According to the latest figures by the Ministry of Finance (MoF), Lebanon’s fiscal deficit (cash basis) stood at $1.75B by April 2020, up from last year’s $1.38B. In detail, the substantial deficit is attributed to the annual 9.14% drop in government revenues (including treasuries) which fell to $3.14B by April 2020. On the counterpart, total expenditures (including treasuries) added a yearly 1.13% to $4.89B in the first four months of the year. Worth mentioning that the primary balance which excludes debt service posted a deficit of $596.25M, compared to a surplus of $22.80M during the same period last year.
Fiscal revenues recorded a yearly downtick of 22% to stand at $2.57B. Tax revenues (constituting 84.85% of total revenues) retreated by an annual 20% to $2.18B by April 2020. Revenues from VAT” (17.55% of total tax receipts) dropped by 52.23% y-o-y to $382M. The drop in VAT revenues is most probably attributed to the low growth environment and the ensuing reduction in spending especially during the total lockdown. Meanwhile, “customs’ revenues” (11.79% of tax receipts) dropped by 36.9% year-on-year (y-o-y) to $257M.
As for Non-tax revenues (15.15% of total revenues), they dropped from $569M by April 2019 to $389M by April 2020. Meanwhile, “Telecom revenues” (constituting 34.11% of total non-tax revenues) shrunk yearly by 38.67% to reach $132.67M by April 2020.
On the expenditures’ side, total government spending recorded a yearly downtick of 0.23% to hit $4.53B by April 2020. In details, transfers to Electricity du Liban (EDL) (11.4% of general expenditure) slid by 23.71% to reach $386.56M. Moreover, total debt servicing (including the interest payments and principal repayment) reached $1.15B by April 2020, down by a yearly 17.67% such that interest payments alone retreated by 18.25% y-o-y to $114B. In details, interest payments on domestic debt rose by 5.38% y-o-y to $991.96M. This goes hand-in-hand with the substantial 11.22% increase registered in the total debt denominated in Lebanese pounds which hit $58.3B in Q1 2020. Meanwhile, interest payments on foreign debt registered year-on-year a significant drop by 70.9% to $123M noting that on March 7 2020, the Lebanese government announced for the first time that Lebanon will not pay a $1.2B Eurobond due on March 9 and will seek to restructure its sovereign foreign currency debt.
In its turn, the treasury transactions (includes revenues and spending that are of temporary nature) posted a surplus of $213M, compared to a deficit $132M by April
Yearly Fiscal deficit by April (in $M)