The Banque du Liban lifts its hand on gasoline subsidies..a warning of chaos at stations

The Banque du Liban lifts its hand on gasoline subsidies..a warning of chaos at stations

The Central Bank of Lebanon took a decision to lift the total subsidy on gasoline, after a long path of gradual reduction of its support. The price of a plate of it rose, on Monday morning, by 20 thousand pounds, to reach 638,000 pounds for 95 octane, and 653 for 98 octane.

The decision of the Central Bank of Lebanon did not surprise the Lebanese, for a few days ago, those concerned in this field have indicated that taking this step is around the corner, including a member of the Syndicate of Gas Station Owners, Dr. Indirect support for importing gasoline, by securing part of this bill according to the exchange platform, provided that the importing companies secure the remaining part of the free exchange markets.

And he explained in a statement: “The equation so far has been 40% banking and 60% unsubsidized, but the Central Bank has reduced, in the schedule of the composition of the exported fuel prices, the banking ratio from 40% to 20%, and thus the unsubsidized percentage has increased to 80%,” stressing: “From It is clear that the Banque du Liban has only one final stage to stop securing the dollar through an exchange platform, to reach the equation of zero exchange and 100% unsupported free market,” which is what actually happened.

Gasoline importers are no longer able to obtain green currency from an exchange platform to buy it at a price that has reached about 28 thousand pounds, as they have to resort to the black market, where the exchange rate of the dollar reached, today, Monday, about 35,000 pounds.

The suffering of the Lebanese with gasoline is old and renewed. With its disappearance from the market last year and the emergence of queues in front of gas stations, its price gradually increased, until it touched the minimum wage of 675,000 pounds, or even increased, last June.

Within a year, the price of gasoline in Lebanon increased 16 times, according to what was confirmed by the “International Information” as it explained, “On June 15, the price of a plate of 95 octane caliber reached 691 thousand pounds, while the price was 43,500 pounds a year ago, an increase within a year. Its amount is 647,500 Syrian pounds, or 1,488 percent.

stop draining

Those concerned in the fuel sector were informed, on Sunday evening, of the Central Bank’s decision, according to what the representative of the fuel distributors in Lebanon, Fadi Abu Chakra, said, who confirmed in an interview with Al-Hurra that the decision had been expected for a long time, and that the problem came out of the Banque du Liban and the importing companies and reached To the stations, which will bear the burden of this step.

According to the estimates of the economic researcher, Professor Jassem Ajaga, half of the quantities of imported gasoline are smuggled outside the Lebanese borders by traders, so the continuation of the support means continuing to drain the dollars of the Central Bank. From this perspective, it can be said that this step is to stop the drain of dollars, and it is primarily In response to the request of the International Monetary Fund, which knows what is going on in Lebanon.

Lebanon has reached the stage of transforming into a large company, says journalist Nazir Reda, and explains, “It will lift support from all sectors except for bread because of its symbolism, while the status of the public school and the Lebanese University has been cracked, but its support will remain within its capabilities because, so far, there is an international commitment to the issue of Education, while social security has become besieged by weak capabilities, and we do not know how long the state will remain able to intervene and contribute modestly to the health of citizens.”

It is clear that this transformation is not a result of the economic and financial crisis that the country is experiencing only. Reda says that it “comes in the context of a radical shift in the state’s policy, as its previous intervention that provided support, which turned the country into a large company, stopped.”

With regard to fuel, Reda told Al-Hurra website, “The lifting of subsidies proceeded in a gradual manner, with the decline in the state’s financial capacity and the depletion of its central bank reserves.” He explains, “In the spring of 2021, fuel prices began to rise gradually, and in the summer of 2021 the total subsidy for diesel was lifted, and today We have reached the stage of lifting the total subsidy on gasoline, which is the natural course.”

The main question raised by the journalist revolves around “why did the Central Bank continue to support gasoline until yesterday, or rather why the state asked it to continue supporting it, and why it was not dollarized with the dollarization of diesel? Is this related to calming the Lebanese and enabling some groups to obtain it, although that caused the depletion of the central reserve of hard currency.

Since the start of the Lebanese state gradually lifting subsidies on fuel and domestic gas, all prices in the country have risen. If the Lebanese, as Reda stresses, “received a salary of six million pounds, he would have been able to live even with the minimum requirements of life, but today this salary is not enough to pay a bill Electricity generator or transportation allowance, in short, this sector has destroyed all the capabilities of citizens and the resilience capabilities of those who work in their homeland.

Extra Siege

After lifting the subsidy on gasoline, the Lebanese citizen became hostage to three things, which, according to Ajaqa, “the international price of oil, the price of the dollar on the black market, and the price of canisters of gasoline in dollars,” and he pointed out that “despite the decline in the price of a barrel of oil globally, the price of the black market dollar It is witnessing a rise in Lebanon, which means that the price of gasoline will rise. From this point of view, what the Lebanese citizen is waiting for are more burdens. We have entered an inflationary cycle, where we will witness a rise in most prices as they are related to fuel.”

Since the summer of 2019, Lebanon has been witnessing a severe economic crisis, which the World Bank has ranked among the worst in the world since 1850, as the lira lost about 90% of its value, as a result of the rise in the dollar exchange rate.

Ajaqa refers to the gasoline pricing chaos that the stations will witness after the Central Bank’s decision, asking, “According to the dollar, which application will gasoline be priced, and what guarantees that the owner of the station does not specify the price that he likes, as supermarket owners do, and this is due to the monopoly that was supposed to treat it.” The state before taking the step of raising subsidies, by opening the market to competing companies, we have not yet forgotten that in August 2021 the Lebanese army found tens of millions of liters of stored fuel, as the state was supposed to fight dollar applications.” For his part, Abu Chakra wished price stability Exchange the dollar, and not witness chaos in prices.

As for a member of the Union of Petroleum Import Companies, Maroun Shammas, told Reuters, “If there is more fluctuation in the exchange rate, there will be more fluctuation in the price of fuel,” noting that “importers have so far been able to get all the dollars they need from the black market. Petrol pumps will continue to accept payment in Lebanese pounds at the daily rate on the black market.”

The rise in the price of gasoline has forced the Lebanese to reduce their consumption of this substance, and according to the “International Information” indicated, the average daily consumption in 2021 amounted to 328,000 pages per day, and in 2022 it decreased to 281 newspapers per day, i.e. a decline of 47 thousand plates and a rate of 14.3 per cent. percent.” And after lifting the total subsidy, it is expected that gasoline consumption will witness a further decline, which means an additional indirect siege on the Lebanese, who are now calculating the distance of their transportation and its cost on their pockets.

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