CBSP: Central Bank Subsidy Program
CBSP advocates for repealing the central bank subsidies program. The central bank of Lebanon is currently subsidizing several commodities deemed vital for the population such as fuel, wheat, medications & food items. Those subsidies cost around USD4.5 billion in 2020, twice total government expenditure but they go unnoticed since they are financed by foreign exchange reserves. In a nutshell, Lebanese depositors are not allowed to withdraw their dollars from the banks and at the same time the central bank is squandering what remains of their dollar-deposits on the subsidy program.
Subsidies were intended to make essential consumer products available for cheaper, to help citizens cope with the crisis. However, most subsidized goods ended up being smuggled to neighboring countries or sold locally on the black market for higher prices. So far, the Central Bank Subsidies Program (CBSP) resulted in product shortages, depletion of the central bank’s reserves, and benefits going exclusively to smugglers. The subsidy program proved to be a fundamental mistake and ought to be reformed, especially that it was made without the approval of the parliament and was not included in the Government Budget.