According to the latest figures by the Ministry of Finance (MoF), Lebanon’s fiscal deficit (cash basis) stood at $2B by May 2020, down from last year’s $2.38B. In detail, the substantial deficit is attributed to the annual 15.35% drop in government revenues (including treasuries) which fell to $3.77B by May 2020. On the counterpart, total expenditures (including treasuries) retreated yearly by 15.66% to $5.77B in the first five months of the year. Worth mentioning that the primary balance which excludes debt service posted a deficit of $715.75M, compared to a deficit of $37.57M during the same period last year.
Fiscal revenues recorded a yearly downtick of 25.50% to stand at $3.17B. Tax revenues (constituting 86.55% of total revenues) retreated by an annual 22.64% to $2.75B by May 2020. Revenues from VAT” (17.99% of total tax receipts) dropped by 51.12% y-o-y to $494.64M. 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” (11.94% of tax receipts) dropped by 37.77% year-on-year (y-o-y) to $328M.
As for Non-tax revenues (13.45% of total revenues), they dropped from $710M by May 2019 to $427M by May 2020. Meanwhile, “Telecom revenues” (constituting 31% of total non-tax revenues) shrunk yearly by 54.46% to reach $132.67M by May 2020.
On the expenditures’ side, total government spending recorded a yearly drop by 17.23% to hit $5.25B by May 2020. In details, transfers to Electricity du Liban (EDL) (10.2% of general expenditure) slid by 33.50% to reach $402.77M. Moreover, total debt servicing (including the interest payments and principal repayment) reached $1.28B by May 2020, down by a yearly 45.4% such that interest payments alone retreated by 45.78% y-o-y to $1.23B. In details, interest payments on domestic debt slumped by 10.56% y-o-y to $1.10B. Meanwhile, interest payments on foreign debt registered a year-on-year significant drop by 87.52% to $129.54M 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 $76.17M, compared to a deficit $305.48M by May 2019.
Yearly Fiscal deficit by May (in $M)
Source: MOF, BlominvestBank