Lebanon 2013 draft budget sees deficit narrowing

Lebanon’s 2013 budget deficit will narrow to $3.11 billion from a projected $3.69 billion this year, helped by revenues from planned new taxes, according to a draft budget submitted to cabinet by the Finance Ministry.

The draft budget puts expenditure at $15.26 billion, up from $14.16 billion this year, but foresees a bigger rise in revenues to $12.15 billion from $10.47 billion, the ministry said in a statement on Monday.

The ministry statement did not give a figure for the percentage of deficit as a proportion of GDP, and did not give a projection for GDP next year.

It forecast $2.43 billion in revenues from new taxes. The ministry gave no details but Finance Minister Mohammad Safadi’s proposals have included an increase in VAT to 12 percent from 10 percent and new taxes on profit from real estate sales.

Lebanon’s deep political divide has repeatedly held up agreement on state budgets, forcing governments to spend on an ad hoc basis in the absence of parliamentary approval. This year’s budget only passed through cabinet in July and is still being discussed in parliament.

Saddled with high levels of debt from its post-civil war reconstruction projects, Lebanon has seen that debt fall as a proportion of GDP to 134.8 percent last year from 167.7 percent in 2007, helped by rapid economic growth.

But growth has slowed in Lebanon, partially due to the conflict in neighboring Syria, which could make it harder to push down debt in the coming year.