RAQQA, Syria (North Press)— The Autonomous Administration of North and East Syria (AANES) relied on three main sources of revenue, with oil topping the list, followed by customs and other sources.
North Press obtained annual and monthly reports from the General Finance Board of the AANES and conducted an in-depth interview with Ahmad Youssef [Ahmad Yousef], the co-chair of the board who holds a PhD in economics. The purpose of the interview was to discuss and analyze the administration’s revenue sources and financial situation.
The AANES primarily relies on oil for its revenues, according to reports obtained by North Press.
Youssef states that such a high dependence on oil regarding the budget is evidence of a major imbalance in the economy.
The economist raises the question, “If there is no oil, does that mean we won’t be able to survive?”
According to Youssef, the AANES has made efforts since 2021 to decrease the reliance on oil as a major revenue source and instead diversify its income streams. This includes increasing other sources such as revenues from companies, taxes that were previously non-existent.
“On the 2021 budget of the AANES, oil accounted for 92 percent of total revenues, customs constituted 7 percent, and other revenues comprised the remaining 1 percent,” the economist stated.
The board was able to reduce the share of oil in total revenues to 80 percent in 2022 and 76 percent in 2023, according to Youssef.
Statistics
The oil revenues accounted for 77.3 percent of the total public revenues of the AANES in the past year, amounting to nearly $605 million.
Customs revenues amounted to nearly $102.5 million in 2022, equivalent to 13 percent of total revenues.
Tax revenues reached nearly $3.3 million, resulting from the application of Tax Law No. 1 in 2021, comprising 0.42 percent of the total revenue.
Regional revenues reached approximately $1.8 million, equal to 0.23 percent of the total revenue.
The remaining revenues from the Agricultural Community Development Company and other central revenues amounted to $69.9 million, equivalent to 9 percent of total revenues.
The report from the General Finance Board identified several factors that hinder the improvement and diversification of general revenues. These factors include weak governance, limited contribution of the economic sector to revenue generation, inadequate administrative accounting systems leading to revenue loss, absence of a comprehensive and sustainable economic strategy, and a dominance of consumerism.
“The AANES seeks to maximize revenues and rationalize expenditures to reduce public money waste, which requires very extensive procedural policies, including the implementation of the general budget system,” Youssef said.
Divided Budget
The general budget is a financial plan for governments and administrations in which they outline their expenditures and revenues for a specific period of time.
The first experience in northeastern Syria with the implementation of the general budget system in 2020 was a report lacking financial data. The system has transitioned since then from an absolute financial chaos to a partial financial chaos, according to Youssef.
He added, “The AANES initiated the implementation of the general budget system in 2021, which consisted of only 25 pages and aimed at dividing revenues between the central administration and regional authorities.”
The AANES divide its areas of control into seven regions: Jazira (Hasakah Governorate), Deir ez-Zor, Raqqa, Tabqa, Euphrates (Kobani and its countryside), Manbij, and Afrin (currently Shahba).
He stated, “To implement the principle of administrative decentralization in northeastern Syria, we formulated a regional budget divided into three sections: central, the regional, and municipalities. Each section was treated according to its specific requirements. The central section represents the AANES, the regional section encompasses the seven regions under the control of the AANES, with their budgets determined by their legislative councils. As for the municipalities, their revenues are returned to them on the condition that they declare them to the General Finance Board in order to enhance the services provided to the population.”
The official says that diversifying revenues requires more economic policies.
He adds, “The Finance Board is responsible for customs and taxes. We issued the Tax Law in 2020, which was implemented in the second half of 2021. In that same year, its revenues amounted to around $3 million, and in 2022, it reached $7.2 million, only covering 70 percent of a one-month salary for AANES employees.” He also points out that a significant portion of these revenues is derived from taxes on salaries of employees working in NGOs operating in the region.
Meanwhile, the AANES implemented the ‘Harmonized System’ in customs, which is an internationally recognized system for classifying goods with standardized names and numbers. The Administration has identified approximately 3,000 products. It imposed customs tariffs based on their value through an application that calculates the customs value, the official explained.
He adds that the revenues generated by customs are relatively low, reaching only $5.5 million in a month in 2023, which only cover the salaries of the AANES’ civil sector employees.
“If we look at the second-largest source of the AANES income, it becomes apparent that it is insufficient to only cover salaries. We also have other expenses, including subsidizing food and fuel, as well as investment spending. In addition, we do not yet have a cash reserve, despite being mentioned in the law,” he concluded.
