Reuters: Saudi Arabia intends to repay Syria’s debt to the World Bank

Reuters reported that Saudi Arabia intends to repay Syria’s debt to the World Bank, as part of efforts to assist Damascus, after the collapse of Assad regime.

Reuters quoted three sources saying that repaying these debts would pave the way for approval of millions of dollars in grants for reconstruction and support for the country’s struggling public sector.

The World Bank reclassified Syria as a low-income country in 2018, with GDP collapsing by more than half between 2010 and 2020.

In a report released in February, the United Nations Development Program said, “Sanctions have played a major role in isolating Syria from the global financial system, restricting trade, increasing import costs, and significantly reducing exports and remittances”.

Thus, Saudi Arabia has provided sustained relief aid via flights to Damascus since the fall of Assad’s regime.

Last month, donor countries pledged €5.8 billion to Syria and its neighbors, as these funds will support Syria during a crucial transitional phase and address urgent needs on the ground.

It’s worth mentioning that as of the latest data, Syria’s debt to the World Bank is not publicly disclosed in detail due to the conflict since 2011, followed by the international sanctions, and the lack of regular reporting by the Syrian government.

However, Syria had limited engagement with the World Bank, with some outstanding loans primarily related to development projects, as bbefore 2011, Syria had a few active World Bank projects, with estimated outstanding commitments in the range of $500 million to $1 billion.

Since the conflict began, the World Bank suspended all programs in Syria due to sanctions, instability, and the lack of a recognized government by much of the international community. No new loans have been issued in recent years.

Generally, Syria likely has accumulated arrears on its debt, but the exact amount is uncertain, with the World Bank typically classifies such cases as “in non-accrual status,” meaning repayments are delayed indefinitely.

Syria’s overall external debt, including other creditors like Russia, Iran, and some international institutions, which is estimated to exceed $60 billion, with the World Bank’s share has a very small fraction of the total Syrian external debts.