Since the beginning of 2020, the Lebanese have been suffering from a continuous and sharp rise in commodity prices, mainly due to the devaluation of the local currency against the US dollar in the parallel market.
The Central Bank (BDL) has been subsidizing basic commodities, including wheat, medicine and fuel. However, reports have emerged over the BDL’s inability to continue to subsidize the basic commodities, which would put them at the mercy of the fluctuating exchange rate.
Lifting subsidies on medicine would be a “humanitarian catastrophe”, as described by the head of the Drug Importers Syndicate, Karim Gebara.
“Citizens pay 35 percent of the medicine bill and they can barely afford it; so what if the subsidy is lifted and the value of the bill is doubled?” he asked.
In remarks to Asharq Al-Awsat, Gebara said it was difficult to define the increase in prices.
“There will be no fixed price or threshold; the prices of medicine will be directly linked to the dollar exchange rate on the black market,” he noted.
If we consider that the exchange rate remains at its current value of LBP 7,500, then this means the price of any drug will be multiplied by five.
Gebara stressed that so far, the Syndicate has not been officially informed of BDL’s ending of subsidies, hoping that such a move, if taken, would not affect the medical sector.
The Syndicate of Gas Station Owners has not been officially informed either, but warned of a real crisis facing the sector and citizens if BDL goes ahead with such a plan.
The head of the syndicate, Sami Braks, stressed that lifting the subsidies would automatically mean an adjustment of fuel prices.
Economic Expert Elie Yashouei said that ending the subsidies has become inevitable, adding: “We will reach it sooner or later.”
“In light of the drastic decline in BDL’s foreign reserves … it no longer has enough funds to support basic commodities or even the 300 commodities in the approved food basket,” he said.
In the event that the prices of goods were determined by the current rate of the US dollar on the black market (USD1= LBP7,500), the price of a pack of bread will exceed LBP5,000, a kilo of chicken will be sold for LBP50,000, a kilo of meat for LBP80,000, and a box of Panadol medicine for LBP15,000.