Lebanon’s fiscal deficit narrowed from $2.53B by August 2016 to $1.39B by August 2017. The contraction is mainly attributed to the 14.85% annual increase recorded in public revenues, which also outweighed the 4.64% year-on-year (y-o-y) uptick in government spending.
During the same period, the total primary balance displayed a substantial surplus, which rose from $405.11M by Aug. 2016 to $1.74B by Aug. 2017. This can be partly explained by the fact that not all transfers have been made to municipalities yet, which is reflected in the total treasuries deficit contracting from $792.30M to $226.9M by Aug. 2017.
In fact, total government revenues amounted to $7.37B by Aug. 2017, compared to $6.42B by Aug. 2016. Tax revenues (82.19% of total public revenues) including income tax on profits, income tax on wages and salaries, and the one-off banks’ tax payments on gains from the BDL swap operation of June 2016, increased by 21.7% y-o-y to stand at $6.06B. In details, Miscellaneous tax revenues alone grew by 36.25% to $3.5B, while revenues from the Value Added Tax (VAT, grasping a 26.31% share of total tax receipts) rose by an annual 7.7% to reach $1.59B by Aug. 2017. In their turn, revenues from the Lebanese customs (composing 15.74% of tax receipts) added a yearly 3.35% to $953.28M over the same period.
Meanwhile, non-tax revenues declined by 8.75% y-o-y to $1.31B, out of which telecom revenues (7.2% of total government revenues) slipped from $797.5M by Aug. 2016 to $530.67M during the same period this year, as Lebanon’s Cabinet in June 2017 cut down internet prices for households, with DSL package costs down by around 50%, according to Telecom Minister Jamal Jarrah.
On the expenditures side, budgetary spending, which includes general spending and debt-servicing, reached $8.53B during the first 8 months of 2017. Transfers to Electricite du Liban (EDL) particularly rose from $521.2M by Aug. 2016 to $841.51M during the same period this year and this is largely attributed to the rise in average oil prices which stood at $42.65 per barrel by Aug.2016 compared to $52.14 per barrel by August this year. Moreover, interest payments on government’s debt added 6.96% y-o-y, amounting to $3B, owing it to an annual 8.8% rise in interest payments on domestic debt to $2.04B, which in turn outweighed the 3.29% yearly uptick in interest payments on foreign debt, which stood at $966.5M.
Yearly Government Deficit by August (in $B)
Source: Ministry of Finance