Budget 2024:  Another Year of Reform-less Budget

As per law, the MOF prepared its 2024 budget and submitted it to the Lebanese Parliament last month, where it is currently under review by the Finance and Budget Committee. Legalwise, though, the Parliament can’t enact the budget into law because it is not a legislative parliament (since there isn’t a sitting President at the moment), so it remains to be seen whether the COM can issue the budget in the form of a decree!. At any rate, the budget estimates expenditures at 295.11 trillion LBP and revenues at 277.92 trillion LBP, with a deficit of 17.19 trillion LBP or 5.82% of expenditures.

In terms of expenditures, 91.3% fall into current expenditures and 8.7% into capital expenditures. As to current expenditures, 52.6% go into salaries and wages, 5% into servicing of the debt, and 35.7% into other expenditures. In terms of revenues, 76.5% accrue from tax revenues and 23.5% from non-tax revenues. As to tax revenues, 24.5% are expected to come from VAT, 8.2% from income taxes, and 6% from real estate taxes and fees. Note that the budget doesn’t include transfers to EDL, nether it includes other Treasury revenues and expenditures.

The budget has been criticized on several grounds, most important of which are: it is not a reform-oriented budget; it allocates little to capital expenditures; it doesn’t specify the exchange rate used in the calculations; and the new taxes it imposes are either excessive or regressive, especially in a depression-like environment.

In the context of the last criticism, it is interesting to note that – among other things —  the Finance and Budget Committee has eliminated articles 16, 17, 20, and 21 from the budget because they are redundant/excessive; and is reviewing articles 25, 64, and 65 (that deal with taxing USD income and adjusting tax brackets) because they are regressive, in addition to eliminating any new fees.

In fairness, with the absence of any reform plan, the 2024 budget realistically speaking can’t be a reform budget, but has to act as a transitory, stop-gap budget. So the fundamental criticism should lie there: where is the structural reform that is at least four years late!

Budget Estimates: 2023 and 2024: