The draft budget for 2021 that the Ministry of Finance submitted to the Council of Ministers shows budget expenditures at LBP19,759bn or $13.1bn and revenues at LBP13,572bn or $9bn, leading to a budget deficit of LBP6,187bn or $4.1bn, which would be equivalent to 31.3% of expenditures. The dollar figures are converted at the official exchange rate of the Lebanese pound against the US dollar, as the ministry prepared the budget based on the official rate of the national currency. The ministry did not provide the macroeconomic indicators and assumptions that it used in the draft budget, such as real GDP growth, the inflation rate, and nominal GDP. 

The breakdown of budgetary spending for 2021, excluding Treasury outlays, shows that current expenditures amount to LBP19,024bn ($12.6bn), equivalent to 96.3% of such spending. Also, capital spending, which includes investing in infrastructure, land expropriation and the purchase of equipment, reaches LBP735bn ($488m), or 3.7% of total outlays in 2021. The compensation of public-sector personnel, which covers salaries, wages and related benefits, as well as retirement, end-of-service indemnities, and transfers to public institutions to cover salaries, amounts to LBP10,444bn, or $6.9bn, and represents 53% of total budget spending in 2021. It is followed by interest payments on debt denominated in Lebanese pounds and on multilateral and bilateral debt at LBP3,106bn, or $2.1bn (15.7% of total budget spending), and Transfers to Electricité du Liban (EdL) at LBP1,500bn, or $1bn (7.6% of total budget spending). 

On the revenues side, the 2021 draft budget forecast tax receipts at LBP10,493bn ($7bn), compared to LBP9,966bn ($6.6bn) in the 2020 budget law. The ministry estimates receipts from the tax on income, profits & capital gains would generate 47% of total tax revenues, followed by revenues from the value-added tax and the excise tax on goods & services (36%), income from property taxes (8.8%), and receipts from custom duties (4.5%), while other taxes would generate the remaining 3.9%. Also, the draft budget projects non-tax revenues at LBP3,080bn ($2bn) relative to LBP3,430bn ($2.3bn) in the 2020 budget. 

The 2021 draft budget includes random tax and non-tax measures that are not part of any medium-term fiscal framework or a plan to address the crises that Lebanon is facing. For instance, it imposes a one-time "solidarity" tax of up to 2% on deposits of $1m or LBP1,500m or higher, citing the "need for revenues". It also imposes a 30% surplus tax on all interest rates that exceed 3% on deposits, Treasury bills, Certificates of Deposits, interbank deposits, and interest income on assets management, among others. Revenues from interest rates on these instruments are already subject to a 10% tax. Further, it exempted "fresh dollar" deposits from the tax on interest rates for three years to encourage the inflows of such deposits, while it suggested that Lebanon extends residency to any foreigner who buys real estate in the district of Beirut for a minimum of $350,000 in "fresh dollars" or in any other district for a minimum of $200,000. In addition, it plans to increase the limit on the deposit guarantees from LBP75m currently to LBP300m on existing deposits in all currencies, and sets at $50,000 the deposit guarantees on "fresh accounts" in US dollars or in any other foreign currency. In addition, it intends to gradually increase electricity tariffs in order to help eliminate the financial losses at Electricité du Liban. Further, it exempts technology startups from paying the income tax for 2021, 2022 and 2023, while it exempts new projects in tourism and industry from paying 75% of the income tax in 2021, 2022 and 2023, provided that at least 80% of the employees in these projects are Lebanese citizens. Also, it provides new industrial and commercial companies a 10-year exemption on paying income tax, provided that they are established in regions that the government intends to develop, that their capital is $5m or more, and that 85% of their workforce consists of Lebanese citizens. Moreover, it exempts the remuneration that employees receive from layoffs or resignations from the tax on wages and salaries and allows companies to consider these remunerations as deductibles from the company's revenues.  

In its assessment of the impact of the COVID-19 pandemic on food-price inflation in the Middle East & North Africa (MENA) region, the World Bank indicated that prices in Lebanon have surged across all food categories between February 14, 2020 and January 20, 2021. It assessed the change in food prices in 19 countries in the MENA region across five main food categories that are carbohydrates, dairy, fruits, meats and vegetables.

