Lebanon’s prime minister Hassan Diab rejected President Michel Aoun’s call to convene the cabinet to discuss the country’s fuel crisis, saying such a meeting fell outside the caretaker cabinet’s constitutional duties, Diab said in a statement.
The Lebanese government clashed with the central bank on Thursday over its move to end fuel subsidies that have drained the currency reserves, saying prices must not change and subsidies must continue until measures are in place to help the poor.
With the government and central bank adopting conflicting positions, petroleum importers demanded clarification, with one warning of huge fuel shortages due to inadequate supply.
The loss of fuel subsidies would open a new phase in the financial crisis that has sunk the value of Lebanon’s currency by more than 90 percent since 2019 and thrown more than half the population into poverty.
Since the crisis began, the central bank has been effectively subsidising fuel by using its dollar reserves to finance imports at exchange rates well below the rates on the parallel market.
The central bank defended its decision to provide dollars at market rates, saying it had told the government a year ago that legislation would be needed to dip into the mandatory reserve, a portion of deposits that must be preserved by law.