BELIEF, Debt Crisis, Fiscal Deficit, Economic Update

Lebanon’s Timely Budget Submission: Imbalances Persist Amidst Calls for Reform

12:16 | 30 September 2023LIMS output
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Lebanon's Budget

Lebanon’s 2024 budget submission marks an achievement, representing the first time a timely budget draft has been presented since the year 2002. Nevertheless, the budget’s equilibrium remains elusive, with a staggering 41.73 trillion LBP fiscal deficit, even after implementing substantial increases in fees, tariffs, and taxes. This deficit has reached record proportions, all while Lebanon continues to refrain from servicing its Eurobond obligations and accounting for subsidy costs clandestinely concealed within the central bank’s accounts. It is untenable that the government would proffer imbalanced budgets, particularly in light of the protracted four-year crisis that has besieged the nation. With debt markets firmly closed and the central bank refusing to finance the deficit in either LBP or USD, a pressing question emerges: How will this deficit be financed?

LIMS, in response to this fiscal scenario, urges parliamentarians to reject the budget as currently presented and, in its stead, demand a balanced budget proposal. LIMS contends that the budget is unduly inflated in its expectations for revenues, with a projection of a 75% upsurge, attributed to higher taxes and fees. However, this optimistic projection remains far from realistic, as the imposition of elevated taxes and tariffs will inevitably propel businesses to shutter their operations, thus exacerbating tax evasion and creating a fertile ground for illicit activities such as smuggling.

In order to restore fiscal equilibrium, LIMS offers a series of recommendations. First and foremost, it advocates for a comprehensive overhaul of the existing tariff and tax structures, with a particular emphasis on reducing rates and transitioning to a flat tax system. Such measures promise to broaden the tax base thus providing alternative avenues for financing. Moreover, LIMS underscores the pressing need for the government to liberalize key sectors, most notably in the fields of telecommunications and electricity. By permitting competition and enabling private sector participation, the government can not only save on the cost of investments but also mitigate the substantial losses it has historically incurred due to its mismanagement of these critical sectors. In doing so, Lebanon can embark on a path toward fiscal responsibility and sustainable economic growth, ultimately securing a brighter future for its citizens.

  • Patrick Mardini: The Budget’s Focus On Taxes And Fees Has A Negative Impact On Increasing The Economic Momentum, September 3, 2023: Al Jadeed, TV Interview AR         
  • How Will the Budget Deficit Be Financed? September 8, 2023: Al Jadeed, TV Interview AR
  • Taxes Are A Gateway To Increasing Recession… “Welcome To Evasion And Smuggling”, September 12, 2023: Lebanese Forces, Article AR
  • How Will The Deficit Be Filled? September 15, 2023: VDL, TV Interview AR
  • It Is Shameful That Budgets Continue To Be Prepared In This Way, September 16, 2023: Hadath Online, Article AR
  • The Budget Has Been Completed, But How Will It Be Funded? September 26, 2023: Al Jadeed, TV Interview AR          
  • Patrick Mardini To “Huna Talks”: The Central Bank’s Step Not To Fund The State Is Positive, September 26, 2023: Hona Lobnan, TV Interview AR      
  • Budget 2024 Masculinity: The Inequality Between The Razor And The Sanitary Napkin, September 27, 2023: Al Modon, Article AR
  • LIMSLB Exclusive: The Court of Audit Drops The Obligation On The Post For CMA CGM Due To Violations, September 28, 2023: LIMSLB, Article AR