Lebanese brace for lifting of subsidies as conditions deteriorate
As Lebanon suffers from its worst economic crisis in decades, the Lebanese are growing concerned as the central bank warns that its reserves will soon be depleted, forcing it to lift subsidies off basic commodities.
BEIRUT — News of Lebanon's central bank, Banque du Liban (BDL), lifting subsidies on basic commodities, namely fuel, medicine and flour, by the end of 2020 is causing concern and fear for the majority of the Lebanese, especially the poor who account for 55% of the population in 2020, compared to 28% in 2019, according to estimates by the United Nations Economic and Social Commission for Western Asia (ESCWA) published Aug. 19.
Meanwhile, the percentage of those suffering from extreme poverty increased three-fold, from 8% to 23%; they will soon be unable to purchase most of these goods, according to the same ESCWA estimates.
Lebanon has been suffering from an acute financial and economic crisis since October 2019, when thousands of people took to the streets to protest the government’s attempts to impose more taxes. Since then, local banks have been restricting withdrawals of foreign currency while the Lebanese pound has collapsed. Since Lebanon imports most of its goods, including basic commodities, prices of goods skyrocketed while the salaries of citizens remained the same. People lost their purchasing power, several businesses closed their doors and unemployment rates increased.
The BDL supports the import of basic commodities — fuel, medicine and flour — based on the official exchange rate of 1,515 Lebanese pounds. The BDL secures the importers' need of dollars to buy the aforementioned goods, while the value of the dollar on the black market has been hovering between 6,500 and 8,000 Lebanese pounds in recent days.
