This article is part of the August 2026 edition of the Syria Monthly Economic Digest. Click here to explore the full edition.
Key Developments: On August 31, the Ministry of Finance published a “citizen’s version” of its financial performance report covering the execution of the 2026 state budget from January 1 to June 30. Public revenue reached approximately USD 2.695 billion over the six months, equivalent to 31% of the USD 8.716 billion projected in the 2026 budget and a monthly average of around USD 449 million, while public expenditure reached approximately USD 3.7 billion, or 35% of approved appropriations, producing a fiscal deficit of about USD 1.005 billion. Against the first half of 2025, revenue rose by 111% and expenditure by 331%; the comparable half-year in 2025 showed revenue of USD 1.28 billion, expenditure of USD 858 million, and a surplus of USD 422 million.
Finance Minister Mohammad Yisr Barnieh described the report as the third installment in a disclosure series that began with the 2025 performance report and the 2026 Citizens Budget, and as a shift from publishing approved appropriations toward periodic reporting of actual execution.
On the revenue side, the report breaks the total into USD 1.079 billion in customs duties (40% of the half-year total, and 56% of the annual estimate for that line), USD 763 million in returns on state investments (28%; 41%), USD 601 million in oil and gas revenue (22%; 25%), and USD 252 million in taxes and fees (9%; 10%). Expenditure was distributed between USD 1.339 billion in wages, salaries, compensation and benefits (36% of the half-year total, 37% of the annual allocation), USD 1.025 billion in administrative spending (28%; 65%), USD 1.021 billion in investment spending (28%; 35%), and USD 315 million in subsidies and social security (9%; 13%).
The ministry attributed the expenditure increase mainly to the salary and wage rises applied from May, expanded spending on government priorities, and higher costs for imported goods, services and inputs driven by regional developments. It noted that oil and gas revenue only began being transferred to the ministry in May and that proceeds from the second mobile operator license were not collected during the period, meaning the half-year results reflect only part of expected annual revenue. The report states the deficit was managed through short-term investment financing repayable within a year, but did not mention the source of this financing.
In contrast (and perhaps in response) to low tax revenue collection, revenue administration and enforcement were a focus in August.
On August 17, Barnieh warned chambers of commerce and industry that repeated cases of under-valued invoices in customs declarations had reduced collection of the tax advance on imports, describing the practice as tax evasion subject to penalties unless corrected voluntarily. The minister suspended 34 employees on August 6, 24 in the finance directorates of Damascus, Hama and Aleppo and 10 at the Real Estate Bank, following 94 suspensions in May; the Central Bureau for Financial Control identified a 2021 Real Estate Bank contract carrying a financial impact of USD 8.454 million, and separately uncovered an embezzlement scheme involving real estate sales tax receipts at the Kiswah finance directorate. A national campaign to review state property investment contracts, run by the illicit enrichment committee with the Ministry of Finance, was launched on August 2.
What It Matters: Barnieh presented the half-year result as a deficit “within target,” at 56% of the budgeted USD 1.8 billion. That sits awkwardly beside his own revision of full-year revenue to “close to USD 8 billion,” a downgrade of roughly USD 716 million against the April budget. If revenue lands there and appropriations execute in full, the deficit is closer to USD 2.5 billion, around 40% above target and equivalent to some 12.5% of an estimated GDP of USD 20 billion.
Such a ratio is unstable, since the denominator (the budget) is contested: the budget itself assumes GDP of around USD 33.7 billion, Barnieh has put 2025 output at USD 30.6 billion, and al-Sharaa has projected USD 50–60 billion for 2026. Still, and regardless of the ratio, a deficit overshoot of this order means finding some USD 700 million beyond what was budgeted, in a context where the sovereign sukuk framework has yet to produce a first issuance, and no domestic securities market exists to absorb one. The ministry’s warning that spending will accelerate as the wage increase reaches full effect may also mean cuts to development and investment expenditure.
On revenues, customs alone delivered 40% of half-year receipts, while taxes and fees delivered 9%, with the tax line executing at 10% of its annual allocation—by far the weakest performance of any category—against a budget that assumed taxes, fees and customs would jointly supply about half of revenue.
Looking at the structure of revenues, Syria remains fiscally a “border state” rather than a tax state, collecting where goods cross a frontier rather than where income and consumption are generated. That is not surprising given how weak tax enforcement has historically been. But this also reflects the new authorities’ institutional history: governing a large territory with limited administrative reach made customs the most practicable revenue source, and that lesson appears to have carried over. The General Authority for Land and Sea Ports was among the first bodies established after the collapse of the Assad regime, which says something about where the priority sat from the outset.
The reliance on customs revenue ties the budget to import volumes, which depend on an exchange rate and a trade regime the government is actively liberalizing; it is inflationary at the point of collection, since duties and the tax advance on imports pass into consumer prices; and it is regressive relative to a functioning income tax. Based on The Syria Dispatch’s review of the new tariff schedule, because most current duties are specific rather than ad valorem, assessed on the weight of goods, inflation quickly erodes their real value—and the government is left better off with more imports for more revenue, which undermines local industry and production it needs to protect. The August circular on under-valued declarations is a rational response to immediate leakage, but it is border enforcement standing in for a domestic tax base, and the reform meant to build that base is not expected to take effect before 2027.
Execution rates tell a similar story on the spending side: administrative spending ran at 65% of its annual allocation in six months, while subsidies and social security ran at 13%, so the fastest-disbursing category is the cost of running the state apparatus and the slowest is the one that reaches households directly. That is awkward given that August 2026 also produced reports that nine in ten Syrians remain in poverty and continued contraction of humanitarian food assistance amid funding shortfalls.
Finally, despite the overall transparency, the financing disclosure is the report’s clearest gap: the deficit was covered by short-term investment financing repaid within a year, with no instrument, counterparty, cost, or maturity given. The sukuk and treasury securities framework was still at the draft-strategy stage in mid-July, as covered in last month’s edition, so whatever financed the first-half gap was not that. A government that has genuinely stopped borrowing from the Central Bank—a real and underrated break with the pre-2024 model—has a strong story to tell about how it is financing itself instead, and not telling it invites the assumption that the answer is less clean than the alternative.
That said, the disclosure deserves credit on its own terms: a mid-year execution report with a line-item breakdown, published within two months of the period closing, is not the regional norm, even if these are in-year figures from a twenty-one-slide summary rather than audited accounts. The year-on-year comparison is about as flattering as it could be, given that the first half of 2025 ran on a one-twelfth budget based on appropriations inherited from the former government, so the 331% expenditure increase measures a state resuming normal fiscal operation across reunified territory at least as much as a decision to spend more.
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