DAMASCUS Syria's Parliament has approved a 322 billion-pound ($7-billion) budget for 2001 with Prime Minister Mohammed Mustafa Mero vowing reforms to boost the private sector's role in the economy.

Mero's address to the Parliament on Monday evening came two days after the regional command of the ruling Baath Party approved the establishment of private banks ending a near 40-year government monopoly of the banking sector.

The regional command also approved the establishment of a stock market and a law on banking privacy.

In his address, extracts of which were obtained by Reuters on Tuesday, Mero said the government would introduce dramatic reforms in the public sector instead of privatizing it. He said that measures were already underway "to achieve this important objective."

The decisions, which also called for freeing the price of the Syrian pound to reflect its real value at the free market, are part of President Bashar al-Assad's promises to reform the economy made when he took office in July following the death of his father president Hafez al-Assad in June.

Finance Minister Khaled Mahayni said the revenue was also set at 322 billion pounds and included 28.52 billion pounds ($620 million) as foreign loans.

Economic sources said the money would be used in addition to other local loans to offset the projected deficit in the budget.

The volume of the local loans and the exact volume of the deficit of the budget were not revealed.

Three Budgets Approved This Year

Economic sources told Reuters the projected increase in the 2001 budget's expenditure of 46.6 billion pounds ($1.01 billion), compared with the 2000 budget's expenditure, would be used to cover the 25 percent increases in government employees' salaries that was approved earlier this year.

The sources noted that it was the first time in at least three decades that the government had presented its budget covering the fiscal year starting January 1 before the start of the new year.

The government usually delays budgets as a means of cutting down spending. If Parliament also fails to approve a budget, government ministries are then forced to stick to the limits of the previous year's budget.

But this year, for the first time, the government and Parliament worked together to clear a backlog and pass three budgets, one left over from 1999, one for 2000 and one for 2001.

The finance minister said that 37.32 billion pounds ($811 million) were allocated to cover repayment of foreign debts and to help keep local prices at their current levels.

That included 22.47 billion pounds to cover general debts especially after the settlement of debt problems with the World Bank, France, Germany and others, the minister said, without giving figures on the volume of loans involved.

The budget included special allocations to cover national defense expenditure in addition to other portions to finance new projects and projects under construction in the fields of electricity, irrigation, agriculture and petroleum, he said.

He did not give the exact figure on the defense spending this year but in previous budgets, defense is usually between 35 and 45 percent of spending.

The budget will provide 65,940 jobs in the administrative and economic sectors, the minister said.

(Reuter)