Revenues up: what margins for the state?

Lebanese government revenues increased sharply in 2025. They rose from approximately $3.9 billion in 2024 to nearly $6 billion, or even $6.2 billion, depending on the accounting entity selected, or a nearly 60 per cent jump. Customs revenues have also increased. At first glance, the state seems to have regained a financial capacity that it had lost with the crisis that began in 2019. But the 2025 peak must be decomposed: it does not only result from better collection or recovery of activity. The increase in taxes, the upgrading of duties and tax bases also increased the amounts actually levied on households and businesses. In 2026, tax deferrals and, above all, new wage expenditures already reduced the resulting margins.

So the question is no longer whether the government is paying more. The figures clearly answer in the affirmative. It is necessary to determine what proportion of these additional revenues corresponds to a lasting improvement in the tax economy and administration, what share comes from a higher tax burden and how much will remain when the state starts normalizing its spending.

3.9 to over $6 billion

The scale change is spectacular. According to figures reported on 12 August, revenues and other receipts from the State increased from about £349,000 billion in 2024, or $3.9 billion, to about $554 trillion in 2025. Converted at the reference exchange rate used in the accounts, the latter amount represents approximately $6.2 billion.

The increase is therefore approaching 59% in one year. It is far superior to real economic activity. This is the only difference that prohibits the interpretation of revenue growth as a mere reflection of an economy that would have produced much more taxable wealth.

Expenditure also increased, but less rapidly. They reached about $4.7 billion in 2025. The result is a budgetary surplus of $1.4 billion to $1.5 billion and an even higher primary surplus.

The first quarter of 2026 continued this trend. Revenues approached $1.6 billion, while expenditures were about $1.1 billion. Public finances therefore remain surplus at this stage before full account is taken of debt obligations.

These figures establish a real fiscal recovery. However, they do not yet say where the extra money comes from.

The revenue peak also comes from higher taxes

This is the essential point to interpret 2025. The state does not collect nearly 60% of additional revenue solely because taxpayers report their income better or because customs control imports more. A significant part of the jump comes from the increase in the amount of the levies themselves.

Since the collapse of the pound, Lebanon has had to gradually rebuild its tax system. During the early years of the crisis, many taxes, taxes, duties and administrative charges remained based on amounts or book references that became derisory after devaluation.

The State therefore received revenue whose real value had collapsed. The budgets adopted since then have gradually corrected this anomaly. Duties have been multiplied, tax values revised and several levies realigned on an exchange rate much closer to reality.

In some cases, the legal rate of tax has not necessarily changed. But its basis of calculation or the amount actually paid has increased sharply. For both the taxpayer and the Treasury, the result is concrete: more money is transferred to the state.

The 2024 budget had already marked an important step in this catching-up. The 2025 one extended the movement. The revenue surge observed that year therefore had a strong tax effect that added to the collection effect and to the evolution of activity.

This distinction is fundamental. If revenues increase by 59 per cent because the economy generates 59 per cent additional taxable income, the state has a much richer tax base without necessarily taking more from each transaction. If they progress because the levies are increasing, the situation is different: the Treasury is getting richer, but part of this improvement corresponds to an additional drain on the private sector.

Increasingly focused on consumption

The composition of revenues reinforces this reserve. The Lebanese system remains heavily dependent on indirect taxes, including VAT, customs duties and other consumption and import levies.

Available estimates show that the share of indirect taxes in tax revenues increased further between 2024 and 2025. It represented about three quarters of tax revenues in 2024 and approached four fifths in 2025. VAT alone is central to this scheme.

This model has a budgetary advantage: taxes on consumption and imports are relatively easy to collect in an economy where a large part of the business is not directly taxed. Goods pass through identified entry points and VAT is collected at several stages of the economic chain.

But this structure also has a cost. Indirect taxes affect consumption regardless of the level of wealth of households. Their relative weight is therefore generally greater for households which spend most of their income on current expenditure.

Part of the 2025 revenue increase is thus directly borne by consumers. This allows the state to replenish its resources, but does not mean that households or businesses themselves have more wealth.

The paradox is clear: the state can quickly improve its accounts while purchasing power remains under pressure.

Four engines behind revenue growth

The strength of the recovery must therefore be measured by dividing the 2025 peak into four effects.

The first is the tax rate and revalorisation effect. Taxes, duties, tariffs and reference values were raised or realigned after several years of monetary erosion. This effect accounts for a significant part of the nominal increase in receipts.

The second is the plate effect. When reported imports, consumption, transactions or revenues increase, the state collects more even without changing the tax rate.

