Skip to main content
A scary good deal on trusted journalism
Get full digital access to globeandmail.com
$0.99
per week for 24 weeks SAVE OVER $140
OFFER ENDS OCTOBER 31
A scary good deal on trusted journalism
$0.99
per week
for 24 weeks
SAVE OVER $140
OFFER ENDS OCTOBER 31
// //

Riot police are deployed during clashes with protesters outside the home of Prime Minister-designate Najib Mikati in Beirut, following a fuel tank explosion in northern Lebanon, Aug. 15, 2021.

ISSAM ABDALLAH/Reuters

Lebanon’s central bank governor said nobody was running the country, hitting back after government criticism of his decision to halt fuel subsidies that have drained currency reserves.

In an interview broadcast on Saturday, Riad Salameh said the government could resolve the problem quickly by passing necessary legislation.

The country’s President Michel Aoun later on Saturday called on parliament to convene and take appropriate action on the crisis, his office said in a statement, without specifying a time or a particular proposal.

Story continues below advertisement

Mr. Salameh denied he had acted alone in declaring an end to the subsidies on Wednesday, and said it was widely known that the decision was coming.

“So far you have nobody running the country,” Mr. Salameh told Radio Free Lebanon.

The worsening fuel crisis is part of Lebanon’s wider financial meltdown. Hospitals, bakeries and many businesses are scaling back operations or shutting down as fuel runs dry.

Deadly violence has flared in fuel lines, protesters have blocked roads, and fuel tankers have been hijacked this week.

The American University of Beirut Medical Center said it was threatened with a forced shutdown as early as Monday because of shortages of fuel used to generate electricity.

“This means that ventilators and other lifesaving medical devices will cease to operate. Forty adult patients and 15 children living on respirators will die immediately,” the hospital said.

The central bank’s move to end subsidies will mean sharp price increases. It is the latest turn in a crisis that has sunk the Lebanese pound by 90 per cent in less than two years and pushed more than half the population into poverty.

Story continues below advertisement

The central bank has effectively been subsidizing fuel and other vital imports by providing dollars at exchange rates below the real price of the Lebanese pound – most recently at 3,900 Lebanese pounds to the dollar compared with parallel market rates above 20,000 Lebanese pounds. This has eaten into a reserve that Mr. Salameh said now stood at US$14-billion.

To continue providing such support, the central bank has said it needs legislation to allow use of the mandatory reserve, a portion of deposits that must be preserved by law.

“We are saying to everyone: You want to spend the mandatory reserve, we are ready, give us the law. It will take five minutes,” Mr. Salameh said.

“Humiliation of the lebanese”

The government has said fuel prices must not change. Fuel importers say they cannot import at market rates and sell at subsidized rates, and want clarity.

The central bank and oil authority told importers to sell their stocks at the subsidized rate of 3,900 pounds to the dollar, prioritizing hospitals and other essential functions.

Lebanon’s army said on Saturday it had begun raiding closed petrol stations and distributing stored gasoline to citizens.

Story continues below advertisement

Critics of the subsidy scheme say it has encouraged smuggling and hoarding by selling commodities at a fraction of their real price.

Mr. Salameh said the bank had been obliged to finance traders who were not bringing their product to the market, and that more than US$800-million spent on fuel imports in the past month should have lasted three months.

Mr. Salameh said there was no diesel, gasoline or electricity, adding: “This is humiliation of the Lebanese.”

Lebanese politicians have failed to agree on a new government since Prime Minister Hassan Diab quit last August after a deadly explosion at Beirut port. He has stayed on as caretaker prime minister.

Mr. Aoun expressed optimism a new government would be formed soon.

Mr. Salameh said Lebanon could exit its crisis if a reform-minded government took office, adding the pound was “hostage to the formation of a new government and reforms.”

Story continues below advertisement

The government has said ending subsidies must wait until prepaid cash cards for the poor are rolled out. Parliament approved these in June, with financing from the mandatory reserve, Mr. Salameh said, but they have yet to materialize.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies