BEIRUT, Oct. 8 (Xinhua) -- Lebanese economists have been urging authorities to adopt an effective aid mechanism for citizens before starting to lift subsidies on fuel, wheat, medicines and food products from the end of October, citing severe economic and financial trouble in the country.
Banque Du Liban, the central bank of Lebanon, is expected to gradually remove years of subsidies on these items starting the end of October, which cost a total of 700 million U.S. dollars a month.
The central bank's decision came in the light of an acute shortage in dollar reserves in Lebanon as Riad Salameh, the central bank's governor, announced earlier this year that Banque Du Liban had only 1.8 billion dollars left for the subsidy program while the remaining 17.5 billion dollars in foreign reserves cannot be touched because they belong to depositors.
This decision, however, has raised a great deal of concern among citizens who flocked to supermarkets and pharmacies to snap up items in fear of a hike in their prices next month.
"When we stop paying 700 million dollars a month on subsidies and provide direct financial support for people instead, we would not only save a lot of money but also provide people with means to purchase their needs," Patrick Mardini, president of the Lebanese Institute for Market Studies, told Xinhua.
Mardini explained that subsidizing wheat, fuel, medicines and a basket of 300 food products is encouraging smugglers to purchase these products at lower prices and sell them in nearby countries such as Syria and Iraq at higher prices, causing shortages of such items in Lebanon.
Adnan Rammal, representative of the trade sector in the Economic and Social Council, told Xinhua that providing direct financial support for middle and low-income citizens would cost the state only about 200 million dollars a month.
More than 55 percent of Lebanon's population are in poverty and struggling for bare necessities, almost double last year's 28 percent, according to the UN Economic and Social Commission for Western Asia (ESCWA).
In addition, extreme poverty has registered a threefold increase from eight percent in 2019 to 23 percent in 2020 in Lebanon, the ESCWA said.
That's partly because many companies have laid off thousands of employees or even gone out of business while the rest of the employees have lost about 80 percent of their salaries' value amid the weakening of the local currency.
Nasser Yassin, a professor of policy and planning at the American University of Beirut, told Xinhua that a World Bank program that aims to support 112,000 families by offering 140,000 Lebanese pounds (37 U.S. dollars at the bank rate) per family could be adopted ahead of the removal of the subsidy program.
The program also offers 70,000 Lebanese pounds for every student in public schools, Yassin added, warning of serious unrest if the subsidy program is cancelled without proper remedies.
"Prices of 20 liters of petrol would increase to at least 60,000 Lebanese pounds from 25,000 pounds, which would impact the transport sector and other sectors that use fuel in their operations such as agriculture, industry and tourism," the professor noted. Enditem
