Lebanon’s Ministry of Finance is expected to disburse the approved grant for the month of July to both active and retired military and security personnel before August 15, or within the next few days, pending the receipt of payroll data from the army command and security institutions.

The monthly grant, valued at approximately $30 million, had been financed through a fuel tax introduced by the government. However, the tax was later suspended by the State Shura Council one month after its approval. Despite the suspension of the tax, the salary increase itself was not revoked.

Under the current arrangement, active-duty soldiers will receive 14 million Lebanese lira each, while retired personnel will receive 12 million. The number of active military and security personnel is estimated at 120,000, with around 82,000 retirees.

The cancellation of the fuel tax has created a funding gap, leaving the Ministry of Finance facing a challenge in identifying alternative and sustainable sources to continue making the monthly payments. The ministry has reiterated its commitment not to spend a single lira without secured and approved revenue.

In line with recommendations from the International Monetary Fund, the Ministry of Finance is proceeding cautiously, aiming to avoid any decisions that might jeopardize ongoing negotiations or the potential signing of a deal with the IMF.

According to LBCI, one proposed solution is to increase a specific tax on gasoline, excluding diesel, based on the argument that gasoline is not used by the entire population. This option does not require parliamentary approval but may still face political opposition.

Other potential funding avenues include improving tax collection, enhancing compliance, increasing customs revenue, and utilizing income from state-owned coastal property. There is also growing consensus around the need to move away from reliance on consumption-based taxes and to adopt permanent, long-term financing strategies to ensure fiscal sustainability.