Lebanon parliament approves cash subsidy costing $556 mln annually

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Lebanon’s parliament on Wednesday approved cash payments for poor families, to cost $556 million annually, a member of parliament told Reuters, planned as a step that would allow the curbing of a $6 billion subsidy program for basic goods.

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Parliament also instructed government to issue approval for exceptional credit to finance the program.

Lebanese MPs passed a law to create a ration card program for the country’s poorest families. The decision comes as the country’s central bank gradually ends subsidies, online news media L’Orient Today reported on Wednesday.

Under the program, around 500,000 families are expected to receive an average of $93 each. However, who will qualify for the program remains undecided.

“The mechanisms and how the payment process will go remain the responsibility of the government,” said Lebanese Parliament speaker Nabih Berri during the discussion, adding that he received a letter from outgoing Prime Minister Hassan Diab which suggested that the caretaker government will begin to implement all the necessary measures for the program, according to L’Orient Today.

Caretaker Finance Minister Ghazi Wazni said that the scheme had two potential funding sources, one of which is through the International Monetary fund (IMF), which had previously informed him that it was considering a decision to allocate around $900 million to Lebanon as part of a larger proposal, and the second is through the World Bank, essentially a relocation of $300 million that was initially intended for public transport projects.

Lebanon’s central bank said on Monday it would open credit lines to import fuel at 3,900 Lebanese pounds to the dollar, a weaker rate than previously offered that effectively raises the costs for ordinary Lebanese.

Under a subsidy program, the central bank had been using 1,500 pounds to the dollar, the official rate used for all transactions until the crisis that erupted in late 2019 precipitated a currency collapse. The street rate for the pound is now over 17,000 to the dollar.

Lebanon’s caretaker prime minister had on Friday approved a proposal to finance the imports at the new rate amid worsening fuel shortages.

Lebanon is suffering unprecedented political, economic and financial crises that have led to poverty, unemployment, collapse of the national currency, its failure to repay sovereign debts and an accelerating decline in foreign exchange reserves since October 2019.

The outgoing government of Premier Hassan Diab resigned in the wake of an August 4 explosion at Beirut’s port that killed more than 200 people and ravaged swaths of the capital.

Last October, Lebanese President Aoun appointed Saad Hariri, the former Prime Minister of Lebanon, as the new prime minister of the government and authorized him to form a cabinet. However, attempts to form a cabinet have not made any progress for several months.

As the country has suffered multiple crises over the past year with fuel and medicine shortages being the most critical at present, the caretaker government is working with President Michel Aoun and has promised a quick solution.

With Reuters

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