In June 2014, oil prices were slashed from a high of $112 to a low of $58 in December 2014. This bearish trend meant different things to the fiscal balances of oil importing countries and to those of oil exporting countries. For Saudi Arabia, the world’s biggest oil exporter, the news meant the Kingdom might face its first fiscal deficit since 2011 while for Lebanon, the news raised hopes for a smaller fiscal deficit. According to Bank of America Merrill Lynch, “the fiscal deficit is likely to ease on lower oil prices but reform remains needed to decrease vulnerabilities”.
The following lines depict the improvement witnessed in the Lebanese fiscal balance during the year 2014. However, this improvement might be short-lived as it stemmed from exceptional circumstances. In its latest concluding statement, the IMF noted that “Exceptional factors allowed for a welcome primary surplus in 2014, but without decisive action, fiscal deterioration will continue in 2015.”
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2014 Fiscal Balance Short-Term Improvement