Lebanon's Central Bank calls for targeting subsidies

The bank also said in a statement it had paid banks to open up credits for fuel imports

  
Image used for illustrative purpose. A money exchange vendor displays Lebanese pound banknotes at his shop in Beirut February 7, 2012.

Image used for illustrative purpose. A money exchange vendor displays Lebanese pound banknotes at his shop in Beirut February 7, 2012.

REUTERS/Mohamed Azakir

BEIRUT- Lebanon's Central Bank urged the caretaker government on Wednesday to approve a plan to ration subsidies to target people in the most need, as the country struggles with a deepening economic crisis.

The bank reiterated that it would not use mandatory reserves to fund subsidies, which currently cost around $6 billion a year. Lebanon's hard currency reserves have slumped from over $30 billion in late 2019 to just over $15 billion in March.

The bank also said in a statement it had paid banks to open up credits for fuel imports, after shortages which have caused lengthy queues at fuel stations across Lebanon.

It said the bank had also made payments to ensure the most urgent health supplies continued, and was waiting for the Health Ministry to specify priority medicines for importing.

The bank said last month that a system for importing subsidised medical goods could not be sustained without using its mandatory reserves and had asked authorities to find a solution which avoided that outcome.

Lebanon, which is in political paralysis, deeply indebted and struggling to raise funds from potential donor states and institutions, has said money for subsidies has all but run out.

The design and implementation of its subsidy system, which included long lists of non-basic items, has been criticised as wasteful by traders and consumers.

(Reporting by Maha El Dahan Editing by Dominic Evans) ((Dominic.J.Evans@Thomsonreuters.com, @DominicJEvans;))


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