Skip to content Skip to Search
Skip navigation

Lebanon passes 2024 budget but debate rages on taxes and ‘dollarisation’

A man counts Lebanese pound banknotes at an exchange shop in Beirut Reuters/Mohamed Azakir
Fees collected in lira have been increased in line with inflation
  • Criticised for tax burden on poorer citizens
  • Plan to raise VAT to 12% abandoned
  • Last year’s budget only passed a fortnight ago

Lebanon’s caretaker cabinet passed a draft budget for 2024 on Tuesday with a focus on raising tax revenue and a move towards collecting fees and taxes in dollars.

It was the first time since 2002 that a budget was approved within the constitutionally delineated time period of 31 October, which caretaker prime minister Najib Mikati called “a great achievement”.

Last year’s budget, by contrast, was only passed two weeks ago, presenting the possibility of parliament voting on two annual budgets at the same time.

Mikati said that the 2024 budget would be sent to parliament at the end of the week in time for the next autumn session in the second half of October.

Analysts say that the current draft budget could change drastically through parliamentary negotiations.

Although the speed of the budget’s approval has been roundly praised, its content has been criticised for increasing the tax burden on the poor and middle class while failing to implement measures to widen the tax base or make collection more progressive.

The budget has also been called a defacto “dollarisation” of the tax system.

“There is no strategic vision of the role for the state or public administration reform,” said Sibylle Rizkl, policy director at Kulluna Irada, a Lebanese think-tank that advocates policy reform.

“They are going to the easiest way to raise taxes without any strategic vision.”

The draft budget includes an article raising VAT from 11 percent to 12 percent. However, on Monday, caretaker public works minister Ali Hamieh announced that this provision would be abandoned.

While the VAT increase remains in the draft budget for now, opposition to it has made it unclear if the increase will make it into the final version.

The budget may also allow the government to collect more fees and taxes in US dollars. Under previously published plans, customs fees, port and airport fees, bills to power provider Electricité du Liban, residence fees and some fees related to the petroleum sector would all be collected in dollars.

Rizk said that these plans constitute “an attempt to dollarise taxation”. 

However, following the budget’s approval, Mikati appeared to backtrack on these plans and said: “We held a meeting yesterday with the International Monetary Fund, which advised that public revenues remain in Lebanese pounds.”

Other fees collected in lira have been increased in line with inflation, such as legal fees related to registering private companies, which have increased ten-fold in lira terms.

Yet despite forecast increases in tax revenue, the 2024 budget has a deficit of LL42 trillion ($464 million), which is around 13.9 percent of public expenditure and 2.5 percent of GDP. It is unclear how the government will bridge this gap.

“The deficit faces a financing challenge,” said group chief economist and head of research at Bank Audi, Marwan Barakat.

He cited the government’s inability to borrow on international markets before restructuring its current debt and the central bank’s recent refusal to dip into reserves to make up the budget shortfall.

Latest articles

Aramco pipelines

BlackRock-led investors to refinance Aramco Pipelines stake

Investors in Saudi Aramco’s gas pipeline network, led by BlackRock, the world’s largest asset manager, are planning to issue $3 billion in bonds to refinance a loan that backed their purchase of a stake in the network.   The consortium of investors took a $13.4 billion bridge loan in 2021 to acquire a 49 percent stake […]

Over the first half of the year Sanad Group signed deals with international airlines including Asiana Airlines and Deucalion Aviation

Mubadala-backed Sanad Group reports 53% revenue growth

Sanad Group, the Abu Dhabi-based global aerospace engineering and leasing company, has seen revenues increase by more than half over the first six months of the year. Figures released to AGBI show revenue totalling AED2.3 billion ($620 million) was reported in the first half of the year, up from AED1.5 billion over the same period […]

Malaysia’s HSS Engineers Berhad and its emirati consultancy HSS signed the deal top oversee construction with the Baghdad municipality

UAE company in joint venture to build Baghdad metro

A Malaysian engineering company and its UAE affiliate have jointly won a $316 million contract to oversee the construction of the new Baghdad metro. The building of the planned 148-kilometre network and its 64 stations across the Iraqi capital was slated to begin this month and end in 2029. This timeline might be delayed, however, […]