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Lebanon’s central bank said on Wednesday that it would end the subsidies for fuel amid a country-wide energy crisis.
Instead, the central bank will extend lines of credit for fuel importers at the current market price—a decision that will increase fuel prices—as much as four fold—at a time when energy shortages are already rampant in the country.
The subsidies will officially end on Thursday.
The central bank said it can no longer afford to subsidize the fuel, which it has done since the start of the country’s financial crisis.
The higher cost of fuel will hit the impoverished—which is more than 50% of the population— particularly hard. Lebanon’s currency has already seen a 90% loss in value over the span of the last two years.
Lebanon has been plagued with fuel shortages that have triggered widespread blackouts and outbreaks of violence as the desperate public tries to get its hands on the fuel.
On Monday, three people were killed in an eruption of violence over the scarce resource that has lasted for months as the central bank attempts to keep its citizenry in imported fuel.
Lebanon’s electricity company has instituted rolling blackouts that restrict power to about an hour a day to both homes and businesses. It is dependent on imported fuel.
Hospitals in Lebanon have had to cut air conditioning and lights in some cases, and are concerned they may have to close.
While Lebanon has endured continuous rolling blackouts since its civil war decades ago, it has only in the last two years reached this level of intensity.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.