The Lebanese finance ministry submitted the 2001 draft budget to the council of ministers after modifying the original budget submitted by the previous Cabinet. The budget forecast expenditures at $6.61 billion and revenues at $3.25 billion, leading to a projected fiscal deficit of 50.87 percent of spending for 2001.
The finance ministry attributed the expected deficit to the accounting for the first time of all off-budgetary expenses inside the budget, while only assured revenues have been included.
The ministry also said it was moving away from the austerity policies of the previous Cabinet and focusing on a pro-growth fiscal policy, increasing public investments by 13 percent and activating $1.26 billion in soft loans already extended by foreign governments and multilateral organizations.
Debt servicing was estimated at $2.85 billion, accounting for 43.11 percent of total spending, while defense ministry spending reached $906.3 million, constituting the largest single expenditure item after debt servicing.
The budget also incorporated $442 million in off-budgetary expenditures allocated to the Council for Reconstruction and Development and the Fund for the Displaced.
The budget proposal presented realistic revenue estimates, as it conservatively projected customs revenues at $637 million due to the recent cut in tariffs and excluded $465 million in hypothetical revenues from value-added tax since VAT will not be implemented this year. It estimated total tax receipts at $2.28 billion, or 70 percent of aggregate revenues, and incorporated $133 million in foreign grants on the revenue side.
Further, the ministry did not include any potential receipts from privatization as it declined to estimate revenues from the sale of state assets. The draft budget also called for the issuance of two billion dollars in Eurobonds and one billion dollars in Treasury bills this year.
The Lebanese government expenditures reached $6.91 billion and revenues totaled $3.02 billion in 2000, resulting in a cumulative budget deficit of 56.33 percent of expenditures compared to 42.41 percent in 1999 and a target deficit of 37.3 percent for 2000.Expenditures increased by 23.32 percent while revenues dropped 6.5 percent from the previous year.
Overall revenues from direct taxes fell by 12.12 percent to $1.936 billion. The deficit was 79.98 percent in December compared to 62.88 percent in November and 33.14 percent in December 1999. Debt servicing accounted for 40.27 percent of expenditures and constituted 92.21 percent of overall revenues and 102.59 percent of budgetary receipts.
Excluding debt servicing, the primary surplus reached 1.28 percent of budgetary expenditures and decreased 88.9 percent to $65.55 million year-on-year. Debt servicing, salaries of public employees, funds allocated to municipalities and subsidies to the money-losing Electricity du Liban continue to constitute a major burden on the budget and Treasury. — (Lebanon Invest )
© 2001 Mena Report (www.menareport.com )