A Look at the Numbers

In an animated 5-day parliamentary session marked with the customary squabbling, the Lebanese government concluded its 2002 budget assessment in February. The ratified budget totaled LL 9,375 billion, a decrease of LL 525 billion from the previous year. Estimated revenues for 2002 are LL 5,500 billion, resulting in a 41% deficit of LL 3,875 billion. Noting the government’s historic inability to maintain its estimated deficit percentages, this year’s figures will constitute a similarly tough challenge. Table 3 shows the government’s estimated and realized figures over the last eight years.

The government’s poor record is reflected by:
• An increase in actual expenses over estimated ones (at a rate of 133% in 1997, for example)
• A decrease in actual revenues against estimated ones (at a rate of 25% in 1996, for example)

Further, real total government debt is not represented in the budget. According to Table 3, the accumulated budget deficit since 1994 has amounted to LL31,204 billion. This figure, added to the accumulated debt before 1994 (LL 4,293 billion) sums up to approximately LL 35,000 billion.

However, total actual debt is LL 41 billion, confirming that the budget is not all-inclusive. The difference in the figures represents unrevealed extra-budgetary expenditures, constituting a violation of a primary principle - the inclusivity principle - representing all annual government revenues and expenses of the general budgbet.

The establishment of extra-budgetary loans and the expenditure of related revenues through councils and funds do not appear in the budget, unless related to loan or interest payment. The same applies to the issuance of treasury bills from the Ministry of Finance to the Central Bank, in which the money is deposited into the treasury at the Central Bank.

Actual Vs Estimated Revenues

Distribution of the Budget

Budget appropriations cover three main areas:
• Debt servicing estimated at LL 4,500 billion, equivalent to 48% of the budget.
• Allowances and salaries estimated at LL 2,377 billion, equivalent to 25.4% of the budget.
• Retirement salaries and end-of duty indemnities estimated at LL 900 billion, equivalent to 9.6% of the budget.
The remaining 17% covers consumer and developmental expenses, maintenance, advertising, seminars, reconciliation and judiciary sentences.

Revenues and Expenditures

Budget revenues are estimated at LL 5,500 billion, distributed as shown in Table 4.
Main expenditures are listed in Table 5.

Revenue Distribution

Main Expenditures

Schedule of Fees

Over the years, the government has circulated Table #9 as an attachment to the annual budget. This schedule of fees usually carries additional fees, and this year’s table contains a number of hefty ones, as shown in Table 6 below.
 

Schedule of Fees

Program Laws

Since 1993, consecutive governments have included program laws as part of the budget. These laws specify appropriations to be divided over a number of years.

However, their legality has been disputed as they are inconsistent with the budget’s Annuity Principle. In other words, an amount is specified for payment over a period of several years but not addressed on an annual basis.

This year, the budget carried amendments to 14 previously established program laws regarding the decrease in estimated appropriations for 2002. The appropriations were set at LL 446.7 billion but decreased to LL 161 billion (a decrease equivalent to 3% of the overall estimated expenses in the 2002 budget).

As for the new program laws included in the budget, they are as follows:
• Program Law for the Investment Development Authority of Lebanon (IDAL), at a rate of LL 50 billion, of which LL 10 billion are allocated for 2002.
• Program law for a port of fishing and promenade facilities at a rate of LL 120 billion (LL 1.5 billion for 2002)
• Program law for the Metn Highway at a rate of LL 40 billion (25 billion for 2002)

As assessed, the 2002 budget does not adequately address the deepening economic crisis, and carries nothing new in terms of solutions. What Lebanon really needs is a budget based on a well designed plan addressing long-term solutions to the chronic deficit issue.