No public budget was approved for 2006 and Law no. 717 dated February 3, 2006 was issued authorizing the government to collect revenues as previously and spend according to the one-twelfth rule starting February 1, 2006 until a new budget had been passed. However, what started off as an alternative for a few months dragged on for years because of Parliament’s recurrent failure to approve a public budget between 2006 and 2015, thus resulting, inevitably, in a major gap in public finances. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

The 2005 budget, numbered 715, was approved on February 3, 2006. In it public expenditure was estimated at LBP 10,000 billion and public revenue at LBP 6,917 billion, i.e. a deficit of LBP 3,083 billion or 30.8%. No final account statements were issued to illustrate the actual expenditures and the revenues, but figures showed that the government spent LBP 10,203 billion and collected LBP 7,405 billion, thus running an actual deficit of LBP 2,798 billion or 27.4%. Spending was distributed as illustrated in Table 1. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

It was clearly inappropriate to apply those expenditure figures adopted in the 2005 budget as a basis for spending in 2006 and the years to follow. Worse still, the successive governments did nothing to legalize the extra-budgetary spending that occurred, which led to talks about wasted amounts worth USD 11 billion in the years following 2005.
Extra-budgetary spending under Mikati and Salam
Luckily, the governments under Najib Mikati and Tamam Salam did not commit the same spending offence and approved two laws to cover the extra-budgetary spending occurring under their term in the absence of an approved budget. These laws are:

Law no. 238 dated October 22, 2012 which approved extra credits worth LBP 9,248 billion (LBP 8,315 billion for the public budget and LBP 933 billion for annex budgets) to be added to the digits of the 2005 public budget, i.e. an increase of 83.2%, to account for the public spending in 2012. Since no tax increases were imposed and against the decline in businesses, these extra credits were not to be covered by means of regular revenues but by allowing the government to issue short or long term treasury bonds in either local or foreign currencies to cover the deficit, which meant an increase in the public debt. 

“From LBP 58,050 billion in late 2005, the public debt soared to LBP 105,000 billion by the end of 2014, i. e up by LBP 46,950 billion“

Law no. 15 dated November 11, 2014 which approved extra credits worth LBP 340 billion dedicated to meet the needs of ministries in 2014. This amount was to be added to the digits of the 2005 public budget and to the extra credits approved by virtue of Law no. 238. As before, these credits are to be covered by further borrowing. 

Public debt increase 
The budget deficit resulting from a growth in expenditures paralleled with no increases in revenue has led to an enormous increase in Lebanon’s public debt over the past ten years. From LBP 58,050 billion in late 2005, the public debt soared to LBP 105,000 billion by the end of 2014, i. e up by LBP 46,950 billion (USD 31.3 billion) as illustrated in Table 2. The public debt, which saw a significant increase in 2008 and 2009, recorded a decline in 2010 and 2011 only to rise again in 2013 and 2014 when it exceeded LBP USD 5.8 billion and USD 6 billion respectively. This enormous increase in the size of public debt is likely to reach alarming levels and exceed USD 100 billion in 2018.