'We're scared': Lebanon on edge as time and money run out
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[October 09, 2020] By
Ellen Francis and Issam Abdallah
BEIRUT (Reuters) - Fouad Khamasi fills his
taxi every day with about 40,000 Lebanese pounds' worth of fuel. It
could cost at least four times that much if subsidies come to an end.
The Beirut cab driver, 53, can just about afford to buy fuel and feed
his kids. He worries the price of subsidised foods and key imports -
wheat, fuel, medicine - will skyrocket.
"These are the toughest days I've ever seen," he said. "Some days, you
stick your hand in your pocket and find nothing ... I leave the house
and just pray. Whatever I make, it does nothing. It's a joke."
Time and money are running out for Lebanon.
Foreign reserves have dropped far below what the state already deemed
"dangerous levels" when it defaulted on its huge debt in March, meaning
it cannot afford to keep subsidies for long.
Leaders in power for decades have yet to enact a financial rescue plan,
a year after huge protests against them swept the country, and they have
failed to secure aid from foreign donors.
Talks with the International Monetary Fund (IMF) stalled earlier this
year when Lebanese government officials, bankers and political parties
could not agree over how big the losses were in the financial system and
who should bear them.
After a massive explosion at Beirut's port in August that killed nearly
200 people and caused billions of dollars worth of damage, former
colonial power France stepped in.
But rival sectarian politicians could not get past the first hurdle on
the French roadmap towards financial aid: naming a new cabinet quickly.
The currency, which has lost more than 80% of its value against the U.S.
dollar since last autumn, weakened after the French effort faltered.
Meanwhile, comments from officials indicating an end to some subsidies
within months have triggered panic buying, raising the spectre of food
shortages and a more dramatic crash in the currency.
In the nation of some six million people, more than 55% of whom are
below the poverty line, many are bracing for hunger and cold as winter
looms.
KICKING THE CAN
"Everything that happened since last October could have been avoidable,"
Nasser Saidi, a former vice central bank governor, told Reuters.
He said targeted aid to the poorest Lebanese would be more effective
than subsidies across the board, which had benefited smugglers taking
goods into Syria.
"It's all kicking the can down the road. What should have been done is a
full economic and financial plan," Saidi said.
Importers of key commodities said they had not been given a timeline to
plan for how long subsidies could last.
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A worker arranges bottles of oil inside inside a supermarket in
Beirut, Lebanon October 8, 2020. Picture taken October 8, 2020. The
sign reads: "This product is supported by the Ministry of Economy".
REUTERS/Mohamed Azakir
Central Bank Governor Riad Salameh has said the bank could not finance trade
indefinitely, although he gave no timeframe. President Michel Aoun said recently
of reserves: "The money will run out. What can we say?"
An official source close to the government told Reuters the money left for
subsidies would last six more months by cutting support for some goods.
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The state, which critics say is mired in corruption, and the paralysed banking
sector, its biggest creditor, have traded blame for the crisis.
Meanwhile, the wealth gap, already one of the region's largest, widens. In a
country that relies heavily on imports and produces little, prices for many
items including diapers have tripled.
In Beirut, men and women, some with young children, can often be seen digging
for food in dumpsters near city intersections.
STOCKPILING MEDICINE
Two months after the port blast, Lebanese expect life to get even harder.
Many families now rely on charity. The meltdown could render people more
dependent on political factions for aid and security, in a throwback to the
militia days of the civil war.
Some analysts have warned that security forces, their wages fast losing value,
would not be able to contain rising unrest.
Hospitals fighting a surge in COVID-19 cases are overstretched. Fuel shortages
have left city streets dark. Cars line up at petrol stations for rationed fuel.
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"We're scared we won't be able to go on," said Siham Itani, a pharmacist who
fears price hikes and being robbed. She said supplies of insulin and blood
pressure medication had dwindled.
Another pharmacist said a masked man had held her up at gunpoint, asking for
baby food.
Mostafa al-Mohalhal, who at 62 suffers from diabetes, stored four insulin vials
in his fridge, but the daily power cuts spoiled them.
"If the price rises, how will I pay for them?" he said. "People will die in the
streets."
(Writing by Ellen Francis; Editing by Samia Nakhoul and Mike Collett-White)
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