According to Ministry of Finance (MoF) latest figures, Lebanon’s fiscal deficit (cash basis) stood at $2.80B by October 2020, down from last year’s $4.02B.
In detail, the substantial deficit is attributed to the annual 14.96% drop in government revenues (including treasuries) which fell to $7.97B by October 2020. On the counterpart, total expenditures (including treasuries) retreated yearly by 24.05% to $9.37B in the first eleven months of the year. It is worth noting that the primary balance which excludes debt service posted a deficit of $645M, compared to a surplus of $831.49M during the same period last year.
Fiscal revenues recorded a yearly drop by 20.74% to stand at $7.08B. Tax revenues (constituting 79.52% of total revenues) retreated by an annual 21.63% to $5.63B by October 2020. Revenues from VAT (17.45% of total tax receipts) dropped by 46.77% y-o-y to $983.36M. The drop in “VAT revenues” is most probably attributed to the deterioration of Lebanese purchasing power with the decrease in value of Lebanese pound, which obligated Lebanese people to rationalize their spending.
As for Non-tax revenues (20.48% of total revenues), they dropped from $1.75B by October 2019 to $1.45B by October 2020. Meanwhile, “Telecom revenues” (constituting 41.83% of total non-tax revenues) shrunk yearly by 23.91% to reach $606.83M by October 2020.
On the expenditures’ side, transfers to Electricity du Liban (EDL) (9.6% of general expenditure) slid by 43.42% to reach $738.98M. Moreover, total debt servicing (including the interest payments and principal repayment) reached $1.64B by October 2020, down by a yearly 61.32% such that interest payments alone retreated by 62.42% y-o-y to $1.54B. In details, interest payments on domestic debt slumped by 46.51% y-o-y to $1.39B. Meanwhile, interest payments on foreign debt registered a year-on-year significant drop by 90.12% to $147.76M, 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 deficit of $507.92M compared to a deficit $613.32M by October 2019.
Yearly Fiscal deficit by July (in $M)