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Beirut – AFP: To ensure the sustenance of her family, Sandra Tawil was forced to sell a refrigerator and a washing machine. But what he won will not serve him long in light of a suffocating life crisis. He fears that the elimination of government subsidies for basic products could make it impossible to secure a livelihood for his family.
The last few weeks have witnessed a new rise in the prices of all goods and services, from mostly imported bread and food, through gasoline and taxi rates, through the electricity generator bill, in the midst of the current hard rations, highlighting that much of these goods and services are subsidized by the state.
In 2019, Sandra and her husband decided to move from Dubai to Beirut, where they opened their own salon. But the dream for which they worked for so long collided with an unprecedented economic collapse.
Sandra, a 40-year-old woman and mother of two, said in an interview: “I got to the point where I sold my washing machine and fridge (my fridge) to secure my livelihood for my night and rent for the house.” Then he asks excitedly: “Basically, we live in a state of austerity. “What will we eat if we cannot buy rice, wheat and lentils?”
The family, which has stopped buying meat and poultry, makes a living with food aid provided by the non-governmental association “Beit Al Baraka”, which also pays the school fees for the two children.
Like Sandra, many Lebanese found themselves gradually over the past year unable to meet their basic needs, due to an insane 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 terrible explosion at the port of Beirut, led to high unemployment, the closure of institutions and a shortage of liquidity in light of the strict banking restrictions in place for more one year. year.
Shrinking central reserves
Meanwhile, the central bank’s dollar reserves began to decline, which was negatively reflected in its ability to continue to subsidize basic products such as flour, fuel, and medicine. With the payment of the Central Bank, the authorities have been studying for months to rationalize or lift import subsidies, in a movement that analysts warn of its impact on the poor, who are more than half the population, and on the rate of inflation.
In 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 orders,” says founder Maya Ibrahim. Currently, the organization assists some 226,000 people per month, by paying school fees and medical care. It also runs free supermarkets in Beirut.
“The people we are helping now were all middle class,” explained Ibrahim Shah. Analysts say the current crisis is over. He hopes that the number of people who will need help will increase if the subsidy is eliminated or reduced.
Subsidized assets are a safety valve, especially for the poorest families. According to the World Bank, the current subsidy formula, which amounts to 437 million dollars a month, allows curbing the prices of some 300 basic products, which the State has begun to pay part of its cost since the summer.
The Central Bank delivers the dollar to importers according to the official exchange rate (1507 pounds), which covers most of the value of the materials to be imported, while it returns them to ensure 10 to 15 percent of the remaining amount of it. black market, as the exchange rate hit the 10,000 threshold at a record rate.
In an interview in December, BDL Governor Riad Salameh warned that the bank would only be able to fund the support for two more months. He said in a later statement that he had $ 2 billion to secure support.
Last month, the bank’s reserves reached $ 17.9 billion, according to its website, of which 17.5 billion were mandatory reserves that should not be affected. The Office of Media Safety did not respond to questions about next steps.
Five-year plan
According to the Minister of Economy in the interim government, Raoul Nehme, to France Press, the government has drawn up an action plan that provides for the gradual elimination of subsidies, in exchange for ensuring measured financial aid for those affected over a period of several years.
According to the plan, the subsidies will be eliminated first in the consumer 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 for an adult and $ 25 for a child, provided that, after one year, the number of beneficiaries and the value of the support Decrease gradually.
The United Nations World Food Program warns of “significant inflationary effects” if subsidies are rationalized, expecting the price of bread to rise between one and a half and 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, highlights the need to “work immediately to increase social assistance to the poorest groups” to mitigate the repercussions of the subsidy.
Earlier this year, the World Bank agreed to provide $ 246 million in emergency aid in the form of financial transfers and social services to some 786,000 Lebanese from the poorest families.
The days are heavy for Nasser Jumaa (56 years old), who is trying to secure a livelihood for his family, while his 25-year-old son cannot find a job.
“Raising subsidies would be catastrophic,” he says, questioning the state’s ability to support the poor. “This is all just a talk,” he added. “We don’t trust the state.”
The man works as a private driver with a salary of 1.6 million pounds, or 160 dollars, after it was the equivalent of more than a thousand dollars before the crisis. “We will come to the day when we cannot buy what we eat and drink,” he says.
