Lebanon: Politicians blast central bank for ending fuel subsidies

Lebanon’s central bank on Wednesday announced it is ending fuel subsidies – a move that was highly anticipated and is likely to send prices soaring, heaping even more pain on economically ravaged households.

A truck blocks a road in Tripoli, Lebanon after the central bank decided to effectively end subsidies on fuel imports [Walid Saleh/Reuters]

Lebanon’s caretaker prime minister has called a decision by the central bank to end subsidies to fuel products “illegal”, and called for an emergency cabinet meeting to discuss the move.

The Wednesday night announcement by the central bank is likely to send prices soaring in a country already in the throes of an unprecedented economic crisis.

The move had been anticipated for months as the bank’s reserves dry up, but on Thursday politicians distanced themselves and blamed the central bank governor, Riad Salameh.

Outgoing Prime Minister Hassan Diab, whose government has rarely held meetings since its resignation a year ago, called for an emergency meeting later on Thursday. He called on the finance minister to inform Salameh that his decision is “illegal”.

The central bank later issued another statement on Thursday, standing by its decision. It said subsidies over the past weeks have only helped businessmen, not people in need. Despite subsidies worth $800m in July alone, fuel products remained scarce in the market, it added.

The shortages are blamed on smuggling, hoarding and the cash-strapped government’s inability to secure deliveries of imported fuel.

Most petrol stations were closed on Thursday as it was not clear how much the price of petrol and diesel will rise, with some experts saying it will increase fivefold. Several major roads were closed by angry protesters opposed to the decision.

In June, parliament approved a ration card system that would give some 500,000 poor families an amount of money in United States dollars for a period of one year. It is not yet clear how the estimated $556m project, which aims to replace the subsidy system, will be financed.

Diab’s office said work on the mechanism of the ration card is almost done and it will be implemented soon.

Source: AP