Gas Station Owners Call Off Strike after Solution to Dollar Crisis
The syndicates of fuel station owners and fuel tanker owners and a representative of fuel distributors on Sunday called off a strike previously scheduled for Monday after a settlement was reached with fuel importers over the currency that should be used in transactions.
At a press conference, the head of the syndicate of fuel station owners, Sami al-Brax, thanked President Michel Aoun, Speaker Nabih Berri and Prime Minister Saad Hariri for “their efforts in reaching this solution.”
“The importing companies will continue to issue bills in U.S. dollar but they will get paid in Lebanese lira,” he said.
Another representative called for devising a “monetary mechanism” for the agreement and announced that Monday will be a normal work day.
On Tuesday, the central bank said it will facilitate access to dollars for importers of petroleum products, wheat and medicine, following fears of a dollar shortage and possible currency devaluation.
Local media said last month that banks and money exchange shops were rationing dollar sales in the country, where Lebanese pounds and U.S. dollars are used interchangeably in everyday transactions.
Petrol station owners staged a strike over a lack of dollars at a fixed exchange rate to pay for imports, while flour producers complained they had to resort to much higher rates from money changers.
"Banks that issue letters of credit for the importation of petroleum products (petrol, fuel oil and gas), wheat and medicine will be able to ask the Banque du Liban to ensure the value of such credits in U.S. dollars," read the decision issued by Banque du Liban.
The mechanism requires that a "special account" be opened at the central bank, and at least 15 percent of the value of the credit be deposited in it in U.S. dollars, as well as the full value in Lebanese pounds, it said.
The central bank will take 0.5 percent from each transaction.
Lebanon has had a fixed exchange rate of around 1,500 Lebanese pounds to the dollar in place since 1997.
Central Bank Governor Riad Salameh has denied that the country was facing a currency reserve crisis, but it has become very difficult to withdraw dollars from ATMs.
Lebanese economist Jad Chaaban said the central bank measure was a welcome short-term solution to allow key products into the country.
"It's a good measure to contain the crisis on importing these commodities and to keep the prices in check," said the associate professor at the American University of Beirut.
And it will "ease pressure on the non-bank exchange rate," he said.
But he also called for the broader easing of capital controls keeping dollars in the banks, and "fundamental economic reforms" including to reduce dependency on imports.
The finance ministry has said that rating agency Moody's has warned it could lower Lebanon's sovereign credit rating within three months if the country does not redress its economy.
Moody's already downgraded the rating from "B3" to "Caa1" at the start of the year, citing debt risks, while fellow agency Fitch followed suit in August.
Lebanon's public debt stands at around $86 billion -- more than 150 percent of gross domestic product (GDP) -- according to the finance ministry.
Eighty percent of that debt is owed to Lebanon's central bank and local banks.
In July, parliament passed an austerity budget as part of conditions to unlock $11 billion in aid pledged at a conference in Paris last year.
Source: Naharnet
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