The third is the recovery effect. A more efficient tax or customs administration can recover a larger share of the theoretically due amounts. The reduction of certain underreportings or leaks then generates additional revenue without new taxes.

The fourth is the economic recovery effect. Real growth in activity naturally broadens the taxable base.

These four phenomena must not be confused. For the state, they all generate more revenue. For the economy, they don’t tell the same story.

A revenue from real growth can be renewed without necessarily increasing the levy on each taxpayer. A recipe from a better fight against escape also improves the situation by charging what should have already been. A revenue generated by a tax increase increases the tax burden.

Therefore, the figure of 59% should be interpreted with caution. It correctly measures the progress of receipts. It does not measure the growth of the economy or the growth of available wealth.

Customs illustrate this ambiguity

One of the most visible examples of the recovery is the increase in customs revenues. By 2024 they had accounted for about $548 million. Their collection rate increased sharply in 2025.

In the first four months of 2025, they had already reached about $457 million. The difference with the previous year could not be explained solely by the physical increase in imports.

Several factors combined. The valuation of goods has been closer to monetary reality, duties have been revised and collection procedures strengthened. Better monitoring of imports has also helped to recover some of the revenues previously lost.

This improvement represents a real margin for the Treasury. A dollar that escapes customs and is now cashed increases resources without requiring the creation of a new tax.

But customs revenues are also linked to the level of imports. However, an important economy can generate high tariffs while maintaining a large trade deficit.

The increase in customs can therefore signal simultaneously better public administration and the persistence of an economic model highly dependent on foreign products.

In the first quarter of 2026, customs revenues continued to grow, but at a slower pace. This deceleration is important: it shows why it would be risky to mechanically extend the 2025 peak in future budget projections.

Additional revenue is not an additional growth

The distinction may seem technical, but it determines the answer to the central question: has the state really found margins?

For the treasury, yes. Six billion dollars of revenue allows more spending than $3.9 billion. This improvement also reduces the risk of using monetary mechanisms to finance current expenditure.

For the economy as a whole, the answer is more nuanced. Part of that extra $2 billion just changed your pocket. It was previously owned by households or businesses and transferred to the State through higher taxes and duties.

This transfer can be economically justified if the State uses revenue to provide better services, restore infrastructure or invest. It becomes more problematic when levies increase without proportional improvement in public services.

It is therefore the use of the new revenues that will make it possible to judge the quality of the recovery.

Wages already absorb part of the new margins

The first major pressure comes from the public sector. After several years of collapse of the purchasing power of civil servants, military personnel and retirees, the state must gradually revalue remuneration.

Parliament therefore approved an additional appropriation of £56,500 billion in 2026. At the current exchange rate, this envelope represents approximately $630 million and is required to fund six additional salary allowances.

The amount is considerable. It corresponds to about 10 per cent of the annual public revenues observed in 2025.

The measures do not stop at this envelope. Other allowances and benefits were decided or discussed for civil servants and retirees. According to available estimates, the annualized cost of the whole can approach $800 million.

This expenditure responds to an undeniable social reality. Public wages have lost most of their value with the monetary crisis and their correction remains partial.

But from a budgetary point of view, the problem is that of permanence. One-time improvement in recovery can produce a surplus one year. An increase in remuneration creates an obligation that must be funded annually.

The State must therefore avoid using an exceptional revenue to finance a permanent expenditure. It is precisely this risk that explains the caution displayed in the wage discussions.

The paradox of new taxes in 2026

The best evidence that margins remain narrow is in the measures envisaged to finance salary adjustments.

Despite the surplus of 2025, the government sought new resources. An additional gas tax was introduced. An increase in VAT from 11% to 12% was also proposed.

This increase in VAT does not explain the peak revenue of 2025: it belongs to the 2026 debate and requires its own legislative path. The chronological distinction is important.

But its existence raises a simple question. If the state has really regained a comfortable financial margin thanks to the surge in revenues, why should the levies be raised again to finance wages?

The answer is that the government does not consider the current surplus to be fully available. He is looking for a sustainable recipe to cover an expenditure that has to be repeated.

This caution can protect the budgetary balance. It can also produce a difficult circle for households: the state increases public wages and then takes more from consumption to finance this increase.

A gas tax affects transport and distribution costs. An increase in VAT directly affects a wide range of goods and services. Part of the wage gain can therefore be absorbed by increasing the cost of living.

Tax deferrals blur the figures of 2026

To increase expenditure adds a problem of timing of revenue. Several tax deadlines were postponed or extended in 2026, in a context of economic and security disruption.