The prices of fresh or frozen cattle meat in Lebanon rose by 103.4% between February 14, 2020 and January 20, 2021, constituting the highest increase in the price of this item in the region. In contrast, the price of fresh or frozen cattle meat grew by an average of 10.6% in the region.

Also, the price of bananas in Lebanon surged by 88.6% in the covered period, representing the highest growth rate in the price of this fruit regionally, relative to an average increase of 10.5% among MENA countries. Lebanon, along with Djibouti and Yemen, were the only countries in the region that posted increases of above 20% in the price of bananas.

In parallel, the price of eggs in Lebanon jumped by 86% between February 14, 2020 and January 20, 2021, the highest price increase for this product among MENA countries. Lebanon, Djibouti, Iran, Syria and Yemen were the only countries in the region that posted a rise of more than 20% in the price of eggs. In comparison, the price of eggs increased by an average of 6.7% in the region.

In addition, the prices of rice and tomatoes in Lebanon climbed by 81% and by 80%, respectively, in the covered period, the highest surge in the prices of these food products regionally. Also, the prices of onions and lettuce jumped by 70% and by 64.6%, respectively, the highest price leap in the region for such products. The prices of potatoes in Lebanon grew by 64.3% in the covered period, the highest rise among MENA countries relative to an average increase of 4.4% in the region. Also, the prices of fresh or frozen chicken surged by 61% in the covered period, the second highest increase, after Djibouti, among MENA countries and compared to an average growth of 16.6% regionally. Lebanon, along with Djibouti and Saudi Arabia, were the only countries in the region that posted increases of above 20% in the price of fresh or frozen chicken.

Further, the prices of apples and oranges in Lebanon soared by 50% and 53.7%, respectively, between February 14, 2020 and January 20, 2021, the most significant price increases for such fruits among MENA countries. Lebanon, along with Morocco and Yemen, were the only countries in the region that posted increases of above 20% in the price of oranges. Also, the price of processed liquid milk in Lebanon grew by 52%, the second highest price rise regionally, after Djibouti. Further, the price of cheese surged by 16.4%, the fifth highest price increase regionally for this category; while the price of bread in Lebanon expanded by 8% in the covered period, representing the ninth highest increase in bread prices among MENA countries.

Figures released by Banque du Liban (BdL) show that revenues generated by tourism activity in Lebanon, defined by BdL as "Travel Services", totaled $1.3bn in the first half of 2020, constituting a decrease of 67.8% from $4.2bn in the same period of 2019. Tourism receipts in the first half of 2020 reached their lowest semi-annual level since BdL started publishing detailed figures about the balance of payments in 2002. Tourism receipts in Lebanon averaged $3.2bn during the first half of each year between 2002 and 2020. BdL's figures are the only official data on receipts from tourism activity in Lebanon and on tourism spending abroad by Lebanese citizens. 

Tourism receipts reached $1.1bn and $286m in the first and second quarters of 2020, respectively, constituting declines of 42.5% and 87.7%, respectively, from the same quarters of the previous year. The figures of the first quarter of 2020 constitute their seventh lowest quarterly level on record, while the second quarter results represent their lowest quarterly outcome on record. 

In parallel, tourism spending abroad by Lebanese citizens amounted to $1.1bn in the first half of 2020, constituting a drop of 60.6% from $2.9bn in the first half of 2019. Outbound tourism expenditures in the first half of 2020 posted their lowest semi-annual level on record. They totaled $978.8m and $145m in the first and second quarters of 2020, respectively, representing decreases of 25.4% and 90.6%, respectively, from the same quarters of the previous year. The figures of the first quarter of 2020 are their lowest since the first quarter of 2013, while the results of the second quarter reached their lowest on record. Tourism spending abroad by Lebanese citizens averaged $2.1bn during the first half of each year between 2002 and 2020.

As such, net revenues generated by tourism activity in Lebanon totaled $216.4m in the first half of 2020, constituting a decrease of 83.4% from $1.3bn in the same period of 2019, and registering their lowest semi-annual level on record. They reached $75.6m and $140.8m in the first and second quarters of 2020, respectively, showing declines of 85.5% and 82% from the same periods of 2019. Net tourism revenues averaged $1.1bn during the first half of each year between 2002 and 2020.