Lebanon economic collapse: Central bank ends fuel subsidy

 Lebanese central bank effectively ends the fuel subsidy from Thursday and enforces a credit based transaction for fuel imports which will be entirely based on the market price for the Lebanese pound.

The country fuel subsidies for the people but after the financial crisis drained its reserves that have been immensely exploited over the period of two years, the central bank has decided to end the subsidy. This move was announced on Wednesday, late at night and that meant that from the very next day, the fuel prices will see a steep rise.

The Lebanese media made rough resorts on how much of changes will ending subsidies bring to the fuel prices. They said that the price of unsubsidized 95 octane gasoline will be roughly four times the subsidized price. The currency of the country has lost more than 90 percent of its value in less than two years and even the World Bank has described it as the sharpest depression in modern history.

Talking about the recent line of moves to save the crippling economy, the economist at Byblos Bank Nassib Ghobril said, “It should also alleviate crippling fuel supply shortages as incentives to smuggle and hoard heavily subsidized fuel disappear.”

The bank governor Riad Salameh had also noted earlier in the day that the bank can n more bear the cost of subsidized fuels imports and look after the credit lines. Since the financial crisis, this is the first time that the discussion regarding fuel subsidy has started. Until now, the banks were effectively subsidizing fuel imports.

Until very recently, the bank was extending credit fuel imports at a rate of 3,900 pounds to dollars while the market rate was more 20,000 pounds on Wednesday.