Budget deficit rises by 2.9 % in Lebanon

Lebanon’s budget deficit in the first six months of 2012 rose by LL403 billion to reach LL1.708 trillion (or 18.26 percent) compared to LL1.304 trillion (15.36 percent) in the same period of last year, the Finance Ministry said Wednesday. It added that the primary surplus, excluding the cost of debt servicing, fell by LL542 billion to reach LL1.164 trillion, or 12.45 percent of total spending. This is the first time in less than two years the Finance Ministry announces an increase in the budget deficit. Total government spending up until June 2012 reached LL7.642 trillion compared to LL7.332 trillion in the same period of 2011 – an increase of LL456 billion. Proceeds from tariffs in this reporting period rose to LL1.093 trillion from LL1.067 trillion – an increase of 2.41 percent. Revenues from the Value Added Tax rose by 8.53 percent to reach LL1.675 trillion up until June of this year. Telecom revenues in the first six months of 2012 rose slightly by 0.38 percent to reach LL1.065 trillion. However, the Finance Ministry said that telecoms revenues are based on the estimates provided by the Telecommunication Ministry. The Telecommunications Ministry, following in the footsteps of former Telecoms Minister Charbel Nahhas, insists on depositing all telecoms proceeds in a Central Bank account, arguing that the law stipulates this income should only be transferred to the Treasury at the end of the year. The government’s total expenditures up until June 2012 increased by 10.12 percent to reach LL9.350 trillion, which has contributed to the rise in the budget deficit. The ministry said that excluding the cost of debt servicing total government spending reached LL6.477 trillion up until June of this year compared to LL5.480 trillion in the same period of last year – an increase of LL998 billion. Finance Minister Mohammad Safadi said earlier that the budget deficit is expected to rise at the end of this year since the Cabinet agreed to give the public sector employees a salary increase retroactively from February of this year. The Cabinet has no intention to hike taxes, as this would risk drawing the wrath of labor unions and the private sector. From DailyStar