BEIRUT: Lebanon’s economy ministry on Tuesday raised the price of subsidized bread for the fifth time in a year as the country’s multiple crises worsen with no resolution in sight.
The ministry said the reason behind the latest increase — an 18 percent hike from the last raise in February — was the central bank’s ending of sugar subsidies, which in turn adds to the cost of bread production.
Lebanon is grappling with the worst economic and financial crisis in its modern history — one that the World Bank has said is likely to rank as one of the worst the world has seen in the past 150 years. The currency has lost 90 percent of its value, breaking a record low earlier this month of 15,500 Lebanese pounds to the dollar on the black market. The official exchange rate remains 1,507 pounds to the dollar.
The World Bank said in a report this month that Lebanon’s gross domestic product is projected to contract 9.5 percent in 2021, after shrinking by 20.3 percent in 2020 and 6.7 percent the year before.
The central bank has been cutting back on financing imports at subsidized dollars, as foreign currency reserves have dropped dangerously low, from $30 billion at the start of the crisis in late 2019, to nearly $15 billion currently. That has prompted merchants to either raise prices or stop imports.
Most Lebanese have seen their purchase power drop and their savings evaporate, and more than half the tiny country’s population now lives below the poverty line.
The government in June last year raised the price of flatbread, a staple in Lebanon, by more than 30 percent — for the first time in a decade. It has since raised the price three times before Tuesday.
The Ministry of Economy says 910 grams (2 pounds) of bread will be sold for 3,250 pounds. It used to be sold for 2,750 pounds before the latest increase.
Lebanon is going through severe shortages in gasoline, medicines — both still subsidized by the state — and other vital products. Electricity cuts last for much of the day and people wait in line for hours to fill up their cars. Shootings and fistfights have broken out at gas stations, leaving several people injured.
One of the reasons behind the gasoline shortage is smuggling to neighboring Syria, which struggles with its own gasoline shortage but where the price is nearly five times that in Lebanon.
A fuel distributors representative, Fadi Abu Shakra, said 140 gas station owners refused to receive gasoline on Tuesday because of the problems they are facing, including threats, blackmail and beatings.
“They cannot protect themselves,” he said, and called on security forces to protect gas stations, according to state-run National News Agency.