In the face of the devaluation and hyperinflation, the government opted for a subsidy program to help abate the impact on citizens. Since the program is financed using the central bank’s foreign exchange reserves, it helped slow down devaluation. LIMS points out that the scheme proved to be a failure after costing an average of $6 billion per year, as it did not prevent half the population from going under the poverty line. Furthermore, excessive smuggling and black-market activities denied people the planned support. 

With the central bank down to the required reserves, continued funding to the subsidy program is no longer an option. LIMS explained that the lifting of subsidies is necessary to stop the hemorrhaging of reserves and enabling an economic recovery plan. Previously subsidized products will rise in price, but most of those products are in short supply already. The smugglers and market monopolists will effectively fall out of favor, and shortages will become a less frequent occurrence. LIMS reiterated that supporting citizens out of the crisis can solely be done by solving its main concern, which is the currency depreciation. An instant relief program could be put in place the time the currency is stabilized. A Quasi Universal Basic Income (QUBI) would cost 6 times less than the current subsidies program and be more effective in helping the population in need.

• Lebanon Collapsing Into Despair, March 17, 2021: Aliwaa, Article AR
• Reserves Almost Entirely Spent On Subsidies, What’s The Solution To The Dollar Crisis, March 18, 2021: Sawt Kol Lobnan, Radio Interview AR
• Cement Prices Up By 750%, March 18, 2021: Nidaa Al Watan, Article AR
• Lifting Subsidies Will Not Impact The Exchange Rate As It’s Expected, March 19, 2021: Al Majalla, Article AR
• FAO Warns Of Food Insecurity In Lebanon Amid Collapse In Lira Value, March 24, 2021: France 24, TV Interview AR
• The Subsidy Program Was A Bad Policy That Worsened The Crisis, March 27, 2021: NBN, TV Interview AR
• Consultation Meeting To Discuss The Remaining Solutions To Preserve The Rights Of Depositors, March 29, 2021: Al Markazia, Article AR
• Covid-19 Worsened Lebanon’s Economic Crisis, March 15, 2021: Pharmaceutical Technology, Article EN