Public deficit up 30 percent

Primary surplus declines, expenditure up,
while tax revenues see modest increase

The total deficit has topped $1.138 billion in the first half of 2012, up from $869 million for the same period last year, according to Ministry of Finance figures. The total deficit accounted for 18.26 percent of total expenditure, up from 15.36 percent.

Economist Louis Hobeika said the problem with the deficit is not a new one: “The problem with public finances is a deficiency in collection of taxes and fees, waste and corruption in spending, and the cost of the public debt, accumulated since 1990, which is considered high.”

The primary surplus also declined to $776 million, from $1.137 billion. The primary surplus accounted for 12.45 percent of total expenditure, down from 20.1 percent. Hobeika said that the present budget would be good if its wasn’t for the huge public debt, which means the surplus will never cover expenditures and cost of public debt.

Total public expenditure for the first six month was $6.233 billion, up from $5.66 billion for the same period last year, an increase of 10.12 percent. Total tax revenue rose just 9.25 percent from the period to $3.76 billion, from $3.44 billion. The biggest increase of 8.53 percent has been in VAT revenue that totaled $1.1 billion as off end June.

Spending on the State-owned power utility Electricite du Liban went up in the first half of the year to $986 million, from $687 million for the same period last year. “We have deficient collection of fees, taxes, and bills, an example is EDL it has been four months since a single bill was collected. When bills are finally collected the deficit will decline, but this will not solve the problem as we have a structural deficit in public finances,” said Hobeika. In fact total non-tax revenue for the first half of the year only rose 1.15 percent from the previous period.

Total budgetary and treasury revenues rose slightly in the first half of 2102 to $5.09 billion, from $4.79 billion for the same period last year, a rise of 6.34 percent. The proportion of total expenditure spent on debt servicing however fell in the first six months of the year, from $2 billion for the same period last year, to $1.91 billion.

The MoF relies on taxes collected and other ministries transferring money collected, to get a clear picture of public finances. “There may be revenues but they are lower than before, spending is higher, and the public debt is large, these revenues will not cover the deficit.”

Reported by Abeer Darwiche