These deferrals do not mean that the State waives tax. They’re delaying his receipt.

The distinction is important for the Treasury. A tax claim may exist legally without the money already available to pay wages, suppliers or investments.

The postponements reported in August therefore call for caution when extrapolating revenues from the first months of 2026. Some receipts can simply be moved to the following months.

But the risk increases if the difficulties of companies lead to further delays or defaults. In this case, a deferred recipe may become a more difficult recipe to recover.

The tax calendar thus collides directly with that of expenditure. Wages must be paid monthly, while some revenue may arrive later than expected.

A surplus obtained with a State that still spends little

The second major limitation of the adjustment is less visible in the accounts. The Lebanese State continues to operate with a level of public spending that is extremely limited to its needs.

Infrastructure has accumulated several years of underinvestment. Water systems, roads, public buildings and many administrative facilities require significant expenditure.

Public services also operate with limited resources. Actual earnings remain much lower than pre-crisis earnings despite successive allocations. Many administrations have lost staff or operate under degraded conditions.

A budgetary surplus obtained under these conditions should be interpreted with caution. It can mean that the State collects enough. But it can also mean that it still does not finance all the services that a normally functioning State should provide.

A road that is not maintained reduces the expense today. It potentially increases the bill tomorrow. The same applies to a water system, a public school or an administrative building.

Part of the current surplus can therefore be considered as a reflection of deferred spending rather than as a fully available margin.

Debt remains the great absence of surpluses

Public debt is an even greater limitation. Lebanon failed on its Eurobonds in March 2020 and the restructuring of this debt is still not complete.

This means that part of the financial obligations normally incurred by the budget remain suspended.

The primary balance is particularly revealing. It measures the difference between revenue and expenditure before paying interest on the debt. A primary surplus of $1.76 billion is therefore an important information, but it does not mean that the State would dispose of that amount if it would normally honour all its financial obligations.

Future restructuring will determine the burden Lebanon will have to bear again. Depending on the amount of the restructured debt, the interest rates and the timing chosen, several hundred million dollars of budget margin could be absorbed each year.

Therefore, some of the current surpluses cannot reasonably be considered available for new permanent expenditures.

The situation is similar to that of a household whose income is rising while part of its debt repayment is temporarily suspended. His current account is improving, but his real margin cannot be known until he knows how much he will have to repay again.

How much is really left?

The calculation measures the gap between apparent surplus and sustainable margin.

In 2025, the state cashed about $6.2 billion and spent around $4.7 billion. The gap seems comfortable.

But now we have to cut down or anticipate several charges. The new salary measures can be around $800 million in the full year. Public investment will have to increase if the state resumes normal infrastructure maintenance. Reconstruction needs add additional pressure. The future debt service must finally be reinstated.

At the same time, there is no guarantee that revenues will continue to grow by 59 per cent each year. Much of the tax catch-up has already taken place. Once rates, duties and bases have been recalibrated, the State will not be able to reproduce the same level effect indefinitely.

This is probably the most important point for forecasts. The 2025 jump is partly like a catch-up year. When highly undervalued duties are upgraded, revenues can increase sharply once. The following year, their growth was more dependent on activity, imports, inflation, recovery and new tax decisions.

If revenues stabilize around $6 billion while wage, social, investment and debt expenditures increase, the surplus can be reduced rapidly.

The real budgetary margin is therefore not equal to the surplus recorded in 2025. It corresponds to what would remain after normal funding of State functions and sustainable commitments.

An increase in revenue which can also reduce activity

Finally, there is a more general macroeconomic risk. Too much increase in indirect taxation can itself reduce the tax bases it seeks to exploit.

When taxes on consumption, fuel or imports increase, households can reduce certain expenditures. Companies can defer investments or pass costs on to their prices. Some activities may also seek to escape the formal sector.

The State therefore faces arbitration. It must restore revenue after years of collapse, but it must avoid the burden of the levy reducing economic recovery.

This issue is particularly important in Lebanon, where a large proportion of households continue to live with fragile incomes and where the dollarization of many prices does not mean that income has returned to its pre-crisis level.

An increase in tax revenues can thus be fiscally positive and economically restrictive at the same time.

The choice of tax composition becomes as important as that of the overall level of revenue. Taxation based mainly on VAT, fuel and imports does not have the same effect as improving the recovery of income tax, profits or wealth.

The real challenge is to broaden the base rather than constantly raising rates

The next step should therefore not only be to seek new taxes. The State still has significant potential in the collection of existing taxes.

