Lebanon’s cash-basis fiscal deficit narrowed from $4.51B in the third quarter (Q3) of 2018 to $3.59B in Q3 2019. The smaller deficit comes as a result of the 8.30% yearly decline in government spending, which outweighed the 2.05% annual retreat in total public revenues. In fact, total government revenues and expenditures (including treasuries) stood at $8.5B and $12.08B, respectively. In its turn, the primary balance which excludes debt service, posted a surplus of $197.61M over the same period, compared to a deficit of $590.89M in Sept. 2018.
The breakdown of the fiscal performance of the Lebanese government in Q3 2019 showed that Tax revenues (constituting 81.44% of budget revenues) climbed slightly by 0.87% year-on-year (YOY) to $6.6B by September 2019, of which VAT revenues (25.93% of total tax receipts) declined by 9.55%YOY to $1.71B. The drop in VAT revenues is most probably attributed to the low growth environment and the ensuing reduction in spending since the beginning of the year, which outweighed the positive effect of raising the VAT rate from 10% to 11% effective January 2018. For example, revenues from the Lebanese Customs (14.48% of total tax receipts) decreased by an annual 5.92% to stand at $955.85M by Sept. 2019.
In turn, Non-tax revenues (18.56% of total revenues) registered an annual uptick of 1.95%YOY to $1.5B in Q3 2019, despite a 4.16%YOY slump in Telecom revenues (41.48% of Non-tax revenues) to $624.15M over the same period.
On the expenditures side, Total government expenditures fell by a yearly 7.38% amounting to $11.1B in the third quarter of 2019. In details, Transfers to Electricite du Liban (constituting 10.2% of total public expenditures) fell by an annual 8.13% to stand at $1.13B. The decrease can be affiliated to an 11%YOY drop in the average international oil prices to $64.75 per barrel in Q3 2019. Meanwhile, Total debt-servicing (inclusive of interest payments and principal repayments) fell by 3.42%YOY to $3.66B by Sept. 2019. Notably, interest payments on domestic debt (63% of total interest payments) slid by a yearly 4.79% to $2.31B, while interest payments on debt denominated in foreign currency slipped by 0.99%YOY to $1.35B, noting that gross public debt climbed by 3.5%YOY to $87.08B in Q3 2019.
Treasury transactions in their turn (inclusive of revenues and spending that are of temporary nature) posted a deficit of $600.26M in Q3 2019, compared to $546.84M in the same period last year. In fact, treasury expenses of which Municipalities, slumped by $64.93M annually, to stand at $457.62M over the same period.
Source: Ministry of Finance