CD Talk | Strengthening Fiscal Capacity in Fragile and Conflict-Affected States: Insights From Syria

Why It Matters

Restoring fiscal capacity enables Syria to stabilise public finances, attract investment, and lay groundwork for sustainable growth after years of conflict.

Key Takeaways

• IMF returns to Syria after 14‑year hiatus, targeting fiscal rebuilding.
• Support focuses on 2026 budget, cash management, and tax law reforms.
• Workshops tailor tax design to Syria’s post‑conflict economic realities.
• Oil‑gas policy evaluation aims to boost revenue amid reconstruction.

Pulse Analysis

The International Monetary Fund has long positioned capacity development as a cornerstone of its work with fragile and conflict‑affected economies. By strengthening ministries of finance, tax administrations and public‑service delivery, the IMF helps countries lay the institutional groundwork needed for macro‑economic stability and sustainable growth. In recent years, this approach has been integrated with the Fund’s traditional surveillance and lending tools, creating a three‑pronged model that addresses both immediate financing gaps and the longer‑term governance deficits that often linger after conflict.

In Syria, the IMF’s re‑engagement after a 14‑year pause reflects both political willingness and the urgency of rebuilding a shattered fiscal framework. Teams from the Fiscal Affairs Department, the Global Public Finance Partnership and the Middle East Technical Assistance Center have been on the ground to assist the Ministry of Finance with the 2026 budget, cash‑flow prioritisation, and a comprehensive review of new budget and tax legislation. Tailored workshops on tax design and an evaluation of oil‑gas policy options aim to diversify revenue sources and improve cash management, essential steps for restoring public services and creating jobs.

The Syrian case illustrates how targeted capacity‑building can complement the IMF’s surveillance and lending mandates, offering a template for other post‑conflict states. By improving fiscal transparency and revenue mobilisation, the Fund helps create an environment more attractive to private investment and international donors, potentially accelerating reconstruction. Moreover, a functional finance ministry can better coordinate with humanitarian actors, ensuring that limited resources reach the most vulnerable populations. If successful, the initiative could bolster regional stability and demonstrate the IMF’s evolving role in conflict‑affected economies.

Original Description

For decades, the International Monetary Fund has been providing capacity development support to its member countries, including institution-building in fragile and conflict-affected states. Though not always straightforward and sometimes affected by security considerations, this support is critical for countries that try to regain a grip of their economies, revive growth and create jobs, and strengthen public finances and public service delivery. One such country is Syria: following a 14-year hiatus, the Syrian authorities requested the IMF’s support to rebuild capacity at the Ministry of Finance and strengthen government finances. IMF staff from the Fiscal Affairs Department, supported by the IMF's Global Public Finance Partnership, together with staff of the Middle East and Central Asia Department and the Middle East Technical Assistance Center (METAC), responded promptly, working closely with the authorities on the ground in Syria—also for the first time in over a decade. Initial support focused on two main pillars—revenues and spending—and included preparation of the 2026 budget, supporting cash management to address competing payment priorities, reviewing a new budget law and new tax laws, including tailored workshops on tax design, and evaluating policy options for the oil and gas sector. Complementing the other two key areas of the IMF’s support to our members—surveillance and lending—the capacity development work in Syria and other fragile and conflict-affected states aims at overcoming the challenges inherent to countries emerging from conflict and at enhancing their prosperity.