BEIRUT: Lebanese President Michel Aoun said the government treasury will bear the cost of the continuation of fuel subsidies that was decided on Saturday.
The central bank said earlier that the government had decided to raise the exchange rate used to price fuel to 8,000 pounds to the dollar from the previous level of 3,900 to the dollar, effectively increasing fuel prices.
The new exchange rate set for fuel imports remains, however, below the market rate of about 19,000 pounds to the dollar, which means a continuation of a policy to subsidize fuel, albeit by a small amount.
Last week, Coral Oil Co., operating in Lebanon since 1926 said it would stop supplying its gas stations with fuel.
Lebanon is grappling with an economic crisis branded by the World Bank as one of the planet’s worst since the mid-19th century.
On top of shortages of medicine, gas and bread, the country has been hard hit by severe fuel shortages leading to massive queues at pumping stations.
Diesel shortages have aggravated power cuts which now last up to 22 hours a day, forcing shut businesses, government offices and even hospitals.
Western donors have consistently demanded that Lebanon carry out long-delayed economic reforms to tackle the causes of its collapse — chiefly state corruption and waste.
On Saturday evening, the presidency announced approval of a “request for the Bank of Lebanon to open a temporary account to cover urgent and exceptional subsidies for fuel.”
A kitty of up to $225 million would be set aside to subsidize imports of petrol, fuel oil and cooking gas until the end of September, it said.
The decision was taken at a meeting attended by the president, the central bank chief and the caretaker prime minister, as well as the outgoing ministers of finance and energy.