Lebanon Reduces Fuel Subsidies Amid Gasoline Shortages

Lebanon's caretaker prime minister on Friday granted his approval for financing fuel imports at a rate higher than the official exchange rate, effectively reducing critical fuel subsidies amid worsening gasoline shortages. 

The decision is likely to sharply increase the price of gasoline - but is expected to temporarily ease the shortage crisis in the country. Lebanon is going through an unprecedented economic and financial collapse coupled with a dangerous political crisis. The developments pose the gravest threat to the small country's stability since the end of its civil war three decades ago.   The currency has lost more than 90% of its value since October 2019, trading at a record low of 16,450 Lebanese pounds to the dollar on the black market on Friday. The official exchange rate remains 1,507 Lebanese pounds to the U.S. dollar.  The crisis, rooted in decades of corruption and mismanagement, has worsened in recent weeks with the central bank cutting back on financing imports at subsidized dollars. Foreign currency reserves have dropped dangerously low, from $30 billion at the start of the crisis in late 2019, to nearly $15 billion currently. That has prompted merchants to either raise prices or stop imports.