The outgoing government should soon present to parliament a new bill establishing the creation of ration cards for 750,000 vulnerable families to replace the Bank of Lebanon’s basic commodity purchase subsidy program.

More than 65% of the population is believed to be living below the poverty line today, or on less than $ 6 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.

This new 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.

This procedure should allow the lifting of the Bank of Lebanon’s subsidy program, the financing of which would in any case be interrupted due to the exhaustion of the central bank’s available monetary reserves by May for fuels and June for other basic necessities.

As a reminder, the cost of the program was 700 million dollars 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.

This new program could thus reduce expenditure by 40% to 60% by reducing the number of beneficiaries to vulnerable people only. However, until now questions about this program have been heard concerning the list of beneficiaries, some municipalities or political parties having included the names of individuals not fulfilling the award criteria.

Other questions relate to the origin of the funds that will finance them. Until now, this had to be done via the World Bank. However, due to a disagreement between the Banque du Liban and the international institution concerning the parity rate used, the WB wishing to use a rate close to the real rates and the BdL a rate of 6,240 LL / USD and delays incurred. by the Lebanese authorities to present the case, it no longer seems to be on the agenda.

For the time being, the financing would thus be provided by the Banque du Liban alone, which could resort to an injection of Lebanese pounds into the market to the detriment of the value of the local currency, thus worsening the rate of inflation.

Prime Minister Hassan Diab would try to avoid this pitfall through foreign funding. He went to Qatar with this objective two weeks ago to discuss this.

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