A highly informal economy, weakened tax administration and years of crisis have created large gaps between theoretically due and actual receipts.

Customs is already an example of this potential. Better valuation of goods and tighter control increased revenues. Comparable gains can theoretically be sought in other taxes.

The issue is all the more important since the continuous increase in indirect taxes has a social limit. It affects a much larger population than the wealthiest taxpayers alone.

A sustainable fiscal strategy would therefore require a gradual shift in effort. Instead of relying primarily on the levies applied to each purchase or import, the State should broaden the direct tax base, strengthen control and reduce the possibility of escape.

The quality of the income is as important as its amount.

The 2025 peak must not become a misleading reference

The $6 billion figure can easily become a political benchmark. It allows the government to show that the administration regains its capacity to finance and that public finances are no longer in the 2021 or 2022 situation.

But there is a risk of this comparison. Part of the increase is simply the restoration of samples that had lost almost all their real value during the collapse of the pound.

The 2025 peak thus measures both recovery and catching up.

Nor should we forget the effect of prices. When taxable amounts increase in dollars or the reported values are better aligned with the market, nominal revenues increase rapidly. The nominal increase in the Consolidated Revenue Fund is not necessarily accompanied by an equivalent increase in the volume of goods and services produced.

The right indicator will therefore not only be income in 2025. Their trajectory will have to be monitored over several years and whether they can remain high without repeated increases in rates.

Margins exist, but they are narrower than they look

Public finance photography is now better than it was a few years ago. The State collects more, customs earn more and the Treasury can finance a larger share of its expenditures with regular revenues.

This is a real and important development. It reduces dependence on financing mechanisms that contributed to the monetary crisis.

But this improvement must not be confused with a return to a normal budgetary position.

The level of expenditure remains limited. Wages still need to be adjusted. Infrastructure requires investment. Tax deferrals can disrupt the timing of cash receipts. Debt is not restructured. And part of the increase in revenue comes directly from a higher tax burden.

The question is therefore not whether the State has recovered margins. He found some. The question is their nature.

A margin obtained through better collection is relatively healthy. A margin created by economic growth is even stronger. A margin from a fiscal catch-up is real, but it can be one-off. A margin based on long-term underfunded spending or the lack of normal debt service is much more fragile.

Lebanese public finances today bring together these four phenomena.

The change from $3.9 billion to more than $6 billion marks a milestone, not a success. It shows that the State has rebuilt part of its capacity to collect and cash. It does not yet prove that it has the resources to finance its salaries, services, infrastructure, reconstruction and future debt on a sustainable basis without raising taxes again.

The budgetary implementation of the second half of 2026 will be particularly revealing. Tax deferrals will have to be absorbed, new wage allowances will begin to weigh more and customs revenues will have to confirm their progress. If the surplus resists these charges without further substantial increases in levies, the state will be able to speak of a stronger financial margin. Otherwise, the peak of 2025 will appear above all as the product of a fiscal catch-up before the return of large expenditure.

Exact number of body words:3,428

Keyword:government revenue

Keywords Secondary SEO:eC internal market, EC internal market, EC internal market, EC internal market

Description:Government revenues have jumped in Lebanon, but rising taxes, wages, debt and deferred expenditures significantly reduce real margins.

Extract:
Lebanese government revenues increased from about $3.9 billion in 2024 to over $6 billion in 2025. The leap is spectacular, but it does not only reflect better collection or economic recovery. The increase in taxes, the upgrading of tax bases and duties and the increase in customs revenues account for a significant part of the peak. New wage spending, tax carry-overs and unrestructured debt, however, reduce the real margin available.

Five alternative titles:

1. Lebanon: behind the revenue surge, the burden of taxes
2. Government revenue: a fragile recovery
3. Budget: why the $6 billion is not enough
4. Lebanon: State collects more, but margins remain narrow
5. Taxation: This really explains the peak in revenues

References and links

• An-Nahar, edition of 12 august 2026, for the evolution of government revenues between 2024 and 2025, customs data and budgetary balances.
• Al Jumhouria, edition of august 12, 2026, for tax deferrals and their effects on the timing of receipts.
• Lebanese Ministry of Finance, revenue, expenditure, budget 2026 and tax deadlines.
• Available data and analyses on the evolution of the Lebanese tax structure, including the increase in the weight of indirect taxes and VAT.
• Data on the additional appropriation of £56 500 billion for new public sector allocations.
• International Monetary Fund, work on staff costs, budgetary margins and consolidation needs of Lebanese public finances.