A rationing of dollars by banks in protest-hit Lebanon sparked growing alarm on Saturday as some petrol pumps ran dry and grocery stores introduced fresh price hikes.
For two decades, the Lebanese pound has been pegged to the greenback and both currencies used interchangeably in daily life.
But banks have gradually been reducing access to dollars since the end of the summer, following fears of a shortage in central bank reserves.
Access was limited further this week after banks reopened for the first time since an unprecedented popular uprising hit the country on October 17.
On Saturday, several petrol stations stopped services as reserves ran out because of a shortage of dollars needed to pay for imports, a syndicate head said.
“The petrol stations that opened today are the ones that still have reserves. They will close down as soon as supply runs out,” said Sami Brax, the head of the Syndicate of Gas Station Owners.
He said if officials do not facilitate access to dollars by Tuesday, “we will be forced to stop imports and close down all petrol stations.”
His warning came a day after hospitals threatened to stop receiving patients because of a lack of dollars to pay for medical imports.
Current medical stocks in the country “will not last more than a month”, hospital syndicate head Suleiman Haroun said.
Lebanon has seen an unprecedented popular uprising against everything from power cuts and poor social security to alleged state corruption.
The government yielded to popular pressure and stepped down last month, with the World Bank urging the quick formation of a new cabinet to prevent the economy from further deteriorating.
But the country seemed to plunge deeper into economic crisis after banks reopened this week and further limited dollar supply.
They halted all ATM withdrawals in dollars, introduced an additional charge on dollar withdrawals made at banks, and severely restricted conversions from Lebanese pounds.
This has forced many people to resort to the black market where they are charged higher exchange rates, in what amounts to the de-facto devaluation of the local currency.
The official exchange rate has remained fixed at 1,507 Lebanese pounds to the dollar, but the rate in the parallel market has surpassed 1,800.
According to Zouhair Berro, the head of the Lebanese Consumers Association, the dollar shortage is leading to price hikes, especially for meat, vegetables and dairy.
He said that suppliers are demanding payment in dollars.
Economist Naseeb Gharbeel said that banks are being put “under pressure” due to a large demand for dollars from Lebanese inside the country and abroad.
President Michel Aoun met central bank governor Riad Salameh and representatives from the Lebanese Association of Banks on Saturday to discuss the situation, according to the state-run National News Agency.
The meeting came as hundreds took part in student-led demonstrations across the country to pressure the government into meeting their demands.
The rallies have gained new momentum after pupils and university students boycotted lessons in recent days to spearhead the street movement.
“We want to guarantee a future for ourselves,” said Mohammad, an 18-year-old high-school student.
“I shouldn’t be forced to leave the country after I graduate to find a job,” he said from a protest square in central Beirut.
“The current political class is not capable of providing this.”
Even before protests erupted last month, growth in Lebanon had stalled following repeated political deadlocks in recent years, compounded by the war in Syria.
Public debt stood at more than $86 billion, over 150 percent of gross domestic product, according to the finance ministry.
Moody’s ratings agency this week downgraded Lebanon’s sovereign debt, saying the anti-government protests had hit investor confidence and threatened economic stability.
The World Bank had forecast a contraction of 0.2 percent before the turmoil, but has said that it now expects Lebanon’s recession “to be even more significant”.
Without quick steps to address the crisis, about half of Lebanon’s population could fall into poverty and unemployment could “rise sharply”, the lender said.
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