Lebanon gas stations suspend strike action over dollar 'shortage'

Gas stations in Lebanon are paid by customers in Lebanese pounds but must pay suppliers in US dollars.

2 min read

27 September, 2019

Gas stations in Lebanon are paid by customers in Lebanese pounds [AFP]

Lebanese gas station owners on Thursday suspended planned strike action and announced that all stations will open immediately, a syndicate statement said.

The initially planned strike action, which was open-ended and set to begin on Thursday, was over a shortage in dollar reserves that has made it difficult to pay suppliers.

Gas stations in Lebanon are paid by customers in Lebanese pounds but must pay suppliers in US dollars.

"We need dollars to pay importers, but banks and money exchange houses are not giving us dollars because there is a shortage in the market," said Sami Brax, head of the Syndicate of Gas Station Owners.

He told AFP gas station owners were demanding to be able to pay their suppliers in Lebanese pounds, adding that the strike would take effect "immediately" and would last until "our demands are met".

Pumping stations continued to serve vehicles in the capital shortly after the announcement on Thursday evening, but queues had formed as drivers sought to top up ahead of any shortages.

Fadi Abu Shakra, a spokesman for fuel distributors in Lebanon, said they would not take part in the strike.

"Import companies and fuel distributers are in contact with Prime Minister Saad Hariri, who is dealing with the matter, and we will have a meeting with soon," he said in a statement carried by state-run National News Agency.

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Lebanese media this week reported that banks and money exchange houses were rationing their dollar sales over a feared shortage in reserves.

But central bank governor Riad Salameh on Monday denied that Lebanon was facing a dollar crisis.

"Dollars are available in Lebanon," he said in a news conference, calling reports of a shortage an "exaggeration".

Salameh met with Hariri on Thursday to discuss the country's monetary situation, Hariri's office said in a statement, without giving further details.

Growth in Lebanon has plummeted in the wake of repeated political deadlocks in recent years, compounded by eight years of war in neighbouring Syria.

Lebanon's public debt stands at around $86 billion - higher than 150 percent of GDP - according to the finance ministry.

Eighty percent of that figure is owed to Lebanon's central bank and local banks.

Last month, ratings agency Fitch bumped Lebanon down to "CCC" over what it called "intensifying pressure on Lebanon's financing model".

Standard & Poor's kept Lebanon's "B-/B" rating, but said that could slide over the next year if banking system deposits and the central bank's foreign exchange reserves continued to fall.

In July, parliament passed its 2019 budget, which is expected to trim Lebanon's deficit to 7.59 percent of GDP - a nearly 4-point drop from the previous year.

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