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Since Wednesday morning, the price of a “rabta” of Lebanese bread has been sold in bakeries at 47,000 instead of 43,000 Lebanese pounds. This is due to the increase in the exchange rate used to buy wheat from 15,000 to 30,000 pounds to the dollar. This is by no means the beginning of a lifting of the subsidy, but rather a “rationalization” of the subsidy requested by the World Bank (WB) when it granted Lebanon a loan for the purchase of wheat.
Since Wednesday morning, the “rabta” of Lebanese bread has been sold at 47,000 pounds instead of 43,000 in bakeries. Why was an increase of 4,000 pounds introduced? The main reason is the change in the exchange rate used to purchase wheat from 15,000 to 30,000 pounds to the dollar.
Contacted by This is Beirut, the Caretaker Minister of Economy, Amin Salam, explains that this increase in the exchange rate is part of the plan put in place with the World Bank (WB) when the loan for the purchase of wheat was obtained, in order to rationalize the subsidy. “This does not mean at all that the subsidy on wheat will be lifted,” he assures. “It’s just that the exchange rate used by millers to pay for wheat has been increased from 15,000 LL to 30,000 LL. This is part of the procedure.”
The price of a ton of flour has risen by 4,686,000 pounds
Antoine Seif, President of the Syndicate of Bakery Owners in Mount Lebanon, told This is Beirut that under the agreement with the WB, flour mills are now paying their 15% share of the subsidized wheat price at the rate of 30,000 pounds instead of 15,000 pounds to the dollar. “As a result, the price of a ton of flour has risen by 4 million 686 thousand pounds,” he said.
This difference of 4,000 pounds in the cost of bread, says Seif, “is also attributable to the increase in the price of the tons of fuel oil and sugar by around 30 dollars each”.
He pointed out that, apart from wheat, the other components of bread do not benefit from subsidies.
It should be noted that this increase in the exchange rate for the purchase of wheat was carried out gradually, rising from 1,500 LBP to 7,500 LBP, then to 15,000 LBP, and finally to 30,000 LBP to the dollar on Wednesday.
A $150 million loan
In May 2022, Lebanon and the World Bank signed an emergency agreement worth a total of $150 million to preserve food security in Lebanon by supporting wheat imports.
The agreement was reached following negotiations that began after the start of the Russian offensive in Ukraine and fears of a wheat crisis in Lebanon, which imports most of its wheat from Ukraine. The war in Ukraine and the economic and financial collapse in which Lebanon finds itself have exacerbated the risk of a food crisis.
With this loan, Lebanon is covered for wheat imports, especially as the Central Bank, whose reserves have dwindled considerably, can no longer regularly release funds to subsidize wheat purchases.
