Nobody running Lebanon says central bank boss
Beirut: Lebanon’s central bank governor said nobody was running the country as he defended his decision to halt fuel subsidies that have drained currency reserves, saying the government could resolve the problem quickly by passing necessary legislation.
In an interview broadcast on Saturday, governor Riad Salameh pressed back against government accusations that he had acted alone in declaring an end to the subsidies on Wednesday, saying everyone knew the decision was coming.
Part of Lebanon’s wider financial meltdown, the steadily worsening fuel crisis has hit a crunch point, with hospitals, bakeries and many businesses scaling back operations or shutting down completely as fuel runs dry.
Children try to sell tissues to motorists who had been queuing for hours to fill up due to fuel shortages. Credit:
Lebanese President Michel Aoun called an emergency meeting to discuss the worsening crisis on Friday but was rebuffed by the prime minister as political paralysis obstructed efforts to find a solution, even as much of the country grinds to a halt.
Dwindling fuel supply has plunged Lebanon into extended blackouts and long queues for petrol and bread, with many bakeries and hospitals almost forced to close. Angered by the government’s inaction, protesters blocked roads across the country.
The central bank’s move to end subsidies, which will mean sharp price increases, is the latest turn in the financial crisis that has sunk the Lebanese pound by 90% in less than two years and pushed more than half the population into poverty.
Salameh said Lebanon could recover but could not say how long that would take. “So far you have nobody running the country,†he told Radio Free Lebanon.
The row between the government and Salameh has captured the failure of the Lebanese elite to start tackling the meltdown.
The central bank has effectively been subsidising fuel and other vital imports by providing dollars at exchange rates below the real price of the Lebanese pound - most recently at 3,900 pounds to the dollar compared to parallel market rates above 20,000 - eating into a reserve which Salameh said now stood at $14 billion.
AdvertisementIn order to continue providing such support, the central bank has said it needs legislation to allow use of the mandatory reserve, a portion of deposits that must be preserved by law.
“We are saying to everyone: You want to spend the mandatory reserve, we are ready, give us the law. It will take five minutes,†Salameh said.
The government has said fuel prices must not change, leaving fuel importers, who say they cannot import at market rates and sell at subsidised rates, demanding clarity.
The central bank and oil authority told importers to sell their stocks at the subsidised rate of 3,900 pounds to the dollar, prioritising hospitals and other essential functions.
Critics of the subsidy scheme say it has encouraged smuggling and hoarding by selling commodities at a fraction of their real price.
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