Elie Ferzli wrote innewsTomorrow, the Parliament will approve the financing card law. This is the starting signal for reducing subsidies. The government, for its part, has done its duty as the parliament wanted. Yesterday, the message of President Hassab Diab, in which he pledges to reduce subsidies according to a pre-prepared schedule, arrived. The problem with the government proposal is that it did not He discusses with the Central Bank, the first decision-maker in determining the fate of the subsidy, but the biggest problem remains with the card, which, whatever its value, will not compensate for the expected price fluctuation after reducing the subsidy
The authority continues to adopt denial as a way to confront the crisis. The most it does is patch up, the result of which is more dumping for people. It has been decided that the financing card law will be approved tomorrow. The adoption of the law does not necessarily mean that it will take the path towards implementation. The issue of funding is still unresolved, despite the parliamentary affirmation that matters were resolved and that funding was secured through World Bank loans, a matter that concerned sources are still skeptical about. The problem is that even if it is implemented, it will not compensate for the loss that will result from lifting the subsidy.
In return for approving the card, the council stipulated that the project be attached to a pledge from the presidency of the government, confirming the commitment to reduce subsidies according to a mechanism previously presented in the joint committees, and it refused to decide without a clear endorsement from the government. The settlement at that time required the adoption of an official letter attached to the law, instead of adding a paragraph to it referring to the issue of reducing subsidies.
The book was delayed due to the government’s delay in resolving the issue of subsidy, until it sent it yesterday, including some amendments to the schedule that had previously been handed over to the joint committees. The government pledge is consistent with what has been agreed upon, regarding the government’s commitment to reduce subsidies as a condition for proceeding with the financing card project. In order for President Hassan Diab not to appear retracted from his decision not to reduce subsidies before the card is approved, he indicated in his book that it is in sympathy with the deliberations of the joint parliamentary committees related to the financing card, and based on the government’s directions to reduce subsidies as soon as the financing card begins to work, “The government pledges to implement a program Rationalizing the attached support based on the approval of the joint parliamentary committees for the rate of the financing card with an average value of $93.3, provided that the legal requirement is taken to secure the necessary funding for this purpose in coordination with the Banque du Liban. Noting that in the event that the value of the card is amended by the General Assembly of the House of Representatives, this matter will, of course, be reflected in the rationalization rates in the attached program».
As a result, according to the government scenario, the cost of support will decrease from 5.044 billion dollars annually to 2.513 billion dollars, i.e., 2.526 billion dollars will be saved. However, while Parliament insists that the card should not be funded from the reserve, and its cost does not exceed $566 million, no one knows how the support funding will be secured, if it is not from the reserve, knowing that the Bank of Lebanon has not been contacted to take its opinion on financing the support.
It is noteworthy that the scenario presented to the parliamentary committees stipulated a reduction of subsidies on gasoline by 40 percent. The Minister of Economy, who was responsible for preparing the paper, returned and reduced the percentage to 30 percent. Therefore, after it was expected that the price of the plate would be 104,700 pounds, it will become 90,150 pounds.
In addition to the amendment related to gasoline, the last version of the subsidy scenario also witnessed an amendment in the percentage of fuel subsidies, but instead of increasing the percentage of support as happened with gasoline, the proposal provides for reducing the support percentage to 61 percent, instead of 68 percent, which means The price of the plate will be 90,500 thousand pounds instead of 81 thousand pounds (based on the current oil prices). As for other materials, the proposal remained the same, so that subsidies on gas would be reduced by 30 percent (the price of the bottle is 58,850 thousand pounds), and the subsidy on foodstuffs is completely eliminated, and the same subsidy remains on wheat (85 percent), while the subsidy decreases on medication by 54 percent.