Lebanese Dread End to Subsidies

Maya Ibrahimshah, the founder of Lebanese NGO Beit al-Braka (house of blessings) organizes food to be distributed to the needy. AFP
Maya Ibrahimshah, the founder of Lebanese NGO Beit al-Braka (house of blessings) organizes food to be distributed to the needy. AFP
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Lebanese Dread End to Subsidies

Maya Ibrahimshah, the founder of Lebanese NGO Beit al-Braka (house of blessings) organizes food to be distributed to the needy. AFP
Maya Ibrahimshah, the founder of Lebanese NGO Beit al-Braka (house of blessings) organizes food to be distributed to the needy. AFP

To feed her family, Lebanese mother Sandra al-Tawil sold her fridge and washing machine. Now she fears the cash-strapped state will scrap food subsidies, plunging them deeper into poverty.

Lebanon is locked in its worst economic crisis since the 1975-1990 civil war, with no end in sight.

The value of the Lebanese pound has plunged, driving up the price of crucial imports like food and fuel and triggering small but angry protests.

More than half of Lebanon's population is poverty stricken and relies on subsidies, but a central bank demand for "an immediate plan to ration subsidies" is looming.

"We're already tightening our belts. What will we eat if we can no longer buy rice or lentils?" 40-year-old Tawil said.

Tawil and her husband lived a comfortable life in Dubai before returning to their homeland to open a high-end hair salon in 2019.

But that dream turned to nightmare after the financial crisis and the Covid-19 pandemic hit.

"I had to sell my washing machine and fridge... just to get the minimum of daily bread and pay rent," said the mother of two young children.

Her husband found a job at the start of the year, and the Beit El Baraka charity is helping them out with food and school fees.

But Tawil is still worried, and furious with the political class she blames for the malaise.

"If I see people heading out to protest, I'll be the first to join them," AFP quoted her as saying.

In a country that imports 80 percent of its food, much of the six million population depends on subsidies to get by.

Even without them being lifted, many are already struggling, said Beit El Baraka founder Maya Ibrahimchah.

"There have been many more demands for help over the past four months," she said.

"Those we are helping today are all from the middle class."

The state has poured up to $437 million into subsidies a month, the World Bank estimates, to keep prices in check for bread, medicine, fuel and electricity, as well as around 300 other items since mid-2020.

To counter the pound's drastic devaluation, importers get access to dollars at a preferential rate to ensure they can afford to continue bringing in supplies.

For flour, fuel and medicine, for example, they offer dollars at the official exchange rate of 1,507 pounds to cover most of their cost.

But traders must resort to the black market to cover the difference, where Tuesday the rate hit a record low of 10,000 pounds to the dollar.

As a result, in less than a year the price of a large bag of subsidized bread has risen from 1,500 to 2,500 pounds.

Authorities have remained vague about how the subsidies will be reduced, though meetings are ongoing.

In early December, central bank governor Riad Salameh said it could only fund subsidies for another two months. Later that month, he said two billion dollars were available for them.

At the end of February, the central bank's website showed it had $17.9 billion in foreign currency reserves, yet $17.5 billion of that is the bank's required reserves.

The bank did not respond to AFP's repeated requests for comment.

The UN food agency has warned any subsidy reduction would have "major inflationary repercussions" and "put an unbearable strain on households".

The price of bread could increase by up to three times and fuel by 4.5 times, the World Food Program said, adding it was critical to immediately scale up assistance to the poorest.

Under the government's latest plan, subsidies could be gradually lifted, with financial aid to soften the blow over several years.

The state would first lift subsidies for bread, fuel and around 300 other items, under the plan seen by AFP, before later on reviewing spending in the electricity sector.

To compensate, up to 80 percent of the population would receive handouts -- 50 dollars a month for adults aged over 23 and half for anybody younger.

Those amounts, and the numbers of beneficiaries, would then progressively diminish.

Until then, the authorities have secured $246 million from the World Bank to help 786,000 Lebanese.

But Nasser Jomaa, 52, said he doubted the government would really provide any financial support.

"It's just empty words. We have zero faith in the state," said the driver, who lives with his unemployed 25-year-old son.

As the Lebanese pound has plunged on the black market, he has seen his monthly income drop in value from $1,000 to just $160.

He added that any lifting of subsidies would be "catastrophic".

Already, he said, "we no longer eat meat."



Cash Crunch Leaves Syrians Queueing for Hours to Collect Salaries

Syrian civil servants must queue at one of two state banks or affiliated ATMs, and withdrawals are capped. LOUAI BESHARA / AFP
Syrian civil servants must queue at one of two state banks or affiliated ATMs, and withdrawals are capped. LOUAI BESHARA / AFP
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Cash Crunch Leaves Syrians Queueing for Hours to Collect Salaries

Syrian civil servants must queue at one of two state banks or affiliated ATMs, and withdrawals are capped. LOUAI BESHARA / AFP
Syrian civil servants must queue at one of two state banks or affiliated ATMs, and withdrawals are capped. LOUAI BESHARA / AFP

Seated on the pavement outside a bank in central Damascus, Abu Fares's face is worn with exhaustion as he waits to collect a small portion of his pension.
"I've been here for four hours and I haven't so much as touched my pension," said the 77-year-old, who did not wish to give his full name.

"The cash dispensers are under-stocked and the queues are long," he continued.

Since the overthrow of president Bashar al-Assad last December, Syria has been struggling to emerge from the wake of nearly 14 years of civil war, and its banking sector is no exception.

Decades of punishing sanctions imposed on the Assad dynasty -- which the new authorities are seeking to have lifted -- have left about 90 percent of Syrians under the poverty line, according to the United Nations.

The liquidity crisis has forced authorities to drastically limit cash withdrawals, leaving much of the population struggling to make ends meet.

Prior to his ousting, Assad's key ally Russia held a monopoly on printing banknotes. The new authorities have only announced once that they have received a shipment of banknotes from Moscow since Assad's overthrow.
In a country with about 1.25 million public sector employees, civil servants must queue at one of two state banks or affiliated ATMs to make withdrawals, capped at about 200,000 Syrian pounds, the equivalent on the black market of $20 per day.

In some cases, they have to take a day off just to wait for the cash.

"There are sick people, elderly... we can't continue like this," said Abu Fares.

'Meagre sums'
"There is a clear lack of cash, and for that reason we deactivate the ATMs at the end of the workday," an employee at a private bank told AFP, preferring not to give her name.

A haphazard queue of about 300 people stretches outside the Commercial Bank of Syria. Some are sitting on the ground.

Afraa Jumaa, a civil servant, said she spends most of the money she withdraws on the travel fare to get to and from the bank.

"The conditions are difficult and we need to withdraw our salaries as quickly as possible," said the 43-year-old.
"It's not acceptable that we have to spend days to withdraw meagre sums."

The local currency has plunged in value since the civil war erupted in 2011, prior to which the dollar was valued at 50 pounds.

Economist Georges Khouzam explained that foreign exchange vendors -- whose work was outlawed under Assad -- "deliberately reduced cash flows in Syrian pounds to provoke rapid fluctuations in the market and turn a profit".

Muntaha Abbas, a 37-year-old civil servant, had to return three times to withdraw her entire salary of 500,000 pounds.

"There are a lot of ATMs in Damascus, but very few of them work," she said.

After a five-hour wait, she was finally able to withdraw 200,000 pounds.

"Queues and more queues... our lives have become a series of queues," she lamented.