The year 2015 held some glimmers of positivity for Lebanon with better security conditions, resurgence in the tourism sector, robust lending to the private sector and a decline in international oil prices which played out in favor of lower transfers to EDL. According to the Ministry of Finance, transfers to EDL reached $1.13B by the end of 2015, substantially lower than the $2.04B transferred over the same period in 2014.
The few positive circumstances witnessed in Lebanon during 2015 were not enough to overhaul the elements that weighed the economy down in turn compelling the World Bank to revise its 2015 real GDP growth for Lebanon from 2% to 1.5%. The presidential seat has been vacant for a second year now with no near-resolution in sight, only a short-term solution has been found for the garbage crisis and the real estate sector was down as shown by the 9.4% decline in registration fees and the 8.6% decline in cement deliveries. The lower transfers to EDL were not translated into a smaller fiscal deficit since they were more than offset by lower revenues. To start with the higher revenues seen in 2014 were not the result of a better economic activity but rather the result of exceptional one-off telecom transfers. After falling by 27% annually in 2014, Lebanon’s fiscal deficit widened by 28.62% year-on-year (y-o-y) to $3.95B by the end of 2015. Moreover, despite a better security situation in 2015, Lebanon’s security condition continues to be perceived as precarious as long as spillover risks from the turbulent region persist.
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