World Bank says Lebanon’s economic and financial crisis could be one of the top three global worst in 150 years.
Lebanon’s Ministry of Economy and Trade has raised the price of subsidised bread for the fifth time in a year as the country’s multiple crises worsen with no resolution in sight.
The ministry said on Tuesday the reason behind the latest increase — 18 percent from the last raise in February — was the central bank’s ending of sugar subsidies, which in turn adds to the cost of bread production.
Lebanon is grappling with the worst economic and financial crisis in its modern history — one that the World Bank has said is likely to rank as one of the worst the world has seen in the past 150 years. The Lebanese pound has lost 90 percent of its value since unrest swept the country in 2019. Earlier this month, the pound broke a record low earlier of 15,500 Lebanese pounds to the dollar on the black market. The official exchange rate remains 1,507 pounds to the dollar.
The World Bank said in a report this month that Lebanon’s gross domestic product (GDP) is projected to contract 9.5 percent in 2021 after shrinking by 20.3 percent in 2020 and 6.7 percent the year before.
The central bank has been cutting back on financing imports at subsidised dollars, as foreign currency reserves have dropped dangerously low, from $30bn at the start of the crisis in late 2019, to nearly $15bn currently. That has prompted merchants to either raise prices or stop imports.
Most Lebanese have seen their purchase power decimated and their savings evaporate, and more than half the tiny country’s population now lives below the poverty line.
The government in June last year raised the price of flatbread, a staple in Lebanon, by more than 30 percent — for the first time in 10 years. It has since raised the price three times before Tuesday.
The Ministry of Economy says 910gm (2 pounds) of bread will be sold for 3,250 pounds (more than $2 at the official rate). It used to be sold for 2,750 pounds before the latest increase.
Lebanon is going through severe shortages in petrol, medicines — both still subsidised by the state — and other vital products. Electricity cuts last for much of the day and people wait in line for hours to fill up their cars. Shootings and fistfights have broken out at refuelling stations, leaving several people injured.
One of the reasons behind the petrol shortage is smuggling to neighbouring Syria, which struggles with its own fuel shortage but where the price is nearly five times that of Lebanon.
A fuel distributors representative, Fadi Abu Shakra, said 140 petrol station owners refused to receive petrol on Tuesday because of the problems they are facing, including threats, blackmail and beatings.
“They cannot protect themselves,” he said, calling on security forces to protect petrol stations, according to state-run National News Agency.