According to the latest figures by the Ministry of Finance (MoF), Lebanon’s cash basis -fiscal deficit fell from $2.92B by May 2018 to $2.39B in the first five months of 2019. The improvement in the performance of the country’s fiscal balance came on the back of a yearly 8.62% retreat in government spending to hit $6.34B while fiscal revenues slid by an incremental 1.19% year-on-year (YOY) to reach $4.26B by May 2019. In its turn, the primary balance, which excludes debt servicing, registered a deficit of $37.57M, down from the larger deficit of $354.23M during the same period last year.
The breakdown of the recent MoF’s data revealed Tax revenues (which composed 83.35% of total revenues) advanced by a marginal 0.57% YOY to reach $3.55B in the first five months of the year, with revenues from the Value added Tax or VAT (28.48% of total tax receipts) retreating by a yearly 8.45% to stand at $1.01B by May 2019. In fact, VAT receipts continued their downward trend despite the higher, 11% VAT rate effective January 2018 given the persisting environment of low growth fueled by sectorial slowdowns and the political uncertainty regarding the 2019 draft budget, which was not endorsed till end May 2019. In fact, the total number of real estate transactions in the first five months of 2019 slumped by 16.22% YOY to 19,024 transactions while their value slipped by 24.4% YOY to $2.4B over the same period.
By the same token, revenues from Lebanese Customs (14.85% of tax receipts) recorded a yearly downtick of 3.49% to $527.54M. Meanwhile, Non-tax revenues (16.65% of total revenues) slipped by 9.15% YOY to $710.06M by May 2019, owing it to an 8.56% decline in Telecom revenues (composing 8.56% of total non-tax revenues) to reach $291.34M over the same period.
On the expenditures’ side, total public spending registered a yearly 8.62% downtick to $6.34B by May 2019. In fact, Electricity du Liban (EDL) transfers alone (9.5% of total spending) slid by 3.59% to reach $605.64M which came partly on the back of a 4.94% annual decline in the average oil prices to $66.75/barrel by May 2019. Moreover, total debt servicing (including the interest payments and principal repayment) reached $2.35B by May 2019, down by a yearly 8.52%. In fact, interest payments alone slipped by 8.55% YOY to $2.27B on the back of a 15.33% YOY slump in the interest payments on domestic debt to $1.23B while interest payments on foreign debt recorded year-on-year uptick by 1.06% to $1.04B.
Yearly Fiscal deficit by May (in $M)
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Source: Ministry of Finance