According to the latest figures by the Ministry of Finance (MoF), Lebanon’s fiscal deficit (cash basis) stood at $1.16B by Feb. 2020, up from last year’s $657.84M. In detail, the substantial deficit is attributed to the annual 6.84% drop in government revenues (including treasuries) which fell to $1.68B by February 2020. On the counterpart, total expenditures (including treasuries) added a yearly 15.27% to $2.84B in the first two months of the year. Worth mentioning that the primary balance which excludes debt service posted a deficit of $537.61M, compared to a deficit of $88.97M during the same period last year.
Fiscal revenues recorded a yearly downtick of 6.56% to stand at $1.58B. Tax revenues (constituting 84.14% of total revenues) retreated by an annual 8.10% to $1.33B by February 2020. Revenues from VAT” (20.94% of total tax receipts) dropped by 39.97% y-o-y to $278M. The drop in VAT revenues is most probably attributed to the low growth environment and the ensuing reduction in spending since the beginning of the year. Meanwhile, “customs’ revenues” (9.59% of tax receipts) dropped by 37.89% year-on-year (y-o-y) to $127.31M.
As for Non-tax revenues (15.86% of total revenues), they rose from $244M by February 2019 to $250.25M by February 2020. Meanwhile, “Telecom revenues” (constituting 26.51% of total non-tax revenues) shrunk yearly by 20.24% to reach $66.33M by February 2020.
On the expenditures’ side, total government spending rose by a yearly 18.18% to hit $2.69B by February 2020. In details, transfers to Electricity du Liban (EDL) (9.4% of general expenditure) slid by 21.81% to reach $195M which followed the 3.95% annual decline in average oil prices to $59.77/barrel by February 2020. Moreover, total debt servicing (including the interest payments and principal repayment) reached $619.67M by February 2020, up by a yearly 8.93% such that interest payments alone increased by 9.44% y-o-y to $596.44M. Interest payments on domestic debt rose by 12.09% y-o-y to $482.56 M. This goes hand-in-hand with the substantial 12.96% increase registered in the total debt denominated in Lebanese pounds which hit $58.17B over the same period. Meanwhile, interest payments on foreign debt recorded year-on-year a downtick by 0.54% to $113.87M noting that gross public debt in foreign currency rose by 0.95%YOY to $34B by February 2020.
In its turn, the treasury transactions (includes revenues and spending that are of temporary nature) posted a deficit of $44.97M, compared to $70.23M by February.
The fiscal deficit is expected to rise further in the upcoming months (March April and May).In fact, the impact of Lebanon’s coronavirus lockdown will be fully materialized in the second quarter of 2020 .
Yearly Fiscal deficit by February (in $M)
Source: Ministry of Finance