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As financial crises tightens Lebanon reduces food subsidies

Lebanon is scaling back food subsidies and will gradually raise gasoline prices to save dwindling foreign reserves, the caretaker finance minister said.
The central bank has $16 billion left in foreign reserves, of which only $1 billion to $1.5 billion can be used to fund subsidies, enough for two to three months, Ghazi Wazni said in an interview with Bloomberg. Reserves have halved from about $30 billion a year ago.
Lebanon can no longer continue with the same pace of subsidies,” Wazni said, without giving a time frame for the changes. “It costs $500 million a month, $6 billion a year. That’s why the government made the decision to rationalize subsidies and reduce them on some items.”
Wazni’s comments come amid furious protests sparked by a sudden plunge in the Lebanese currency. The pound plummeted below 13,000 per dollar on the black market Monday, shedding more than 20 percent in two weeks. Since anti-government protests erupted in October 2019, the currency has lost nearly 90 percent of its value, pushing millions into poverty. The inflation rate was 84 percent last year, with food inflation hitting an annual 402 percent in December.
The central bank has stabilized wheat, medicine and fuel prices by providing importers with hard currency at the largely-defunct official rate of 1,507 per dollar. It’s also given a preferential exchange rate to importers of 300 basic food and household products, allowing them to buy dollars at 3,900 pounds each. Other goods are financed in a burgeoning black market at greater cost.

The government will remove certain products, including cashew nuts and some branded coffees, from the subsidized list partly because they were smuggled abroad for profit, Wazni said. It also plans to gradually increase prices at fuel stations in the coming months, reducing gasoline subsidies to 85 percent from 90 percent.
Subsidies on wheat, medicines and fuel for electricity generation remain for now, Wazni said.
“The decision has been taken to reduce subsidies on the food basket,” he said. “The decision that needs to be taken in the coming weeks is the gasoline. Last month, during the lockdown, we had the same consumption so we think something’s wrong.”
Wazni acknowledged the measures would fuel inflation -- forecast at 77 percent this year, before accounting for reduced subsidies. To help poorer people cope, Lebanon will introduce cash transfers via prepaid cards under a program approved by parliament Friday. The government will pay needy families up to 1 million pounds monthly and also secured a $246 million World Bank loan to support 786,000 of the poorest people.
Wazni said the government still planned to devalue the currency as part of a transition to a flexible exchange rate, but wouldn’t take that step without an economic reform program and support from the International Monetary Fund to help restore confidence and anchor the pound.
“We’re going to a flexible exchange rate but we need an IMF program,” he said.
Bickering politicians have failed to agree on a new cabinet lineup since the government resigned in August after a devastating explosion at Beirut’s port. The caretaker cabinet cannot negotiate with the IMF, now essential to unlocking other aid.

