Lebanese experts suggest Long-term solutions to replace central bank’s subsidy program

xinhua net | May 28, 2021

 As Lebanon plans to issue subsidy cards in replacement for the central bank’s subsidy program, some economic experts urge for long-term solutions to support the vulnerable families.

Given the shortage of foreign reserves in the country, the central bank will remove by the end of May its subsidies for food, medicines and fuel which costs 5 billion U.S. dollars yearly while opting for a subsidy card to be offered to nearly 750,000 families (75 percent of the population) at the cost of 1.2 billion U.S. dollars to alleviate the negative impact of the gradual lifting of subsidies.

Patrick Mardini, president of Lebanese Institute for Market Studies, told Xinhua that the subsidy card would have been perfect if the government had adopted it a year ago when money was still available to cover its cost.

The funding of the subsidy card and the time needed to issue and distribute these cards would be challenges, Mardini said.

Haneen Sayed, World Bank Lead Operations Officer and Task Team Leader, also cited the funding source for the subsidy card as a challenge facing the government while adding that this kind of support is usually adopted within the framework of an agreement with the International Monetary Fund (IMF).

Caretaker Prime Minister Hassan Diab previously said that the subsidy card will give amounts ranging from 1 to 3 million Lebanese pounds for each family.

Caretaker Finance Minister Ghazi Wazneh announced earlier this week that Lebanon will be looking for funding from international funds or it will have to use the obligatory reserves.

Adnan Rammal, representative of the trade sector in the Economic and Social Council, said the subsidy card should only be a temporary solution because direct support to citizens may discourage them from searching for jobs while relying on the government’s support.

Rammal told Xinhua the best solution for Lebanon is to form a cabinet and resume negotiations with the IMF to attract funds and investments to the country which would activate the different sectors and create job opportunities.

For his part, Mardini suggests that the central bank must allow depositors to withdraw their dollars which have been frozen at banks for over a year now given the shortage in U.S. currency after the transfer of billions of U.S. dollars to foreign countries.

“This would allow people to use their dollars while also activating the economy,” Mardini said.

According to Mardini, people who do not have bank accounts will be covered by the World Bank program aimed at supporting the most vulnerable families with 246 million U.S. dollars.

Meanwhile, Leila Dagher, economic advisor to the prime minister, said she is in favor of direct cash transfers to families while insisting that they must be achieved in a transparent and fair manner. Enditem

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Tags: Central bank, IMF, Subsidies, البنك الدولي, دعم, صندوق النقد الدولي,