Lebanon's president summons central bank chief over fuel-subsidy cut

Central Bank governor Riad Salame announced a drastic reduction in fuel sops late on Wednesday

Lebanon's Central Bank Governor Riad Salameh speaks to a reporter during an interview with AFP at his office in Beirut on December 15, 2017. (Photo by JOSEPH EID / AFP)

Lebanon’s President Michel Aoun summoned the governor of the central bank after its decision to drastically cut fuel subsidies.

Central Bank governor Riad Salame announced late on Wednesday that fuel imports would no longer be subsidised at the rate of 3,900 Lebanese pounds to the dollar. By Thursday, the price of petrol at some outlets outside Beirut had already risen five-fold.

The decision to lift fuel subsidies had been on the cards for months, although its announcement prompted angry responses, with protesters storming one of the country’s main power plants in Zahrani.

Lebanon’s caretaker prime minister Hassan Diab described the cut as illegal and called for an emergency Cabinet meeting on Thursday.

“The governor of the Banque du Liban has taken the decision to lift subsidies, which is against the law, and also does not take into account the reality of the deep living and social crisis,” Mr Diab said.

Mr Salame had told a meeting of the Higher Defence Council, which included Mr Aoun, that the bank would no longer be able to subsidise fuel purchases at the existing rate. The Lebanese pound traded at more than 20,000 to the dollar early on Thursday.

Lebanon had maintained some of the lowest fuel prices in the world, thanks to a generous subsidy programme based on foreign currency reserves. An economic and political crisis in the country, however, has seen those reserves dwindle since 2019.

Chronic fuel shortages have plagued the country in recent months, with snaking lines outside petrol stations a common sight.

Power supply in much of the country has been limited to two or three hours a day.

Updated: August 12th 2021, 9:23 AM