According to the latest figures by the Ministry of Finance (MoF), Lebanon’s fiscal deficit (cash basis) narrowed from $3.07B by July 2018 to $2.41B by July 2019. This was attributed to a 7.66% yearly drop in government expenditures to hit $8.64B. Meanwhile, fiscal revenues recorded a yearly uptick of 0.22% to stand at $6.68B. Worth mentioning that the primary balance which excludes debt service posted a surplus of $1.01B, compared to a surplus of $445.69M during the same period last year.
Tax revenues (constituting 83.16% of total revenues) rose by an annual 1.01% to $5.55B by July 2019. Revenues from VAT” (26.69% of total tax receipts) dropped by 8.03% y-o-y to $1.48B. In fact, although the new VAT rate of 11% was applied in beginning of January 2018 increasing from 10%, the decrease in the VAT revenues can be linked to the stagnating economy and recession in many sectors. Meanwhile, “customs’ revenues” (13.48% of tax receipts) dropped by 4.87% year-on-year (y-o-y) to $748.63M.
As for Non-tax revenues (16.84% of total revenues), they retreated from $1.16B by July 2018 to $1.12B by July 2019. This can be linked to the yearly decline by 5.59% in “telecom revenues” (constituting 40.71% of total non-tax revenues) to reach $457.82M in the first seven months of 2019.
On the expenditures’ side, total government spending dropped by a yearly 7.66% to hit $8.64B by July 2019. In details, transfers to Electricity du Liban (EDL) (14.8% of general expenditure) slid by 11.83% to reach $838.69M which followed the 7% annual decline in average oil prices to $66.17/barrel over the period. Moreover, total debt servicing (including the interest payments and principal repayment) reached $3.14B by July 2019, down by a yearly 5.07% such that interest payments alone dropped by 5.26% y-o-y to $2.86B. Interest payments on domestic debt declined by 7.64% y-o-y to $1.73B.Meanwhile, interest payments on foreign debt recorded also year-on-year a downtick by 1.36% to $1.13B.
In its turn, the treasury transactions (includes revenues and spending that are of temporary nature) posted a deficit of $440.99M, compared to $377.88M by July 2018. In details, treasury expenses of which municipalities dropped from $458.78M to $278.08M.
Yearly Fiscal deficit by July (in $M)
Source: Ministry of Finance