3 hours ago
Beirut – AFP: To secure her family’s sustenance, Sandra Tawil found herself forced to sell a refrigerator and a washing machine. But what he gained will not serve her for long in light of a stifling living crisis. She fears that removing government subsidies on basic commodities may make it impossible to secure her family’s sustenance.
Recent weeks have witnessed a new rise in the prices of all goods and services, from bread and mostly imported foodstuffs, to gasoline and taxi tariffs, to the electric generator bill amid harsh current rationing, noting that a large part of these goods and services are subsidized by the state.
In 2019, Sandra and her husband chose to move from Dubai to Beirut, where they opened their own salon. But the dream they worked so long to achieve collided with an unprecedented economic collapse.
Sandra, a 40-year-old mother of two, said in an interview, “I got to the point where I sold my washing machine and my fridge (my fridge) so that we could secure our food for my evening and the rent of the house.” Then she asks emotionally, “We are basically living in a state of austerity. “What will we eat if we are unable to buy rice, wheat and lentils?”
The family, which has stopped buying meat and poultry, makes their living from food aid provided by the non-governmental “Beit Al Baraka” association, which also pays the school fees for the two children.
Like Sandra, many Lebanese gradually found themselves during the past year unable to secure their basic needs, due to a mad rise in prices, mainly linked to the collapse of the price of the lira, which lost more than eighty percent of its value against the dollar.
The crisis, which was exacerbated by the outbreak of the Corona virus and then the horrific explosion of the Beirut port, led to a high unemployment rate, closure of institutions and a scarcity of liquidity in light of strict banking restrictions in place for more than a year.
Dwindling central reserves
Meanwhile, the central bank’s dollar reserves began to diminish, which reflected negatively on its ability to continue subsidizing basic commodities such as flour, fuel and medicine. The authorities, with the payment of the Central Bank, have been studying for months the rationing or lifting of subsidies on importing them, in a move analysts warn of its impact on the poor, who are more than half of the population, and on the rate of inflation.
Under these circumstances, the “Beit Al Baraka” association receives hundreds of letters every day asking for help. “About four months ago, we noticed a significant increase in requests,” says founder Maya Ibrahim. The organization currently assists about 226,000 people per month, by paying school fees and health care. It also runs free supermarkets in Beirut.
“The people we are helping now were all from the middle class,” explained Ibrahim Shah. Analysts say the current crisis has ended. It expects the number of people who will need help will increase if the subsidy is removed or reduced.
Subsidized goods constitute a safety valve, especially for the poorest families. According to the World Bank, the current subsidy formula in place, which amounts to $ 437 million a month, allows to curb the prices of about 300 basic commodities, which the state has started to pay part of its cost since the summer.
The Central Bank provides dollars to importers according to the official exchange rate (1507 pounds), which covers the largest part of the value of the materials to be imported, while it returns to them to insure 10 to 15 percent of the remaining amount from the black market, as the exchange rate touched the threshold of ten thousand in a record rate .
In an interview in December, BDL Governor Riad Salameh warned that the bank could only finance the support for an additional two months. He said in a later statement that he had $ 2 billion to secure support.
Last month, the bank’s reserves amounted to $ 17.9 billion, according to its website, of which 17.5 billion were mandatory reserves that should not be affected. The Media Safety Office did not respond to questions about next steps.
According to the Minister of Economy in the caretaker government, Raoul Nehme, to France Press, that the government has drawn up an action plan that provides for a gradual elimination of subsidies, in exchange for providing studied financial aid to those affected over a period of several years.
According to the plan, subsidies will be lifted first on the consumption basket consisting of 300 goods, in addition to bread and fuel. After that, the EDL prices are reviewed.
On the other hand, during the first year, 80 percent of the population will receive financial support of 50 dollars for an adult and 25 dollars for a child, provided that, after a year, the number of beneficiaries and the value of the support will gradually decrease.
The United Nations’ World Food Program warns of “significant inflationary effects” if the subsidies are rationalized, and the price of bread is expected to rise between one and a half to three times and fuel more than four times. The program, which in 2020 provided food and financial aid to 417,000 Lebanese, and is preparing to support 50,000 families monthly in the next phase, stresses the need to “work immediately to increase social assistance for the poorest groups” to mitigate the repercussions of raising the subsidy.
At the beginning of the year, the World Bank agreed to provide emergency aid worth $ 246 million in the form of financial transfers and social services to about 786,000 Lebanese from the poorest families.
The days are heavy for Nasser Jumaa (56 years old), who is trying to secure his family’s sustenance, while his 25-year-old son cannot find a job.
“Lifting subsidies would be catastrophic,” he says, questioning the state’s ability to support the poor. “This is all just talk,” he added. “We do not trust the state.”
The man works as a private driver with a salary of 1.6 million pounds, or 160 dollars, after it was equivalent to more than a thousand dollars before the crisis. “We will reach a day when we are unable to buy what we eat and drink,” he says.