Photo’s source: bdl.gov.lb
On August 12th, 2021, the Central Bank of Lebanon announced that it will end fuel subsidies, a long-awaited move that is likely to send prices skyrocketing and that had drained its foreign reserves during the ongoing economic crisis.
Michel AOUN, the Lebanese President summoned Central Bank Governor Road SALAMEH, a day after the bank’s decision to effectively lift subsidies for fuel imports.
Hassan DIAB, Lebanon’s caretaker prime minister on August 12 announced his rejection of the Central Bank governor’s decision to lift fuel subsidies. He said in a statement that the decision of the Central Bank Governor SALAMEH “is against the law and does not take into account the reality of the deep living and social crisis”.
“The repercussions of the decision will be very serious” DIAB said, warning it would endanger the country’s future.
Hassan DIAB also sent a letter to Finance Minister Ghazi WAZNI asking him to inform SALAMEH that his decision “violates the law which was issued by the House of Representatives … and contradicts the government’s policy of rationalizing support”.
DIAB called for an emergency ministerial meeting on August 13, 2021, to discuss the central bank governor’s decision.
The MP Gebran BASSIL, head of the Free Patriotic Movement in a press conference said that the decision to totally lift the subsidies like “fatalistic” saying that it is “nothing less than detonating the country”.
Lebanon has been unable to form a new administration since the resignation of Hassan DIAB’s Cabinet on August 10, 2020, six days after a massive blast at the Beirut Port.
A foreign currency shortage and devaluation of the currency have caused the central bank’s dollar reserves to go down from an average of $38 billion at the end of 2019 to its current average of $16 billion.
The Central Bank has supported fuel imports by securing the dollar to importers at an exchange rate of 2.59 per dollar, while its exchange rate in the parallel market in recent days topped $13.30.
Lifting the fuel subsidies would raise prices of other goods and services that depend on fuel to generate electricity for production such as factories and private bakeries.
This article was edited using the data from the Aljazeera.com, Asianews.it, Reuters.com, Dw.com and, Aa.com.tr