Deficit wider than planned
by the Ministry of Finance

Fourth quarter revenues

40 percent below forecast

The fiscal deficit for 2019 will be much larger than expected due to the decline in revenues and the contraction in Gross Domestic Product (GDP), said caretaker Minister of Finance Ali Hassan Khalil.

Revenues in the fourth quarter of this year will be 40 percent below the LL5,000 billion ($3.3 billion) projected in the budget, Khalil said.

He said projected revenues for the 2020 draft budget will be revised and consequently all budget figures will be modified.

The government was aiming to reduce the deficit-to-GDP ratio for 2019 to 7.6 percent from 11.2 percent realized in 2018.

The International Monetary Fund (IMF) said in its Country Report on Lebanon released in October: “IMF staff’s projection is that the budget measures will reduce the [2019] cash-basis fiscal deficit to around 9.75 percent of GDP.” Public debt is expected to rise to 155 percent of GDP by the end of 2019, according to the report. Gross public debt reached $87.1 billion at the end of October.

The Ministry of Finance had projected a deficit-to-GDP ratio of 5.7 percent in the 2020 draft budget. When Treasury transfers to Electricité du Liban are added to this deficit, the projected deficit-to-GDP ratio becomes 7.4 percent.

The government had committed at the CEDRE donor conference to cut the fiscal deficit by one percent per annum for the next five consecutive years.

Khalil said that public sector salaries are a priority and will be paid notwithstanding the difficulties in State finances.