Lebanon hiked gasoline and fuel prices by 35% on Tuesday (June 29), after caretaker prime minister, Hassan Diab signed a decree allowing the financing of fuel imports at a rate higher than the official exchange rate, effectively reducing critical fuel subsidies.
In a statement, the premier said he made the decision “guided by his sense of national responsibility”. The decision “aims at securing fuel for citizens for the next three months, especially as the summer season is approaching, which will allow the increase of the US dollar flow to Lebanon with the arrival of expatriates and tourists,” the statement reads.
Lebanon’s handful of importers and distributors rely on central bank subsidies to import fuel in US currency, which costs roughly $3bn annually.
The small Middle Eastern country of six million people will now start importing fuel at LL3,900 to the dollar, as opposed to the official rate of LL1,500. The price of 20 liters of gas will now cost LL61,000 ($40.6 at the official rate), up from LL45,200. Meanwhile 20 liters of diesel will cost LL46,100 ($30.7), up from LL33,300 ($22.2).
The new prices came after weeks of long queues at petrol stations that had started rationing gasoline and diesel fuel amid shortages due to the lack of sufficient foreign exchange to import.
The Lebanese pound- which has been pegged to the dollar at 1,507 since 1997- is trading at around LL18,000 per US dollar on the black market this week, representing a depreciation of around 92 percent for the national currency.
Over the past two years, Lebanon has witnessed a severe economic crisis branded by the World Bank as one of the world’s worst since the mid-19th century. Four out of 10 people are out of work in Lebanon, many businesses have closed and many people aren’t able to access their bank accounts.
On top of that, the country has been without a regular government since August 2020 and continues to struggle with hyperinflation, and the aftermath of last August’s catastrophic explosion at Beirut’s port.
As in every crisis, someone is behind.
With reporting by Arab News, AP