BEIRUT: Lebanon’s budget deficit in the first four months of this year rose by LL1.081 trillion (little more than $666 million) as tax revenues continued to plunge, adding more strains on the public finances, the Finance Ministry said Friday.
The ministry added that the primary surplus, excluding the cost of debt servicing, fell by LL994 billion.
According to the Finance Ministry’s statement, the budget deficit up to May reached LL2.108 trillion, registering a deficit of 35.51 percent of spending compared to a deficit of 19.45 percent in the same period of last year.
The budget deficit has been climbing steadily over the past few months amid growing concern that the Finance Ministry may not be able to check the surge of the deficit if Prime Minister-designate Najib Mikati fails to form a Cabinet before the end of this year.
The public debt, which now stands at more than $52 billion, could rise by $1.5 billion a year if badly needed reforms are not implemented soon.
Caretaker Finance Minister Raya al-Hasan blamed the rise in the deficit on the refusal of caretaker Telecom Minister Cahrbel Nahhas to transfer the telecom revenues to the treasury.
She believes that over $1.8 billion from the telecom revenues are sitting in the coffers of the Central Bank.
Hasan has repeatedly called on Nahhas to send part of these revenues to cut the deficit and pay the state’s dues.
But Nahhas stressed that the Constitution allows him to transfer part of the telecom proceeds to the Finance Ministry at the end of the year while the remaining revenues should go to the municipalities.
Economists and businessmen have warned that the sharp political rift and inability to form a Cabinet are taking their toll on the economy in general.
“If the economy suffers then the government will not be able to collect more taxes. It is simple equation: Bad economy equals high budget deficit,” one banker said.
Francois Bassil, the chairman of Byblos Bank, told The Daily Star earlier that banks are ready to swap maturing Eurobonds and treasury bills but they have no intention to finance new debts as this may increase the public debt and prompt rating agencies to downgrade Lebanon further.
Economists say that tax revenues on gasoline will fall by 50 percent after the Finance Ministry cut taxes by LL5,000 for 20 liters.
Total government revenues up to April 2011 reached LL3.829 trillion, a drop of LL424 billion or 9.98 percent decrease compared to the same period of last year.
Customs revenues in the first four months fell by 20.42 percent to reach LL707.131 billion while proceeds from the value added tax decreased by only 0.89 percent to reach LL1.151 trillion.
Government expenditures up to April fell by 12.44 percent to reach LL5.938 trillion.
The Finance Ministry attributed the drop to the rise in settlement of interest on debts by LL45 billion.
Allocations to Electricite du Liban rose by LL102 billion.
The caretaker government, according to the law, is not authorized to spend above the last budget which was endorsed by both the Cabinet and the Parliament.