According to Ministry of Finance (MoF) latest figures, Lebanon’s fiscal deficit (cash basis) stood at $2.71B by the year 2020, down from last year’s $5.83B.
In detail, the substantial deficit is attributed to the annual 8.02% drop in government revenues (including treasuries) which fell to $10.17B by December 2020. On the counterpart, total expenditures (including treasuries) retreated yearly by 23.75% to $12.88B by end of year 2020. It is worth noting that the primary balance which excludes debt service posted a deficit of $255.63M, compared to a surplus of $433.58M during the same period last year.
Fiscal revenues recorded a yearly drop by 13.88% to stand at $9.07B. Tax revenues (constituting 76.54% of total revenues) retreated by an annual 16.44% to $6.94B by year 2020. Revenues from VAT (17.80% of total tax receipts) dropped by 42.79% y-o-y to $1,24B. 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. Important to note, the revenues from Real Estate registration fees soared annually by 109.53% from $348.42M in year 2019 to $730.03M by in year 2020. This upsurge can be attributed to the increase in real estate transactions by the time depositors activity reflected the continuous migration of their deposits out of the banking sector towards real estate.
As for Non-tax revenues (23.46% of total revenues), they dropped from $2.22B by year of 2019 to $2.13B by end of year 2020. Meanwhile, “Telecom revenues” (constituting 47.33% of total non-tax revenues) added yearly 6.44% to reach $1.08B by December 2020.
On the expenditures’ side, transfers to Electricity du Liban (EDL) (9.9% of general expenditure) slid by 38.59% to reach $924.36M. Moreover, total debt servicing (including the interest payments and principal repayment) reached $2.06B by December 2020, down by a yearly 62.87% such that interest payments alone retreated by 63.84% y-o-y to $1.93B. In details, interest payments on domestic debt slumped by 44.57% y-o-y to $1.78B. Meanwhile, interest payments on foreign debt registered a year-on-year significant drop by 92.77% to $154.72M.
In its turn, the treasury transactions (includes revenues and spending that are of temporary nature) posted a deficit of $392.88M compared to a deficit $719.79M by December 2019.
Yearly Fiscal deficit by December (in $M)
Source: MoF, BLOMINVEST