BEIRUT (AP) – Lebanon’s new government on Wednesday raised the price of fuel by 16%, the second time in five days, as part of a gradual lifting of subsidies in the crisis-stricken country.

The new hike brings the price of fuel, in short supply, closer to black market rates and comes after warnings from Lebanon’s central bank that it can no longer continue to subsidize fuel purchases that have depleted its foreign exchange reserves. The Department of Energy announced the new prices in a statement.

The new government, confirmed by parliament this week, has said removing subsidies – which amount to billions of dollars – will be one of its priorities.

Lebanon is going through a crippling economic and financial crisis, which the World Bank has described as one of the worst in the world in the past 150 years.

The country sank into financial chaos and impoverishment as the crisis unfolded in late 2019. The small country of 6 million people, including Syrian refugees, is struggling with shortages of fuel, medicine and medical supplies. commodities as foreign reserves shrink and the economy shrinks. The national currency is in free fall, losing more than 90% of its value.

Since then, the Lebanese import-dependent currency has multiple exchange rates, including those set to organize imports. The central bank said last month it would start lending to fuel importers at market rates, signaling the end of subsidies.

The government’s priority is to relaunch negotiations with the International Monetary Fund for a recovery plan. Talks with the former government collapsed after a disagreement over the extent of the problem. Lebanon defaulted on its external debt for the first time in March 2020.

It is not immediately clear whether this is the last price increase before the total removal of subsidies.

Following Wednesday’s gas price hike, people will have to pay ten times more for fuel than pre-crisis prices. A common unit of measure – 20 liters – of 95-octane gasoline now costs 202,400 – about $ 14.45.

The Lebanese currency, pegged for 30 years to the dollar at 1,500 Lebanese pounds for $ 1, oscillates at about ten times that rate on the black market. It was trading at around 15,400 Lebanese pounds on Wednesday.

Long lines in front of gas stations often escalated into chaos or violence and caused serious traffic jams. Gas stations ration the amount of gasoline they distribute. The prices of diesel for local power generation – a necessity because national supply is almost non-existent – have also more than increased tenfold. It is therefore almost impossible for many families to provide electricity for their homes. Many businesses have had to close.


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