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Subsidy cuts in Lebanon harm low-income citizens

December 12, 2020 at 4:06 pm

Security forces intervene in protesters with tear gas in Beirut, Lebanon on September 1, 2020 [Houssam Shbaro/Anadolu Agency]

Following the Central Bank of Lebanon’s decision to start implementing subsidy cuts for basic goods including flour, fuel, and medicines, widespread protests have erupted across the country, news agencies reported.

Xinhua News Agency reported United Nations (UN) officials expressing their fear on Tuesday that the subsidy cuts would cause havoc in the country if no alternative plan, such as creating a safety net, is made before the removal of the subsidy.

The central bank has been providing foreign currency to importers of essential goods at a favourable rate, as the value of the Lebanese lira continues to decline due to a prolonged economic crisis.

Attempting to restrain the protests, the Lebanese authorities proposed on Tuesday issuing special cards with limited deposits to help around 600,000 families in need deal with the new conditions.

However, the General Confederation of Lebanese Workers called on Tuesday for protests across the country to demonstrate against ending the subsidy. The protests will take place next week.

As reported by Anadolu Agency, researcher Mohammad Shamsuddin warned that cutting the subsidy for fuel would raise the price of 20-litre containers from 16,000 liras ($11) to 65,000 liras ($43), stressing that this would lead to a crisis among the low-income citizens who will be unable to warm their homes during winter.

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Fouad Ballouk, head of Baalbek’s municipality, told Anadolu Agency that 95 per cent of the residents of his city, in addition to thousands of Syrian refugees, depend on subsidised fuel during winter, adding that a humanitarian crisis would be “inevitable” during the cold season between September and March. Several other Lebanese cities are facing the same fates.

Representative of fuel distributors in Lebanon Fadi Abu Shakra called for not ending the subsidy, pointing to the low rate of wages in the country.

The minimum rate of wages is 675,000 liras ($445) he remarked, highlighting that a fuel container could not be priced more than 16,000 liras ($11) amidst these conditions.

Economist Mounir Younes told Xinhua News Agency that the money used to finance cards aimed for the low-income families comes from the state’s budget or the central bank, which will print more money and lead to a further increase in inflation.

“Special cards are only beneficial if the government adopts a mechanism to control prices in the country, which is impossible in Lebanon due to the absence of a proper team who can achieve this,” according to Younes.

“We need a more comprehensive and long-term solution to secure not only food, medicines, and fuel, but also education for people in private schools, otherwise we will witness a social explosion,” he concluded.

Lebanon is one long tale of disaster and crisis - Cartoon [Sabaaneh/MiddleEastMonitor]

Lebanon is one long tale of disaster and crisis – Cartoon [Sabaaneh/MiddleEastMonitor]