With no comprehensive plan in place to rebuild after the February 06 earthquake, the Syrian government’s approach has focused on providing tax exemptions for those affected and facilitating access to loans so they can fund repairs and reinforcement work.
These exemptions and promises of loans are no substitute for total or partial reconstruction and rehabilitation of quake-damaged homes. Instead, this method of assistance indicates the inability of the Syrian state to compensate impacted residents with permanent alternative housing and its evasion of responsibilities toward their rights to housing, land and property. Granting loans, even if they are interest-free, means turning the matter of repair and reinforcement into a personal issue with costs borne by the owners of the damaged homes.
On February 17, Syria’s Al-Wataniya Microfinance Bank announced the Sanad, or “support,” loan dedicated to repairing and rehabilitating earthquake-damaged homes in Aleppo, Lattakia and Hama governorate. The loans would have a ceiling of up to SYP 18 million interest-free, with a repayment period of six years. In 2011, the Syria Trust for Development, the Syrian Computer Society, and the Small and Medium Projects Development Agency jointly established Al-Wataniya Microfinance Bank.
The bank allocated SYP 10 billion for these loans, with an average of SYP 10 million per loan, aiming to cover expenses for 1,000 damaged homes. For the loans, the bank required a matrix of different types of collateral that can be combined in case one item is insufficient, such as proof of income, guarantees of two individuals, or mortgage of a car, agricultural land, house, gold or insurance policies.
Bank CEO Munir Haroun told the semi-official Al-Watan newspaper on February 19 that borrowers need to obtain a structural safety report for the building that will undergo repairs. He added that the loan would not exclude residents of informal settlements. According to Haroun, the bank will disburse the loans in instalments and appoint committees to assess the quake damage to estimate the size of the initial instalments and conduct subsequent inspections on the progress of repairs. He explained that, for example, an income of SYP 100,000 can obtain a loan of SYP 1.5 million, with a monthly instalment of SYP 35,000. If the applicant is a private sector employee earning SYP 500,000, they can get a loan of up to SYP 10 million. As a merchant with a commercial register and a monthly income of SYP 2 million, they can obtain the maximum loan amount.
On March 5, a banking expert and consultant, Amer Shahda, told Al-Watan that those who actually need this loan could not obtain it, describing the loans as “incapable of fulfilling their tasks” and unsuitable for citizens’ living conditions and the current inflation. Furthermore, he explained that the value of the loan, with a ceiling of SYP 18 million to be repaid over six years, means that the monthly repayment instalment amounts to SYP 250,000, which, in comparison to the incomes of those impacted by the quake, shows they will be unable to pay it.
Decree No. 3
Legislative Decree No. 3 of 2023 granted people affected by the earthquake certain tax exemptions, some of which relate to totally or partially demolished real estate. The decree also stipulated granting easements in paying outstanding loan instalments and obtaining new loans from public banks for those impacted properties.
The decree allowed public banks to grant interest-free loans with a ceiling of SYP 200 million to those impacted by the quake who wish to fully or partially rebuild or fully or partially rehabilitate their properties. They would have ten years to repay such loans, while repayment of the first instalment is due three years after granting the loan. The state treasury bears the interest and commissions resulting from granting these loans.
Meanwhile, Article 13 of the decree’s executive instructions, issued by the Ministry of Finance in early April, allowed public banks to postpone loan instalments due from affected clients, and collection of repayments would resume on April 1, 2024. Due to this postponement, no contractual interest, delay interest, delay fines or fees shall be added. The postponement applies to all types of loans and facilities previously granted by public banks to those affected by the quake. Meanwhile, Article 14 granted those affected the right to obtain loans from public banks for restoration, rehabilitation or reconstruction, with the amount for such loans determined according to the purpose of the loan, the donor bank’s policies, and the procedures for estimating the value of the funds required. The loan is granted on a case-by-case basis for each independent piece of real estate that faced damage, including facilities, shops, houses, or other buildings. They may be fully damaged, partially damaged or cracked and need reinforcement work.
Applicants may not finance a single piece of real estate more than once, whether from the same bank or another, taking into account the priority in granting loans to those applying for the first time. Loans granted according to this measure are exempt from the financial solvency requirement set out in the banking operations regulations without prejudice to the banks’ right to recover the necessary collateral. While each bank applies interest rates to these granted loans, ensuring coverage of the minimum borrowing cost, the state’s public treasury bears the contractual interests and commissions resulting from granting these loans.
At the same time, upon issuance of the decree’s executive instructions, a decision was issued by the Central Bank’s Credit and Monetary Council stipulating that deferral of loan instalments due is not considered a restructuring or rescheduling process for banks, according to a report published April 03 by state-run newspaper Tishreen. This is all while preserving the internal credit rating and the level at which the client was classified within this system, and the provisions withheld against them regardless of the instalment deferral.
Article 2 of the Credit and Monetary Council’s decision exempted beneficiaries from repaying the amounts due on inquiry request operations. In return, the bank’s board of directors or general management is responsible for estimating the value of the loan to the affected party based on the expertise report issued by the committee formed under Decree No. 3. Interest rates applicable to each bank will be applied to the loans granted under this decree, taking into account the executive instructions of the decree, particularly concerning the state’s public treasury bearing the contractual interests and commissions. In addition, public banks must consider the loan duration granted to each beneficiary, plus the due date of the first instalment, when calculating the total contractual interests and commissions resulting from granting these loans. Regarding collateral, the decision expressly confirms the application of the current operational systems adopted by public banks to the accepted guarantees for loans granted under Decree No. 3.
Under the decree’s executive instructions, committees will be formed to identify those impacted by the earthquake in each affected governorate. Any affected parties must submit their official documents to these committees, a police report confirming the damage to their properties, and an accredited structural safety committee report from their governorate. The committee then prepares minutes of its work in the completed areas sequentially. After that, lists with the names of the affected persons are issued by the governor’s decision.
The state-run newspaper Al-Baath reported on April 04 that a governor chairs each committee and includes the chairperson of the governorate council, heads of the administrative units in the affected areas, the finance director and service institutions such as water, electricity, telecoms, technical services and real estate services, the head of the Engineers’ Union branch, a representative of the Syria Trust for Development, and the local area representative of the affected region.