Lebanese authorities Saturday reached a short-term settlement to maintain fuel subsidies, according to tje offices of President Michel Aoun and caretaker Prime Minister Hassan Diab.

The news comes in an attempt to reduce the significant shortage of oil derivatives that the country.

The Banque du Liban had announced earlier that it had stopped financing the purchase of fuels according to the official price of the dollar, which effectively means stopping the subsidy and opening the door to importing it at the black market rate, which is unaffordable to the vast majority of Lebanese citizens. 

In the wake of this announcement, a state of panic prevailed among the Lebanese, and fuel companies reduced the quantities distributed, which led to long queues of cars in front of gas stations, causing road closures and suffocating traffic.

Saturday evening, the Lebanese presidency announced in a statement after a meeting chaired by Aoun devoted to addressing the crisis, "the approval of the Ministry of Finance's proposal to request the Banque du Liban to open a temporary account to cover urgent and exceptional support for hydrocarbons."

According to the statement, the government will spend up to $225 million to pay the difference between the black market value of the lira (20,000) and a subsidized 8,000 rate for the purchase of gasoline, diesel and domestic gas and the maintenance of electricity plants until the end of September.

The official rate stands at 1,500 LL to the dollar. 

The statement indicated that the Ministry of Energy and Water will issue a table of new fuel prices as soon as this decision is issued.

The meeting was attended by Aoun and Diab, Central Bank Governor Riad Salameh, and the resigned Energy Minister Raymond Ghajar, who participated through the Zoom application.

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Lebanese economist Nassib Ghobril said that the agreement is a "compromise" aimed at urging oil importing companies to distribute more of their stockpiles and reduce the severe shortage in the market.

"But this will not solve the problem," added the chief economist at Byblos Bank.

"The solution is to completely lift subsidies. This will lead to the disappearance of long queues of cars in front of gas stations and the cessation of smuggling," Gabriel pointed out.

Saturday's decision comes after a tank explosion in northern Lebanon killed about 30 people, while a large number of people gathered to fill plastic containers with fuel.

In recent weeks, owners of private generators that provide electricity to the country have struggled with no government utility supplies to get enough fuel to run their generators.

Lebanon is witnessing a severe economic crisis that the World Bank has ranked among the worst in the world since 1850.