The Finance Ministry's tax office in Beirut. (Credit: M.A./L'Orient-Le Jour)
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BEIRUT — A long-awaited draft of the 2022 budget was published Friday by the Finance Ministry ahead of Monday’s Cabinet session, where its proposals will be discussed.
Here’s what we know:
• The budget reveals that the Finance Ministry is forecasting a deficit of LL10.26 trillion – 20.77 percent of expenditures – excluding a loan of LL5.25 trillion to Electricité du Liban.
• Revenues are estimated at LL39.15 trillion, and expenditures at LL 49.42 trillion, leading to a deficit of LL10.26 trillion.
• Revenues forecasted for 2022 are nearly triple those of 2021, while expenditures increased 2.5 times and the deficit doubled.
• The budget discussed comes on the back of a 60 percent drop in the value of the lira since early 2021, and a more than 90 percent loss from the lira’s original peg of LL1,507.5 to the US dollar.
• General prices as measured by the Central Administration of Statistics have nearly tripled over the same period and increased around seven times since the end of 2019.
• In order to attract foreign capital, depositors who bring foreign money will be exempt from taxes for five years according to the budget proposal, while institutions will be mandated to pay salaries through banks. After the de facto capital controls placed on individual’s deposits, which started in October 2019, most people have stored their dollars at their homes instead of banks to try to avoid risks to their money, while many companies continue to pay their employees in cash US dollars amid a banking crisis in the country.
• The budget draft contains a proposal to increase the insurance on deposits from LL75 million, previously the equivalent of $50,000, to LL600 million, the current equivalent of $26,000, calculated at the most recent Sayrafa rate. For “fresh US dollar funds,” the deposit insurance increases to $50,000.
• The document also contains a proposal to waive custom taxes and VAT on solar energy equipment.
• The exchange rate used for operational expenses is estimated to be between LL15,000 to LL20,000 to the US dollar.
• Read the draft budget in its entirety below: