Lebanon’s 2024 Budget: LIMS Warns of Illusory Deficit Elimination and Looming Dilemmas


The Lebanese parliament approved the 2024 budget in January 2024, reflecting a newfound commitment to constitutional deadlines. This timely approval of the budget is surprising in a nation often entangled in political deadlocks. The modified 2024 budget outshines the government’s initial draft by aiming to eliminate the fiscal deficit, curb government borrowing, and prevent tax hikes. While LIMS expect that these objectives will not be met given the exaggerations in the budget, decision-makers’ recognition of these imperatives is worth noting.

The shift in monetary policy appears to be a key driver. The recently appointed acting governor of the Banque du Liban (BDL) curtailed money creation and terminated state financing which yielded positive outcomes in terms of both monetary and fiscal adjustments. Lebanese policymakers started to address concerns of excessive deficit, borrowing, and taxes only when they sensed that central bank’s funding dried out.

Furthermore, LIMS issues a cautionary note regarding the ostensibly eliminated fiscal deficit that rests on inflated revenue projections rather than prudent expenditure reduction. Notably, the forecasted surge in revenues, surpassing Lebanon’s anticipated 1.7% economic growth for 2024 by a factor of 12, implies a calculated exaggeration aimed at obscuring the genuine fiscal shortfall.
A critical, unaddressed concern lies in the proposed 50% surge in government spending compared to 2023. This substantial increment, largely allocated to public sector employee salaries, clashes with the nation’s constrained economic growth prospects. LIMS advocates for a more sustainable strategy, advocating a capped expenditure increase of 25%, aligning with economic realities rather than relying on inflated revenue projections.

Consequently, LIMS anticipates a significant deficit in 2024, coupled with an opaque funding scenario. Given Lebanon’s sovereign default, the nation confronts a dilemma: an inability to meet salary obligations or resorting to the central bank’s funding. Should the latter transpire in USD, it risks depleting foreign exchange reserves, exacerbating the banking crisis, and eroding remaining deposits. Opting for Lebanese pound financing from the central bank, on the other hand, resurrects the specter of hyperinflation and currency devaluation. Lebanon, it seems, stands at a precarious crossroads in the coming year.

  • Significant Losses Incurred by the State Due to “Closed Administrations”, January 4, 2024: SBI, Article AR
  • “Moodys” Rating… Lebanon Stable At The Bottom, January 10, 2024: Lebanese Forces, Article AR
  • Conditions For The Lebanese Pound Stability And Filling the General Budget Deficit, January 17, 2024: Lebanese Forces, Article AR
  • Budget 2024: The Dream Of Zeroing The Deficit Collides With The Approach Of Random Expenditure Increase, January 24, 2024: Al Joumhouria, Article AR
  • We Aspired To What Is Better, January 29, 2024: Lebanon Debate, Article AR
  • Budget “Satisfaction” IMF: Any Fate For The Public Sector And The Dollar Exchange Rate? January 30, 2024: Almodon, Article AR
  • Taxes and Reforms in the 2024 Budget, January 30, 2024: VDL, TV Interview AR