Syria introduces special currency concession for international NGOs after lira collapse causes cash crunch

Syria has relaxed money exchange rules for international non-governmental organisations (INGOs) operating in the country, after the low official currency rate led to a cash crunch for aid groups, according to Arabic media reports.

The Syrian Central Bank doubled the exchange rate for INGOs, raising the official price from 1,250 liras to the dollar to around 2,500, Arabi21 reported on Wednesday.

The official exchange rate for the public will remain at 1250 liras to the dollar.

The adjustment for INGOs is still well below black market rate of more than 4,000 liras to the dollar, but should provide some relief for aid groups.

Matt Hemsley, who worked for an INGO in Syria, said that being tied to the official Central Bank rate meant less funding for aid groups and reduced capacity to help those in need.

"That is a real problem, it means for INGOs the grants you are getting from international donors are losing potentially half of their value or more," he told The New Arab.

— The New Arab (@The_NewArab) March 25, 2021" style="color:#fff;" class="twitter-post-link" target="_blank">Twitter Post After ten years of war, #Syrians across the country are facing unprecedented hunger and poverty https://t.co/WWzRkdeDBW — The New Arab (@The_NewArab) March 25, 2021

"That meant for every hundred dollars you receive you are losing around 50 dollars."

The lira's collapse has led to massive hardships in Syrians, leading to rising prices for staple goods and a massive drop in living standards. 

Fear of inflation is one reason why the official exchange rate has not been moved closer to the black market one, but it is hoped the Central Bank's move should increase the reach of INGO services in Syria.

Economists say the rapid fall in the lira - from 50 pounds to the dollar in 2011 to 4,000 now - is due to economic mismanagement, US sanctions, and the banking crisis in neighbouring Lebanon, where many Syrians have funds.

Basma Alloush, policy and advocacy advisor for the Norwegian Refugee Council, focusing on US humanitarian policy, told The New Arab's podcast this week that almost 20 percent of NGOs in Syria have experienced some kind of disruption transferring funds into the country due to sanctions.

"Most have actually experienced the complete stopping of transferring these funds... so that has really had a significant impact for the organisations," Alloush told The New Arab Voice.