Lebanon reduces subsidies for critical fuels amid gasoline crisis Business and Economy News


The measure is likely to raise the price of gasoline, but is expected to temporarily ease the shortage crisis.

Lebanon’s interim prime minister on Friday approved his approval to fund fuel imports at a rate higher than the official exchange rate, effectively reducing critical fuel subsidies amid gasoline shortages.

The decision is likely to sharply raise the price of gasoline, but is expected to temporarily ease the shortage crisis in the country. Lebanon is going through an unprecedented economic and financial collapse along with a dangerous political crisis. The events pose the most serious threat to the stability of the small country since the end of its civil war three decades ago.

The currency has lost more than 90 percent of its value since October 2019, trading on Friday at a record low of 16,450 Lebanese pounds against the US dollar. The official exchange rate remains at 1,507 Lebanese pounds to the US dollar.

The crisis, rooted in decades of corruption and mismanagement, has worsened in recent weeks as the central bank reduced funding for subsidized dollar imports. Foreign exchange reserves have fallen dangerously low, from $ 30 billion at the start of the crisis in late 2019 to nearly $ 15 billion today. This has caused traders to raise prices or stop imports.

In recent weeks, fist fights and gunfire at gas stations have begun as frustrated citizens lined up for hours to fill tanks. Power outages last much of the day and private generators have had to shut down for several hours to ration fuel.

The decree signed on Friday by interim Prime Minister Hassan Diab allows the financing of fuel imports at an exchange rate of 3,900 Lebanese pounds instead of the official carnation of 1,500 pounds.

While this may temporarily alleviate fuel shortages by allowing supplies to flow again, the measure will effectively raise the price of gasoline and is sure to raise the prices of consumer goods.

In a statement, Diab said he made the decision “guided by his sense of national responsibility.”

The decision “aims to provide fuel for citizens for the next three months, especially as the summer season approaches, which will increase the flow of US dollars in Lebanon with the arrival of expatriates and tourists. “The statement said.

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