According to the Ministry of Finance, Lebanon’s fiscal deficit narrowed by 17.71% year-on-year (y-o-y), descending to $1.58B in the first half (H1) of 2014.
The first key driver of this descent is government revenues, which are divided to tax revenues and non-tax revenues. Combined, these two revenues resulted in an 11.43% y-o-y decrease.
Tax revenues suffered a 13.28% y-o-y decrease by H1 to $3.80B, attributable to customs revenues and VAT revenues, which fell by respective 23.82% and 21.11% to $638.06M and $1.09B. These decreases can be caused by the slowing down of trade via land from across the Syrian border.
Non-tax revenues also stumbled, revealing a 4.36% y-o-y drop to $1.10B. This was due to the 11.33% y-o-y decrease in telecom revenues to $624.11M, which were affected by lower tariffs on telecom.
The other key driver of of Lebanon’s fiscal deficit is the total expenditures, which have decreased by 5.90% y-o-y to $5.73B. General expenditures decreased to $3.5B, with diminishing EdL transfers an important factor. Meanwhile interest payments increased by 1.61% to $2.08B.
Interest payments on domestic debt rose by 1.35% to $1.27B. Interest payments on foreign debt also increased, by 2.01% to $808.85M.
The primary surplus, which excludes the government’s debt service, for H1 2014 stood at $580M, up from $217M for the same period in 2014, reflecting the government’s improved capability of securing sufficient revenues to cover current costs.