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Lebanon's gas stations threaten closure as dollar crisis lingers

The shortage of dollar liquidity in the Lebanese market made new rounds. raising concerns over gas stations' ability to import fuel as things currently stand.
by Georgi Azar

22 August 2019 | 17:24

Source: by Annahar

Motorists pictured filling their cars at gas station in the capital Beirut (Annahar)

BEIRUT: Lebanon's gas stations are threatening to close shop amid a shortage in dollar liquidity, calling for a general strike on Thursday, August 29.

The shortage raised concerns over gas stations' ability to import fuel as things currently stand. 

In a televised news conference, both the Syndicates of Gas Station Owners and Fuel Transport Operators complained of rising difficulties to convert their Lira earnings into U.S dollars, which are then used to purchase fuel from abroad. 

"We sell in Lebanese pounds and pay for our goods in U.S dollars," Sami Brax, the head of the Syndicates of Gas Station Owners, told Annahar. 

Conversions have become increasingly difficult, as U.S dollars increasingly become a scarce commodity amid declining remittances and foreign investments.

"Dollars aren't available in the market, banks or currency suppliers," Brax said, further complaining over the substantial rise of the exchange rate, currently trading at 1,555 LBP on the dollar. 

The official conversion rate, as set by the Central Bank, currently stands at 1,515. 

Discussions with authorities have been held, including the Ministry of Energy and Water and the Central Bank, he said, but to no avail. 

"To date, we have not reached any solution to this crisis, which threatens the entire sector, among many others," he said.

This shortage threatens the import of different vital commodities, as pharmaceutical products, wheat and foodstuff risk becoming hard to come by. 

Banks and households have been holding onto their dollar reserves closely, with banks offering exorbitant interest rates on LBP deposits to fend off potential conversions. 

As of August, the Central Bank boasts FX reserves of around $31 billion. In light of diminishing investments, the Central Bank has undertaken a number of “financial engineering” with local banks, whereby the banks provide BdL with hard currencies in exchange for immediate profits in the form of high-interest rates.

Last month, a major university issued a decision to start billing students in U.S dollars instead of Lira, further rattling confidence in the local currency. 

To further shield the Lebanese currency, earlier this year, the Central Bank issued a circular stipulating that all electronic money transfers from abroad be exclusively paid out in Lebanese pounds, in an attempt to limit the outpour of US dollars.

The circular required that all international electronic money transfers, sent through establishments like OMT and Moneygram, be converted to Lebanese pounds.

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