Lebanon may not have enough money for medical supplies

BEIRUT – Lebanon’s central bank said on Thursday that a system for importing subsidised medical goods could not be sustained without using its mandatory reserves and asked the relevant authorities to find a solution to the problem.

Lebanon, which is in the throes of a financial crisis that is threatening its stability, has been subsidising fuel, wheat, medicines and other basic goods since last year.

After caretaker health minister Hamad Hasan had visited the bank, he said he had asked unsuccessfully for the release of funds for essential medicines.

The central bank had refused to dip into its mandatory reserves to cover the $1.3 billion cost of the subsidised medical supplies.

“This total cost that is required from the central bank as a result of a policy to subsidise these medical items cannot be supplied without touching mandatory reserves and this is what the board of the central bank refuses,” the bank said.

Lebanon’s hard currency reserves have dropped alarmingly from over $30 billion before the financial crisis hit in late 2019 to just over $15 million in March.

The wider subsidy programme costs around $6 billion a year.

Hasan had said on a local television programme last week that around 50% of the required medicines were actually available but sitting in the warehouses of importers who were waiting to be paid.

Lebanon, which is in political paralysis, deeply-indebted and struggling to raise funds from potential donor states and institutions, has said money for subsidies will run out in May.

The design and implementation of its subsidy system, which included long lists of non-basic items, has been criticised as wasteful by both traders and consumers.