Lebanon raises fuel prices 66% as it tries to alleviate shortages

BEIRUT, Aug.22 (Reuters) – The Lebanese government on Sunday said it was raising gasoline prices by 66% as part of a partial cut in fuel subsidies as it seeks to alleviate crippling shortages that crippled the country.

The increase in the price of 95-octane gasoline would take effect immediately, the government said in a statement. This follows the state’s decision on Saturday to change the exchange rate used for the price of petroleum products in a bid to alleviate shortages.

The fuel crisis worsened this month when the central bank said it could no longer finance fuel imports at heavily subsidized exchange rates and would switch to market rates.

The government, concerned about the impact of price increases, reached a compromise with the central bank on Saturday to raise prices, but below market rate, to allow the resumption of subsidized imports for now.

Rising prices will mean more hardship in a country where poverty levels have skyrocketed during a two-year financial crisis that wiped out more than 90% of the value of the Lebanese pound.

The decision was made on Saturday at an emergency meeting attended by the president, central bank governor and other officials over a fuel crisis that has left Lebanon in chaos, crippling basic services and triggering daily scrums as people scramble for fuel. Read more

The price increase does not fully raise the exchange rate to set the price of fuel at the exchange rate at which the central bank will finance its import – a gap that the state will continue to finance, for now.

The government has said the central bank will open an account for this purpose up to a maximum of $ 225 million until the end of September – funds that the government will have to repay in the 2022 budget.

The Iranian-backed Lebanese group Hezbollah organized a fuel shipment from Iran to help alleviate the fuel shortage in Lebanon. Read more

Writing by Tom Perry and Suleiman Al-Khalidi; Editing by Susan Fenton

Our Standards: Thomson Reuters Trust Principles.

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