Lebanon raises fuel prices, source says price is set at central bank rate

BEIRUT, Sept. 22 (Reuters) – Lebanon on Wednesday hiked gasoline prices by 16%, the second hike in a week, removing a subsidy on imported fuel that new Prime Minister Najib Mikati said the nation would not can not afford.

Lebanon, which had already hiked fuel prices by 37% on Friday, is grappling with a deep economic crisis that has caused a currency collapse and left the government cash-strapped with a growing bill for subsidies across a range of imported items, including fuel.

A source from the Energy Ministry said the new fuel prices were based on an exchange rate of 14,000 Lebanese pounds to the dollar, against an official rate of 1,500 to the dollar before the crisis erupted in 2019.

The new fuel price calculation rate matches that announced Tuesday by the central bank’s exchange platform Sayrafa, although it remains lower than the parallel market where a dealer bought dollars at 16,000 pounds.

Until now, Lebanon has subsidized the price of gasoline by providing dollars to central bank importers at heavily subsidized exchange rates.

The stated purpose of the subsidies has been to help consumers affected by the financial collapse. Critics say the system has depleted hard currency reserves and created a huge incentive for smuggling and hoarding, leading to crippling shortages.

Lebanon is suffering from what the World Bank has described as one of the worst depressions of modern times.

The Lebanese currency has fallen by more than 90% since 2019, more than three-quarters of the population have been plunged into poverty, the banking system is paralyzed and a currency tightening has resulted in shortages of vital imports, especially of fuel.

Reporting by Laila al Bassam and Maha El Dahan; Writing by Nadine Awadalla and Tom Perry; Editing by Edmund Blair

Our Standards: Thomson Reuters Trust Principles.

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