BEIRUT: Lebanon’s budget deficit for 2010 slipped slightly by LL57 billion ($38 million) to reach 25.78 percent of spending, or LL4.405 trillion, compared to 25.99 percent, or LL4.462 trillion, in 2009, the Finance Ministry said Thursday.

The primary surplus, excluding the cost of debt servicing, rose by LL188 billion to LL1.813 trillion.

But analysts say that the deficit could have been much bigger last year had the Finance Ministry allocated billions of dollars to the Energy and Water Ministry and other ministries to carry out vital projects.

The Finance Ministry has been allocating most of the budget to cover the cost of debt servicing and the salaries of government employees.

Caretaker Finance Minister Raya Haffar Hassan has repeatedly said that March 8 ministers and deputies have blocked the endorsement of the 2010 and 2011 budgets under different pretenses  thereby delaying the allocation of funds to other ministries.

Reducing the public debt still remains the biggest challenge to the government despite the decline of the debt-to-GDP ratio from 185 percent five years ago to 134 percent.

Still, Lebanon’s public debt is one of the largest debt-to-GDP ratios in the world and this has prompted rating agencies to warn about the high public debt exposures to the Lebanese banks, which hold most of the government’s treasury bills and Eurobonds.

Total government expenditures in 2010 reached LL17.89 trillion compared to LL17.167 trillion in 2009.

Total spending, excluding the cost of debt servicing, reached LL10.871 trillion compared to LL11.080 trillion in 2009. Total cost of debt servicing in 2010 stood at LL6.218 trillion compared to LL6.087 trillion in 2009.

Total government revenues in 2010 fell to LL12.684 trillion compared to LL12.705 trillion in 2009.

Customs revenues in 2010 stood at LL2.801 trillion compared to LL2.663 trillion in 2009, an increase of LL137.889 billion.

Value Added Tax proceeds reached LL3.193 trillion compared to LL2.888 trillion in 2009, an increase of LL304.435 billion.

Non-tax revenues, such as revenues from the telecom sector, fell to LL2.042 trillion in 2010 compared to LL3.069 trillion in 2009.

The Finance Ministry said that allocations to Electricite du Liban fell to LL9.011 trillion in 2010 compared to LL9.200 trillion in 2009, a drop of LL188.603 trillion.

Hassan and other ministers say that EDL is depleting the resources of the Cabinet and for this reason they have called on the government to find a radical solution to this sector. Most of the allocations to EDL are channeled to cover the cost of fuel oil to operate most of the country’s aging power plants.

A senior Merril Lynch executive told The Daily Star earlier that it would be very difficult for Lebanon to reduce the budget deficit unless a unity government is formed soon to take proper measures to fix the fiscal imbalance.

He added that the public debt is an enduring problem in Lebanon and this could have a negative impact on the country’s foreign currency reserves.