The parity of the Lebanese pound crossed the threshold of 12,500 LL / USD on Friday, May 7, amid reports of the imminent end of the subsidy program for the purchase of basic necessities.
The exchange rate of the Lebanese pound against the dollar is thus 12,500 LL / USD for the purchase and 12,550 LL / USD for the sale.
The lifting of the subsidy program for the purchase of essential products such as fuel, flour and medicines should put additional pressure on the already weakened Lebanese pound, while a rationing program targeting 75% of the population should
A subsidy program whose hours are counted when available monetary reserves are about to be exhausted
As a reminder, the subsidy program could end at the end of April for fuels and at the end of next June for products such as drugs or flour, according to a letter from the governor of the Bank of Lebanon, Riad Salamé, addressed to the Minister of Finance. Ghazi Wazni, for lack of monetary reserves available to continue to finance it.
The cost of the program was $ 700 million during the period preceding the current crisis. It has fallen to $ 500 million currently, or $ 6 billion per year, of which $ 3 billion is for fuels alone. Questions also relate to the reality of the 16 billion dollars of gross reserves of the Bank of Lebanon mainly constituted by the sums available by the 15% of minimum reserves on bank deposits.
The establishment of a prepaid card program would however depend on the approval by the parliament since it would then be an annual loan for an amount of one billion dollars from the Bank of Lebanon against 6 currently. . This program would be aimed at 800,000 families now.
In fact, more than 65% of the population would be today living below the poverty line, that is to say on less than 6 dollars a day. The inflation rate would have even reached 155% during the year 2020, the prices of certain essential but not subsidized products having even reached an increase of 400%, while the Lebanese pound would have lost more than 90% of its value. since October 2019.
Last March, the outgoing Minister of Finance Ghazi Wazni, for his part, estimated that it would be a question of reducing the number of subsidized products from 300 to 100 products, reducing the subsidies granted to the purchase of fuels and drugs and introduce a ration card for 800,000 families, leading to an annual reduction in half of the current subsidies, which would drop from 6 to 3 billion dollars.
The establishment of a prepaid card program would, however, be subject to parliamentary approval.
The creation of this rescue net program to replace the subsidy program was adopted by the Lebanese parliament on March 12 and signed by the President of the Republic on April 8 before being published in the official journal.
This program aims to set up a prepaid payment card which would thus be given to households vulnerable to the economic crisis. They would thus receive 100,000 pounds per month per person for about a year, wanted the Bank of Lebanon while the World Bank had indicated that it required that these sums be made available at the real rate of the local currency.
50% of the fuel subsidy program
Fuels alone represent 50% of the Bank of Lebanon’s subsidy program, said the outgoing energy minister. Despite an increase in the price of gasoline by more than 50% in Lebanon, a can of gasoline costs around three dollars while in Syria, the same can cost between 7 and 13 dollars, leading to trafficking between 2 countries.