Lebanon’s Ministry of Finance has proposed a draft budget of $6.87 billion for 2027, marking a 14.2 percent increase from the previous year and relying heavily on taxation for 85.9 percent of its projected revenue. This move comes amid an ongoing economic contraction, with the World Bank forecasting a 6.4 percent shrinkage in 2026 following modest growth in 2025.
Achieving the revenue goals set out in the budget would require the government to collect more than double the $3.41 billion in taxes recorded in 2024, a target some economists consider unattainable. Jassem Ajaka, an economist, described the proposed revenue increase as “highly unrealistic” given the faltering economy and diminishing consumer purchasing power. The budget depends largely on higher nominal fees and import prices rather than genuine economic growth, with enforcement measures targeting only existing taxpayers without addressing the broader informal sector.
Capital expenditure is slated at $745 million, just 10.8 percent of total spending, while over half of the budget—53.5 percent—is earmarked for wages, salaries, and social benefits. The draft has been under Cabinet review since early September but has yet to reach parliament for approval.
The International Monetary Fund (IMF) has underscored the urgency of adopting key reforms, including a financial gap law that would clarify how losses from Lebanon’s banking crisis are allocated. The IMF’s recent appeal reinforces pressure on the government to meet fiscal targets and secure financial support.
Regarding revenue collection, the budget incorporates new enforcement strategies such as cross-checking payroll and social security data and requiring foreign digital service providers to appoint local tax representatives. It also proposes an invoice-based lottery to incentivize formal receipt issuance. However, income tax from salaried wages is expected to grow far more rapidly than tax from business profits, indicating a disproportionate impact on wage earners.
Certain fees are set to increase dramatically. For instance, the fee for national ID cards is projected to soar from approximately 56 cents to nearly $11, while levies on inflammable materials, including fuel, are expected to rise by more than 870 percent to $363.5 million. Experts note these hikes largely compensate for currency depreciation rather than represent real revenue gains.
The allocation of banking sector losses remains unresolved. Since Lebanon’s 2019 financial collapse, depositors have been locked out of their funds, and no official mechanism currently determines how losses are shared among the central bank, commercial banks, or the state. Mohamad Farida, economic adviser to the Depositors' Union, emphasized that mere revenue collection without corresponding expenditure is ineffective, particularly in addressing depositor losses.
Attorney Jihad Chidiac identified the primary obstacle to approving the financial gap law as the dispute over which parties should bear the financial burden. He noted that the law must be aligned with bank restructuring efforts because depositors’ recoveries depend on the solvency of financial institutions. In the absence of legislation, public-sector deposits at the central bank remain ordinary claims without clear ranking among liabilities.
Experts agree that closing Lebanon’s fiscal and banking gaps requires comprehensive reforms. These include adopting the banking resolution and financial gap laws, auditing the central bank and commercial bank balance sheets, initiating formal discussions with Eurobond creditors, advancing toward a funded IMF program, and publishing audited financial statements. However, skepticism persists over the political will to enact these measures without more decisive intervention. An IMF spokesperson reiterated that Lebanon’s fiscal framework must be consistent with debt sustainability, signaling that meaningful reform remains a prerequisite for international support.