LEBANON MOVES TO END FUEL SUBSIDY
Mikati government began a reforms push by raising petrol prices a day after Hezbollah brought in the first tanker trucks carrying 1m gallons of Iranian fuel through Syria |
Lebanon’s new government raised petrol prices yesterday, cutting a subsidy that Prime Minister Najib Mikati has said is unaffordable as he advances plans to address a devastating financial crisis.
Fuel prices issued yesterday raised the petrol price by more than 37 per cent with immediate effect. “This is the stage before last of lifting the subsidy,” said Georges Braks, a member of the Petrol Station Owners’ syndicate, who expects the subsidy to be removed by the end of September. He said the new prices were based on an exchange rate around 12,000 pounds per dollar.
This compares with a rate of 8,000 pounds per dollar that the previous government agreed for fuel prices last month, but is still below the rate on the parallel market, where dollars were changing hands at 14,600 yesterday.
The petrol price hike means importers will still be sourcing dollars from the central bank rather than the market and so a subsidy still applies, said Mike Azar, a senior Beirut-based financial adviser.
Alvarez & Marsal back
The government also signed a new contract with restructuring consultancy Alvarez & Marsal (A&M) to carry out a forensic audit of the central bank, a step sought by donors who want to see Beirut enact reforms to unlock badly needed aid.
Finance Minister Yousuf Khalil, formerly a senior central bank official, signed the contract with A&M, which the ministry said would present an initial report within 12 weeks of its team starting work.
A&M withdrew from the audit last November, saying it had not received the information it required. The finance ministry said in April the central bank had agreed to hand over required documents.
Parliament then agreed in December to lift banking secrecy for one year.
$1.13b worth of IMF Special Drawing Rights deposited
In a boost to the depleted reserves, $1.139 billion worth of IMF Special Drawing Rights have been deposited at the central bank, the finance ministry said, part of the Fund’s global allocation to help with the fallout of the Covif-19 pandemic.
The Mikati government has promised talks with the IMF and a start to reforms. IMF spokesman Gerry Rice said on Thursday there had been courtesy calls with members of the new government and the Fund stood ready to engage in the period ahead. Talks with the IMF broke down last year.
The currency has slumped more than 90 per cent since 2019.