Central Bank ends fuel import subsidies – Middle East Monitor

The Central Bank of Lebanon said it had stopped supplying US dollars for oil imports, Reuters reported. The move caused prices to spike and increased pressure on the local currency, which is steadily losing value.

Although the bank said last year that it would stop supplying dollars at heavily subsidized exchange rates due to dwindling foreign exchange reserves, it continued to do so at below market prices on its Sayrafa exchange platform.

A bank spokesman said fuel importers will now have to source US dollars on the black market, where the Lebanese currency traded at around 35,000 pounds to the dollar on Monday. Sayrafa’s rate was around 28,000 last week.

“If there is more volatility in the exchange rate, there will be more volatility in the price of fuel,” said Maroun Chammas, a member of the Association of Petroleum Importing Companies. Reuters.

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The price of 20 liters of petrol jumped 20,000 pounds on Monday, a significant increase from the regular daily fluctuations of a few thousand pounds in previous weeks.

According to Chammas, importers have so far been able to get all the dollars they need on the black market. Petrol retailers will continue to accept payment in Lebanese pounds at the daily black market rate, he added.

Lebanon is experiencing its worst economic crisis since the end of the 1975-1990 civil war, which led to financial collapse.

Edward N. Arrington