| 15 June 2021, Tuesday | النسخة العربية

Mardini: Lifting subsidies is essential to protect depositors’ funds

The Governor of the Central Bank Riad Salameh, drove the country into a cycle of lifting, and rationing subsidies. Until this day, there is no clear decision, but rather confusion among decision-makers, accompanied with shortage in pharmaceuticals, fuel, and subsidized foodstuffs in the market.

Economist Patrick Mardini, told Sawt Beirut International (SBI) reporter Mahasen Morsel that the solution for all this confusion is in lifting subsidies and establishing a monetary council to ensure the stability of the exchange rate of the Lebanese pound against dollar.

Mardini said: “Subsidies should be lifted immediately even with the absence of any other alternative, because it is affecting the poor and the citizens in general severely.”  This is because subsidies are funded from depositors who are banned from withdrawing their money from banks. Thus the Central Bank is spending the dollars on goods and printing instead the national currency. This is tumbling the Lebanese pound against dollar, and at the same time increasing commodity prices.

Mardini added that subsidies are affecting the prices of all commodities except for subsidized goods, which is unfortunately unavailable and unreachable in the market.

“Even if the alternative of subsidies is not available, it must be lifted, however it is better to reduce the exchange rate of the dollar in parallel with lifting subsidies so that the prices of all commodities decline. This can be done by not printing liras, and through the monetary council in Lebanon.” Mardini eliminated the possibility of going through this solution, as the last thing they care about is the citizen’s difficulties. But the crisis will exacerbate, and establishing this council will become mandatory.

Unions and Syndicates importing subsidized goods agreed on what Mardini said, as most importers are storing and withholding goods awaiting the Central Bank’s decision whether it will keep or lift subsidies, without paying attention to the queues at gas stations, pharmacies, bakeries, and supermarkets.