Lebanon defaulted on its $30 billion in international debt a year ago. With no reforms or payment plans agreed since, it can’t borrow or attract investors, while the pandemic and banking crisis hit businesses. It was therefore “no surprise” the pound had weakened, according to Wazni.
“The situation is: no dollar inflows, less confidence and political impasse, which means uncertainty because you are fearful of the future as the reserves are declining,” he said. “There are financial, economic and political factors that are playing a role and circumstantial factors that led to the fast deterioration in a few days.”
Lebanon’s gross domestic product contracted 25 percent last year. Wazni said the outlook for 2021 depends on when politicians agree on a government and secure external aid. Without progress, the economy will contract as much as 10 percent, he said. In the best-case scenario, real GDP will shrink 2 percent to 5 percent, he said.
The budget deficit is expected to narrow to about 4 percent of GDP from 6 percent last year and 11 percent in 2019, largely due to the default and cancellation of nearly half the local-currency debt held by the central bank.
The draft budget foresees no increases to income or value added tax. Instead, Wazni proposes a 1 percent tax on bank deposits above $1 million and a 10 percent to 30 percent tax on interest earned by banks on deposits at the central bank.
The government has yet to approve the budget, which could face opposition from banks and depositors who’ve already suffered an unofficial haircut of more than 65 percent.
Image source: Reuters
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BENEFIT AGM approves 10%...
- March 27, 2025
BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, held its Annual General Meeting (AGM) at the company’s headquarters in the Seef District.
During the meeting, shareholders approved all items listed on the agenda, including the ratification of the minutes of the previous AGM held on 26 March 2024. The session reviewed and approved the Board’s Annual Report on the company’s activities and financial performance for the fiscal year ended 31 December 2024, and the shareholders expressed their satisfaction with the company’s operational and financial results during the reporting period.
The meeting also reviewed the Independent External Auditor’s Report on the company’s consolidated financial statements for the year ended 31 December 2024. Subsequently, the shareholders approved the audited financial statements for the fiscal year. Based on the Board’s recommendation, the shareholders approved the distribution of a cash dividend equivalent to 10% of the paid-up share capital.
Furthermore, the shareholders endorsed the allocation of a total amount of BD 172,500 as remuneration to the members of the Board for the year ended 31 December 2024, subject to prior clearance by related authorities.
The extension of the current composition of the Board was approved, which includes ten members and one CBB observer, for a further six-month term, expiring in September 2025, pending no objection from the CBB.
The meeting reviewed and approved the Corporate Governance Report for 2024, which affirmed the company’s full compliance with the corporate governance directives issued by the CBB and other applicable regulatory frameworks. The AGM absolved the Board Members of liability for any of their actions during the year ending on 31st December 2024, in accordance with the Commercial Companies Law.
In alignment with regulatory requirements, the session approved the reappointment of Ernst & Young (EY) as the company’s External Auditors for the fiscal year 2025, covering both the parent company and its subsidiaries—Sinnad and Bahrain FinTech Bay. The Board was authorised to determine the external auditors’ professional fees, subject to approval from the CBB, and the meeting concluded with a discussion of any additional issues as per Article (207) of the Commercial Companies Law.
Speaking on the company’s performance, Mr. Mohamed Al Bastaki, Chairman BENEFIT , stated: “In terms of the financial results for 2024, I am pleased to say that the year gone by has also been proved to be a success in delivering tangible results. Growth rate for 2024 was 19 per cent. Revenue for the year was BD 17 M (US$ 45.3 Million) and net profit was 2 Million ($ 5.3 Million).
Mr. Al Bastaki also announced that the Board had formally adopted a new three-year strategic roadmap to commence in 2025. The strategy encompasses a phased international expansion, optimisation of internal operations, enhanced revenue diversification, long-term sustainability initiatives, and the advancement of innovation and digital transformation initiatives across all service lines.
“I extend my sincere appreciation to the CBB for its continued support of BENEFIT and its pivotal role in fostering a stable and progressive regulatory environment for the Kingdom’s banking and financial sector—an environment that has significantly reinforced Bahrain’s standing as a leading financial hub in the region,” said Mr. Al Bastaki. “I would also like to thank our partner banks and valued customers for their trust, and our shareholders for their ongoing encouragement. The achievements of 2024 set a strong precedent, and I am confident they will serve as a foundation for yet another successful and impactful year ahead.”
Chief Executive of BENEFIT; Mr. Abdulwahed AlJanahi commented, “The year 2024 represented another pivotal chapter in BENEFIT ’s evolution. We achieved substantial progress in advancing our digital strategy across multiple sectors, while reinforcing our long-term commitment to the development of Bahrain’s financial services and payments landscape. Throughout the year, we remained firmly aligned with our objective of delivering measurable value to our shareholders, strategic partners, and customers. At the same time, we continued to play an active role in enabling Bahrain’s digital economy by introducing innovative solutions and service enhancements that directly address market needs and future opportunities.”
Mr. AlJanahi affirmed that BENEFIT has successfully developed a robust and well-integrated payment network that connects individuals and businesses across Bahrain, accelerating the adoption of emerging technologies in the banking and financial services sector and reinforcing Bahrain’s position as a growing fintech hub, and added, “Our achievements of the past year reflect a long-term vision to establish a resilient electronic payment infrastructure that supports the Kingdom’s digital economy. Key developments in 2024 included the implementation of central authentication for open banking via BENEFIT Pay”
Mr. AlJanahi concluded by thanking the Board for its strategic direction, the company’s staff for their continued dedication, and the Central Bank of Bahrain, member banks, and shareholders for their valuable partnership and confidence in the company’s long-term vision.
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