No one runs Lebanon, says central bank chief

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BEIRUT – Lebanon’s central bank governor said no one was running the country, responding after government criticism of its decision to stop fuel subsidies that have depleted foreign exchange reserves.

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

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

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Salameh denied that he had acted alone by declaring the end of the subsidies on Wednesday and said it was widely known that the decision was yet to come.

“So far there is no one running the country,” Salameh told Radio Free Lebanon.

The worsening fuel crisis is part of Lebanon’s broader financial collapse. Hospitals, bakeries, and many businesses are downsizing or shutting down when fuel runs out.

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

The American University Beirut Medical Center said it had been threatened with a forced shutdown on Monday due to a shortage of fuel used to generate electricity.

“This means that ventilators and other life-saving medical devices will stop working. Forty adult patients and 15 children living on respirators will die immediately, ”the hospital said.

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

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

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

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

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“HUMILIATION OF THE LEBANESE”

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

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

The Lebanese army said on Saturday that it had begun raiding closed gas stations and distributing stored gasoline to citizens.

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

Salameh said the bank had been forced to finance traders who did not bring their product to market, and that more than $ 800 million spent on fuel imports in the past month should have lasted three months.

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

Lebanese politicians have been unable to agree on a new government since Prime Minister Hassan Diab resigned last August after a deadly explosion in the port of Beirut. He has remained as interim prime minister.

President Aoun expressed optimism that a new government would soon be formed.

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

The government has said that ending the subsidies should wait until prepaid cash cards for the poor are implemented. They were approved by parliament in June, with funding from the mandatory reserve, Salameh said, but they have yet to materialize. (Reporting by Nafisa Eltahir and Laila Bassam Written by Tom Perry Edited by Timothy Heritage and David Holmes)

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