The announcement by the Central Bank that it has reached a decision to end subsidies for fuel products has sparked uproars across Lebanon, with protesters blocking roads across the nation.
The nation’s caretaker prime minister called the decision “illegal,” and called for an emergency Cabinet meeting to discuss the move.
Analysts are of the view that the development by the central bank is likely to send prices soaring in a country already in the throes of an unprecedented economic crisis.
Reports have it that the move had been anticipated for months as the bank’s reserves dry up, but following the announcement, politicians distanced themselves and blamed central bank governor Riad Salameh.
It was disclosed that outgoing Prime Minister Hassan Diab, whose government has rarely held meetings since its resignation a year ago, called for an emergency meeting. He called on the finance minister to inform Salameh that his decision is “illegal.”
Despite the uproar, the central bank later issued another statement, standing by its decision. It said that subsidies over the past weeks have only helped businessmen, not people in need. Despite subsidies worth $800 million 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.
It should be recalled that in June, parliament approved a ration card system that would give some 500,000 poor families an amount of money in US dollars for a period of one year. It is not yet clear how the estimated $556 million 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.