Lebanon raises fuel prices by more than 35% amid crisis

The Lebanese Energy Ministry has raised gasoline and fuel prices by 35%, a move that could lead to a sharp increase in the prices of most commodities in the crisis-stricken country

BEIRUT – The Lebanese Energy Ministry on Tuesday raised gasoline and fuel prices by 35%, a move that could lead to a sharp increase in the prices of most raw materials in the crisis-stricken country .

The hike came days after Acting Prime Minister Hassan Diab authorized financing of fuel imports at a rate above the official exchange rate, reducing critical fuel subsidies.

Lebanon is going through an unprecedented economic and financial collapse, coupled with a political stalemate lasting several months over the formation of a new government.

These events constitute the most serious threat to the stability of the small country since the end of its civil war three decades ago. The World Bank has declared the crisis to be one of the worst the world has seen in 150 years.

Armed fighting and shootings have erupted at some gas stations in recent weeks as frustrated citizens lined up for hours to fill their tanks and shortages have led to protests around Lebanon.

Power cuts last much of the day, and people have had to turn off private generators for several hours to ration fuel. Last week, the Economy Ministry raised the price of subsidized bread by 18%, the fifth time in a year.

The price of gasoline, which in Lebanon is calculated at 20 liters (about 5 1/2 gallons) reached 62,000 Lebanese pounds at an increase of 35%, or about $ 3.6 at black market rates. Despite the increase, motorists still lined up at gas stations on Tuesday to refuel. Diesel rose 38%, to 46,100 pounds, or about $ 2.7 on the black market.

The representative of the fuel distributors, Fadi Abu Shakra, called for calm. He was quoted by the Lebanese state news agency, NNA, as saying that six tankers began unloading petroleum products after midnight on Monday to ease demands.

The Lebanese pound hit a new low over the weekend, selling on the black market at 18,000 pounds to the dollar. The pound has lost more than 90% of its value since the start of the crisis with nationwide protests against the country’s political class in late 2019.

There are several exchange rates, including the official rate which is always 1,507 pounds to the dollar. Two other exchange rates, both authorized by the Central Bank, are 3,900 pounds to the dollar for withdrawals from bank accounts and 12,000 pounds to $ 1 for imports of several products.

The decree signed by Diab on Friday allows the financing of fuel imports at an exchange price of 3,900 pounds.

The crisis, rooted in decades of corruption and mismanagement, has worsened in recent weeks as the central bank cuts funding for imports in subsidized dollars. Foreign exchange reserves have fallen dangerously from $ 30 billion at the start of the crisis to nearly $ 15 billion today. This prompted traders to raise prices or stop imports.

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