Lifting subsidies on commodities delayed as Lebanon awaits new government formation

Meetings between governmental figures and the General Labor Union in Lebanon were concluded with a decision to delay lifting subsidies on wheat and flour along with a set of alternative choices related to the subsidizing of fuel and medical supplies.

Governmental figures and the General Labor Union agreed on not lifting subsidies on flour and wheat and not to classify the flour between what is intended for the manufacture of loaf bread and other derivatives.

As for oil and fuel supply, a statement released by the Labor Union noted that negotiations are underway “vigorously and positively” with the Iraqi state to secure raw materials at low prices and extended repayment terms.

“Diesel will not be subject to any taxation or increase in price. It seems that the negotiations will lead to a positive outcome soon,” said Bechara al-Asmar, President of the General Labor Union in Lebanon, in a press conference after he met with Prime Minister Hassan Diab and other ministers.

The two parties also agreed on reducing the bill of imported medicines while maintaining the subsidy on medications related to chronic diseases, thus reducing the bill by $250 million. The reduction decision needs a series of measures that will be followed up with the Minister of Health, medical unions, importers, pharmacists, and medical equipment importers to put them into practice.

“Because we want to reach our goal of supporting all the poor and impoverished Lebanese people, and because the country is experiencing its saddest political, financial and economic days, and because we are betting on the conscience of the political class, and also because the option of holding a national strike is in our hands whenever we want and when matters are called for. Therefore, we announce the suspension of the comprehensive national general strike tomorrow, Wednesday,” al-Asmar concluded his statement.

Minister of Economy and Trade Raoul Nehme said that the central bank’s foreign currency support is draining about $550 million from reserves and the negatives of the subsidy policy are the depletion and waste of public money, the decline in the central bank’s reserves, smuggling and the lack of benefit for the poor.

“Any Central Bank’s decision to stop the injection of foreign currency leads to an increase in the demand for US dollars, and thus the deterioration of the Lebanese Lira’s value. This would lead to an increase in prices. Therefore, there is no choice but to continue providing dollars until the formation of a government. Still, it is not possible to continue to support all commercial goods, and subsidizing must be replaced by a cash compensation program targeting the poor,” Nehme concluded.

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