It’s no secret that the Lebanese central bank’s foreign currency reserves have been dwindling for the past year. Today, the amount of these reserves left available for subsidies is revealed.
About $1.8 billion of the Banque du Liban’s foreign exchange reserves are left to cover for the subsidies of imported essentials, according to a report by Reuters, citing an official source.
The source said that the remaining reserves could be made to last for an additional six months by ending the subsidy of a specific range of items, such as certain nuts and vitamins, in favor of more important commodities.
Throughout the ongoing economic crisis, the Banque du Liban (BDL) has been providing US dollars for the import of fuel, wheat, and medicine at the official exchange rate of 1,507.5 LBP/USD.
Additionally, it has been supporting a list of nearly 300 food items, known as the Economy Ministry’s food basket, at the exchange rate of 3,900, which is nearly half of the average and fluctuating 8,700 adopted on the black market today.
However, Central Bank Governor Riad Salameh has made it clear that the BDL would not be able to maintain these subsidies for longer – without indicating a timeframe – due to the fact that its foreign currency reserves were drying up.
A couple of months ago, the central bank informed the government of its plan to lift subsidies in order to prevent its reserves from dropping below the obligatory $17.5 billion.
At that time, Riad Salameh told Reuters that the foreign currency reserves had reached $19.5 in total, which indicated that there were around $2 billion left for subsidies.
In the face of the anticipated end of subsidies, some pharmaceutical companies, gas stations, and supermarkets have been rationing their products to make illicit profits off of their stock after the fact.
