BEIRUT -- Lebanon’s government raised the price of fuel Wednesday by about 25%, the National News Agency reported, effectively removing all subsidies on fuel products and pricing them at market rate amid a worsening economic crisis.
The new increase brings the price of 20 liters (5 gallons) of 98-octane gasoline to 312,700 Lebanese pounds — almost half the monthly minimum wage. The spike also affects cooking gas and diesel fuel used for heating, portending a chilly winter ahead.
“Effectively, the subsidies have been removed from fuel in a final manner,” said Georges Brax, a spokesman for the Syndicate of Petrol Station Owners in Lebanon. He said the new prices were calculated at the black-market rate.
“There are no more subsidies from the central bank or the state coffers,” he said, adding that world fuel prices have also been rising, impacting the pricing in Lebanon.
The increase sparked limited protests in Beirut, southern and northern Lebanon and calls for an increase in the minimum wage. Living conditions continue to deteriorate in Lebanon as the tiny country, once a middle-income nation, slides further into an economic crisis that has already driven over half of the population into poverty.
A government plan for a social safety net has yet to materialize in the country, which is now dependent on international financial assistance.
Lebanon, a country of 6 million people including Syrian refugees, has been grappling with shortages of fuel, medicine and basic goods as foreign reserves dwindle and the economy contracts. The national currency has been in free fall, losing more than 90% of its value.
A new government took office last month after nearly a year of political deadlock that only aggravated the economic crisis, described by the World Bank as one of the world’s worst in the last 150 years.
Over the last few weeks, the government has gradually lifted subsidies, bringing the prices closer to market rates.
The priority of the new government is to lift subsidies and start negotiating with the International Monetary Fund for a recovery package. On Tuesday, Prime Minister Najib Mikati said the government had started designing a reform plan to prepare for talks with the IMF. He hoped the talks would bring results by year's end. Lebanon defaulted on its foreign debt for the first time in March last year and earlier talks with the IMF faltered.
The Lebanese currency, pegged for 30 years to the dollar at 1,500 Lebanese pounds for $1, has been hovering at around ten times that rate in the black market. This week, it was trading closer to 20,000 Lebanese pounds to the dollar.
Brax predicted there will no longer be major changes in the pricing of fuel. “God help the people. ... Their purchasing power has collapsed,” he said, adding that the new price hikes will affect the prices of most merchandise.
He urged the government to expedite its plans to distribute financial assistance to families in need. “It is all talk still,” he said.