After a marathon session on Friday, 26 January 2024, the Lebanese Parliament approved the fiscal budget within its legally binding time limit. And the budget was approved including the amendments by the parliamentary Committee on Finance and the Budget, not as submitted originally by the Government. As such, the committee canceled 46 articles, modified 73, approved 14 old ones, and added 8 new ones.
What distinguishes the budget is that it is a balanced budget with revenues and expenditures at 295.11 trillion LBP each. Interesting that a recent draft report by the MOF estimated revenues to be 308.43 trillion LBP, which if true, then the budget will carry an estimated surplus of 13.32 trillion LBP.
In terms of expenditures, current expenditures constitute 91.2% of total expenditures, whereas capital expenditures constitute 8.8%. Of current expenditures, 51.3% go to wages and salaries, 20.2% go to purchase of goods and services, and 11.1% to transfers, and 5.5% to debt servicing. As to revenues, tax revenues constitute 77.9% whereas non-tax reveues21.1%; of tax revenues, VAT and excise taxes will capture 57.1% of tax revenues, property taxes 15.7%, customs duties 13%, and income taxes 9.3%.
Equally interesting is that the Committee canceled all articles involving new taxes and fees. It also amended some articles, notably the ones with respect to family deductibles that were raised to 450 million LBP and to the threshold of taxable personal income that was lifted to 360 million LBP. Of those added, notable among them is the exceptional tax of 10% on the turnover of companies who benefited from subsidies (including oil companies) and of 17% on the income of entities (not persons) who benefited from Sairafa transactions.
Lastly, what was missing from the budget is the new official exchange rate. The Committee declared through its Chairman that this doesn’t fall under its mandate. So all eyes are on BDL now, which is expected to announce the new official exchange rate most likely on Wednesday, 31 January 2024.