Lebanese leaders hold emergency meeting, decide to change the exchange rate used to price petroleum products.
Fuel prices in Lebanon are anticipated to double after the country’s officials decided to change the currency rate used to sell petroleum products on Saturday in an effort to reduce crippling shortages.
Amounting to a partial reduction in fuel subsidies, the rise will mean more hardship in a country where poverty levels have soared during a two-year-long financial meltdown that has wiped more than 90 percent off the value of the Lebanese pound.
Though prices will rise, the decision did not fully lift the exchange rate for pricing fuel to the exchange rate at which the central bank will finance its import – a gap which the state will continue to finance, for now.According to a statement, the central bank will open an account for that purpose until the end of September, up to a maximum of $225 million, which the government will have to repay in the 2022 budget.
According to the bank, the account was set up to meet a “urgent and exceptional subsidy” for gasoline, fuel oil, and cooking gas.The fuel subsidy would only continue until the end of September, a ministerial source said.President Michel Aoun confirmed the treasury would bear the cost of the continued subsidy.
The fuel issue became even worse last month when the central bank announced that it would no longer be able to fund fuel imports at heavily discounted exchange rates and would instead use market rates.The government objected, refusing to change official selling prices, creating a standoff that left importers in limbo and caused supplies to dry up across the country.
Official selling prices will now be based on an exchange rate of 8,000 pounds to the dollar, up from 3,900 pounds, but still significantly below an unofficial parallel market cost of closer to 20,000 pounds, according to Saturday’s decision.
Roads have been clogged across Lebanon as motorists have queued for the little gasoline left. Prices have soared on the black market. Some confrontations over gasoline have turned deadly.
Much of Lebanon’s fuel oil is also almost run out, leading in lengthy blackouts.
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