In late September, amid escalating conflict, Lebanon’s caretaker government approved the draft budget for 2025. LIMS expressed serious concerns about the accuracy of the budget’s figures, citing the absence of audited accounts and a lack of precise data on past revenues and tax collections. The draft budget projects a deficit of 17 trillion LBP, even though the government achieved a balanced the budget the previous year. LIMS questioned the feasibility of financing this deficit, especially in light of Lebanon’s ongoing defaults and its restricted access to international financial markets. LIMS will oppose any government attempt to finance the deficit through the Central Bank, as this risks reverting to past policies that contributed to Lebanon’s economic collapse during CBSP era.

A notable portion of the proposed budget is earmarked for salaries, wages, and social benefits for the public sector. This heavy allocation highlights the cost of Lebanon’s oversized public workforce, a legacy of political clientelism and the misuse of state resources. While Lebanon’s private sector has downsized significantly during the crisis, the government has instead adjusted revenues to sustain its largely non-productive departments, underscoring systemic inefficiency.

LIMS further pointed out the limited contribution from non-tax revenues, despite government ownership of valuable assets in sectors such as electricity, telecommunications, gaming, and aviation. This low yield reflects mismanagement of state assets, and requires opening these sectors to competition. Enhanced competition would increase tax revenues and attract investment by improving service quality and lowering costs for consumers. Actually, the 2025 budget lacks a coherent reform strategy to support economic recovery. A shift from tax hikes to tax reductions would stimulate business growth, positioning the private sector as the primary driver of economic revival. Lowering taxes and customs duties would also curb tax evasion, strengthen revenue collection, and enhance the state’s fiscal position without stifling economic activity

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• Treasury Advances Are Burning Public Funds: Will They Be Repaid From The Ministers’ Pockets? September 18, 2024: Al Modon, Article AR
• Lebanon Is Stuck Between An ‘Empty Budget’ And Financial Uncertainty, September 12, 2024: This Is Lebanon, Video Interview AR
• The Budget That ‘Kicks’ The Economy To The ‘Edge Of The Road’ Keeps It Profitable Amid Heavy Expenses, September 11, 2024: Al Safa News, Article AR
• More Taxes In The 2025 Budget Proposal, September 10, 2024: VDL, Audio Interview AR
• Lebanon’s 2025 Budget: The Return Of Deficits And Economic Reform Challenges, September 9, 2024: Sputnik, Video Interview AR