Lebanon's Central Bank Ends Subsidies for Fuel Imports
Lebanon's central bank said overnight it will provide a line of credit for fuel importers at market price, ending subsidies on the scarce resource. The move is likely to send prices soaring in a country already in the throes of an economic crisis.
The decision comes amid an unfolding energy crisis that has plunged the country into hours of darkness, threatened hospitals and businesses with shutdown and sparked deadly violence among consumers and motorists looking for fuel.
The shortages are blamed on smuggling, hoarding and the cash-strapped government's inability to secure deliveries of imported fuel.
The crisis worsened when authorities began to reduce subsidies on fuel amid a deepening financial crisis unfolding since 2019. The Lebanese currency has plummeted and now sells at over 20,000 Lebanese pounds to the dollar on the black market while the official rate is fixed at 1,500 pounds for $1.
The price of a gallon of fuel has increased by more than 220% in the last year, triggering panic and a thriving black market.
In a statement, the central bank said the decision to provide credit to importers at market price will be effective Thursday and new prices will be determined by the Ministry of Energy.
The central bank's foreign reserves have been depleted in past months in the import-dependent country, where medicine, fuel and basic needs have been running short and a black market has been thriving.
The move may ease some of the shortages but is likely to heighten social tension in the small country where over 50% of the population has fallen below the poverty line. The financial crisis - rooted in years of corruption and mismanagement - took hold since 2019. It has been made worse by the failure of political leaders to agree on a new government to chart a path out of the crisis and negotiate a recovery package with the International Monetary Fund. A caretaker government has been in charge since last year.
The fuel crisis has turned violent before, with motorists clashing at gas stations after long waits and fuel running out. On Monday, at least three people were killed in violence over access to fuel, reflecting the growing frustration over a continued problem that has only gotten worse.
12 August 2021, 10:28
04
The Central Bank has no other choice. It cannot finance subsidies for ever. It is broke. It holds no more foreign currencies. How is it supposed to pay for 90% of the fuel consumption of an entire Nation..
Thank you to the disastrous management of this country since the end of the war, Lebanon is not viable anymore and will enter dark times... much darker than they are today. Run away if you still can. Our country is doomed.
12 August 2021, 12:14
03
Sorry to disappoint you, but even Sri Lanka has standards and won't admit lowlifes like yourself. Go troll on Al Manar, go and GTFO!
12 August 2021, 10:36
06
This morning, gas stations are selling one liter of gasoline @ 17,000 LL!!! How in the world did they manage to get the gasoline and sell it at the new price? It was always stored or smuggled to Syria. The ruling mafia is making a killing.
Salameh said a week ago the Central Bank has subsidized more than $850 million in one month for fuel and medicine and there are hardly any of both in the local market! It was being stored and smuggled!
12 August 2021, 11:32
02
Just show me one country where everything is supported from people's monies? Please don't mention Syria, which I consider not a country under Assad. The support should have been lifted long ago, because if its happened then, the LL would have reached 5000 to the dollar at the most, and people would have been able to manage the rise. Now, they would have to manage this at the peak, because there's no more hard currency to use at the Central Banks. Why is the president not going to his friend Nasrallah to seek help from him through Iran, a country they both love from the bottom of their hearts? I am sure that Iran would kick the butt of both individuals and ask them to deplete what's left of the Central Bank's reserve so that we go back to the stone ages - not that we are not there now.
12 August 2021, 11:58
24
Yes you have stated that before and your statement still resonates in the dark alleyways of Rio De Janeiro. Keep contributing and move ahead with steady but sure steps.
12 August 2021, 14:56
02
He financed their corruption but at least he warned them not to default on the debt before negotiating, they defaulted before negotiating and were proud of it.
12 August 2021, 19:59
01
Excellent first step by Slameh. Yes, it's going to hurt my pocket book inn the near term but if it ends up drying smuggling our money to Syria, I for one am willing to grin and bare it.
I know us Lebanese are capable of lifting our country and people if only the hegemony is done away with.
13 August 2021, 04:19
01
Wow! I'm impressed you can do subtraction though you never come up with any coherent comment. Truly amazing!!
