Friday July 29, 2022

Lebanese lines for bread getting longer

Lebanese lines for bread getting longer

People queue to buy bread outside a bakery in Beirut, Lebanon. Reuters

The simmering economic crisis became worse on Wednesday when there was no wheat flour in the shops and no bread in the bakeries. Through the hot day, people stood in queues to buy bread and there was not enough bread available for all. Lebanese Economy Minister Amin Salam said, “Around 49,000 tonnes of wheat are expected to arrive in Lebanon by the end of this week. Hopefully the ships will arrive faster. The crisis is the result of flour being stolen from our country.” The political crisis when no government -formation has been possible since the May election has made the government to handle the food and fuel crisis that Lebanon is facing. Salam said that a crisis committee would be formed to handle the distribution of wheat and flour. It has been explained that Lebanon’s central bank failed to secure the dollars it needed to buy fuel and food. And the government’s failure to get the much-needed dollars resulted in the petrol and wheat prices shooting up. On Wednesday, the petrol price had gone up to by 14,000 Lebanese pounds.

Georges Brax, president of the gas station-owners’ syndicate said, “The central bank used to secure 100 per cent of the US dollars needed to import fuel…Now it provides only 85 per cent. The remaining 15 per cent needs to be secured based on the black-market rate.” The black marketeers are running the show as the politicians who won the election are busy forging alliances to form the government. The government under caretaker prime minister Najib Mikati had decided to pay public sector employees granted additional financial assistance equivalent to a month’s salary and a daily transportation allowance of 95,000 Lebanese pounds. But the condition is that the government employees turn up for work at the office for minimum days of the week. It was also decided to pay 4,000 billion Lebanese pounds to pay for the hospitalisation and medical expenses of the armed forces, ministry of health employees and the Cooperative of the Civil Servants, and 200 billion pounds for the National Social Security Fund and 50 billion for the Lebanese university.

The bottom line is that the International Monetary Fund has to offer a bailout package to Lebanon and this hobbled by the fact that there is no government in Beirut. The caretaker government has to focus on getting the IMF economic package. Of course, the IMF will impose its conditionalities, including the reduction in subsidies. At the moment, the people are so vulnerable and helpless, that public expenditure is needed to bring the country back on to the economic rails. People need dole, need subsidies. It must be recognised that doles and subsidies cannot revive economy. It needs other ways to do it. It will need foreign investments and it will happen only if there are concessions like import/export subsidies. The IMF cannot prescribe the formula of market reforms in a country where the people had no access basic things like light, water, food. The World Bank must come forward to help with concessional aid for development.

The US ambassador to Lebanon, Dorothy Shea, has argued in the old way that the Lebanese political parties should elect their president and go ahead with economic reforms that would satisfy the World Bank and the requirements of the IMF. These two organisations can help Lebanon if they give up their old blinkers. The people of Lebanon need help and the US should be nudging the World Bank and the IMF to adopt a more humane and compassionate stance, where people are down and out and they need a helping hand. This does not mean that there should be no concerns for fiscal prudence. It only means that an emergency aid package is different from reforming the economy lock, stock and barrel.

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