The Reserves in The Central Bank are becoming depleted, especially if the Government gives in to the bid of the Minister of Energy, who is asking for a 200 million dollar advance to keep the hemorrhaging and failing electricity company working and the country from going into blackout. Let us keep in mind that the Minister has had a full year to come up with a workable solution for the impending electricity crisis, but here again, at the last minute, they prefer to milk the very skinny and starving cow that has now become Lebanon’s economy.
Reaching near to the end of The Reserves will force The Governor of the Central Bank to tap in to the Obligatory Reserves which are in fact the savings of the depositors. Because of this terminal situation, the Government has decided to abandon its subsidies of foods (excluding wheat), medicines and 80% of the fuel costs by the end of the month.
The Government has been talking about a “Finance Card” to be given to the poorest families in place of the subsidies which were too broad to target only the poorest sector, and which never reached the people in need, as they goods they covered were mostly smuggled into Syria where they could be sold at three times their value.
Until now, the card has not been confirmed and Lebanon is rapidly approaching a food security crisis exacerbated by this impending lifting of the subsidies. It is predicted that this will lead to huge social unrest fueled by desperation over the shortages and ranging from violence to public property, raiding of supermarkets, robberies, kidnappings and assuredly deaths.
At present, with the rapid increase in poverty, 2.5 million Lebanese will need to benefit from this card which has been in deliberations for months, but the Government has not yet identified these people nor have they determined from which source they will be paid. The result will be more delays at a time when speed is of the essence.
There are 100,000 families targeted in this drive. So far only 45,000 have been vetted. There is no “Central Registration” in place, which would be the obvious and necessary procedure to carry out such a large exercise, because as usual they have not thought it through. The World Bank by itself hired a separate company to process the qualified names.
Added to this immanent disaster is the fact that the original aid which was raised during the International Conference led by President Macron, which pledged $240 million to the impoverished sector of Lebanon, has still not been disbursed and is mired in arguments, as to how it will be paid? At what exchange rate? And whether the Government will keep a percentage of this money destined to the people as a deposit in the Central Bank? No surprise there…
Because no one has made provisions for the money to come from anywhere else, the Government is betting on the money already bequeathed by the World Bank to start to pay for the “Finance Card” and when this runs out, they will have no choice but to take it from the Obligatory Reserves.
They do not have a long term strategy to deal with this problem such as a national “Solidarity Fund” which could be obtained by imposing a calculated “Poverty Tax” on the wealthiest accounts sitting stagnant in the banks. The problem is that nobody trusts the Government to handle such a fund and to disburse it without political preferences.
This is where we are today. No money and no Government in sight, no strategy or concessions to obtain sustainable external aid and no haste in remedying the problem. These politicians and their political parties seem to have all the time in the world to watch Lebanon descend into hell as the people starve in darkness when the electricity also runs out in a matter of weeks. (But that is another discussion worthy of The Fables Of 1001 And One Nights).
The conclusion is they must really hate the people and for that, they will go to their specially reserved level in hell.