank, the Real Estate Bank, and the People's Credit Bank. The Central Bank of Syria oversees banking operations and manages the money supply. According to Syrian bank regulations, only the Central Bank and the Commercial Bank may engage in international transactions and hold foreign exchange deposits outside Syria. Within Syria, only the Commercial Bank may sell Syrian pounds for foreign currencies. Except for a few exemptions, unused Syrian pounds cannot be sold back to the Commercial Bank. Moreover, Law 24 of 1986 criminalizes the private exchange of foreign currencies and Syrian pounds.
Besides monopolizing the exchange of foreign currencies, the Syrian government maintains one of the last remaining fixed, multiple exchange rate systems in the world. At present the government exchanges money at four different rates, ranging from the "official" rate of 11.2 SP/USD, to the "neighboring country" rate of 43.5 SP/USD. However, virtually all transactions occur at either the "neighboring country" rate, the "offshore" rate, negotiated in the free markets of Amman or Beirut, which ranges between 49 and 52 SP/USD, or the "export dollar" rate, which ranges between 52 and 57 SP/USD.
How to Finance
Exports/Methods of Payment
Alternatively, an importer may use foreign exchange earned from exports (export dollars) and deposit it in the Commercial Bank of Syria. The foreign exchange used to cover an L/C opened at the Commercial Bank may be his own, or purchased in an informal secondary market. In March 1994, the Syrian government transferred several importable goods from the list of items that can be financed from offshore accounts to the list of items that must be purchased with export dollars. Whatever the source of funding, it is strongly recommended that exporters sell their goods to Syrians under "cash in advance" or "confirmed irrevocable letters of credit" until a satisfactory relationship with the Syrian importer has been established.
For its contracts, the government will open an L/C only after the contractor has posted a ten percent performance bond to ensure that goods will be delivered within the stated time of delivery, free of defects, and identical to the offer in both quality and quantity. Posting these bank guarantees has been a constraint for foreign firms wishing to do business in Syria because suppliers' banks often lack correspondence arrangements with the Commercial Bank of Syria.