BEIRUT: Lebanon’s 2015 deficit is projected to reach $5 billion as the economy grows by 2.5 percent, the government was told Thursday during a session to discuss the draft budget, with ministers set to decide next week whether to approve the budget along with a public sector salary scale.
Addressing the Cabinet, Finance Minister Ali Hasan Khalil said that the budget deficit would reach $5 billion, compared to a deficit of $3.94 billion in 2014.
Around 30.6 percent of the draft budget would be allocated to public debt service, 17.2 percent for public sector salaries, 13.2 percent for electricity, 10.2 percent for retirement salaries, 6.3 percent for budget reserves and 8 percent for investment allocations such as infrastructure projects, according to the draft.
Khalil also said the budget would see Lebanon achieve a primary surplus of around $1.3 billion at the end of 2014, compared to a primary deficit reached in 2012 and 2013.
The minister added that there was a significant rise in revenues, attributing it mainly to reforms and improving the collection of taxes, along with an increase in revenues from income tax.
Khalil explained his ministry was exerting efforts to improve revenues through controlling waste in the Real Estate and Customs Department, saying that results would appear in the coming years.
Revenues from income tax have increased by 12 percent with the collection of arrears despite the modest economic growth in 2014, Khalil said.
Next Tuesday, the government will decide on whether to combine the draft budget and the salary scale in one bill in light of the outcome of talks which Khalil will hold with various political groups.
Michel Aoun’s bloc and some other parties oppose integrating the salary scale with the original draft budget. Lebanon has not had an official budget since 2005 due to political standoffs, repeated security incidents and failure to convene Parliament to discuss these bills.
Industry Minister Hussein Hajj Hasan said that the investment allocations were very low, but stressed the finance minister was not to blame for this.
He said that the deficit had become huge, comprising 10.2 percent of the GDP, and could increase.
Hajj Hasan said that public debt would increase from $66.6 billion to $71 billion at the end of the year.
The minister added that taxes and other forms of revenues could not be increased and that the state had exhausted all possible revenues.
Hajj Hasan said the current draft budget figures indicated that the government was neither able to increase revenues nor reduce expenses, adding that economic policies should be adjusted and oil and gas exploration launched as quickly as possible.
Speaking after the session, Khalil said none of the ministers objected to the figures he presented, adding that the government discussed combining the draft budget with the salary scale.
Ministerial sources told The Daily Star it was important that the government approved the budget and refer it to Parliament for endorsement despite all loopholes so that public finance issues are back on the right track.
The Cabinet also tasked Agriculture Minister Akram Chehayeb with following up on the case of around 318 truck drivers who have been stranded with their vehicles in Jordan, Kuwait and Saudi Arabia since earlier this month due to the closure of the Nassib border crossing between Syria and the Hashemite kingdom.
Emerging from the meeting, Chehayeb said that returning the trucks and drivers would cost around $1 million, adding that the government preferred that transit companies worked on getting back their trucks, while Lebanese authorities would exert effort to bring back the drivers.
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