Lebanon’s budget gap widens 60% y/y to USD 3.3bn at end-September 2013

By bne IntelliNews December 2, 2013

Lebanon's budget gap (including Treasury transactions) widened 60% y/y to LBP 5tn (USD 3.3bn) in the first nine months of the year on falling revenue (both tax and non-tax) and rising spending, mainly on salaries and debt servicing, the finance ministry said in a statement. The budget deficit will likely reach LBP 5.5tn by end-2013 and might expand further in 2014 if no measures were taken to boost revenue, according to caretaker finance minister Mohammed Safadi.

The deficit equalled 31.9% of total spending in January-September, up from 22.3% the previous year.

Total budget proceeds dropped 2.2% y/y to LBP 10.6tn, whereas spending rose 11.6% to LBP 15.6tn. The budget recorded a LBP 824bn primary deficit over the period compared with a LBP 978.6tn primary surplus the year before.

Tax proceeds fell 1.5% y/y to LBP 7.8tn mainly on lower VAT and custom fees. The latter shrank 3.5% y/y to LBP 1.62tn in January-September on falling energy imports. A weak tourism activity and related consumption have also weighed on VAT receipts that edged up just 0.1% y/y to LBP 2.48tn over the period.

Non-tax proceeds fell 10.8% y/y to LBP 2.2tn mainly on shrinking telecom receipts and subdued real estate deals. Telecom receipts shrank 15.2% to LBP 1.4tn in January-September.

Debt servicing rose 1.5% y/y to LBP 3.9tn over the period on higher interest payments on foreign debt (up 6.4% y/y to LBP 1.49tn). Interest on the domestic debt fell 1.3% y/y to LBP 2.44tn. Transfers to loss-making Electircite du Liban (EDL) dropped 3% y/y to LBP 2.54tn on lower fuel prices.

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