Lebanon’s plans to raise transportation allowances and subsidize public transport drivers could cost the State nearly $14 million a month, while funding for subsidized housing loans may be cut to help cover the measures, according to information cited by Al Modon.

The government is considering increasing the transportation allowance for public-sector employees by about $3 a day, following a similar increase for private-sector workers.

The measures are intended to ease the impact of rising living costs on employees and households, but the question of how they will be financed has raised concerns over the government’s spending priorities.

$166 million a year for public-sector transport allowances

The Wage Index Committee recently approved a transportation allowance for private-sector workers equivalent to five liters of gasoline per working day, capped at 800,000 Lebanese pounds.

With gasoline currently costing about $1.58 a liter, the allowance amounts to roughly $7.90 a day. The existing allowance is 450,000 pounds, or about $5, meaning the increase is approximately $3 per day.

The government is expected to consider granting the same increase to public-sector employees.

Lebanon has about 210,000 public-sector employees and active-duty military personnel, according to the latest figures cited in the report. An additional $3 a day for 22 working days would cost about $13.86 million a month, or roughly $166.3 million a year.

For employees, the increase may offer some relief from higher living costs. But the size of the bill raises the question of where the government will find the money to fund it.

Public transport subsidy raises questions

The Finance Ministry has also approved monthly payments of 12 million Lebanese pounds for eligible public transport drivers, starting Oct. 1 and continuing through Dec. 31 as an initial three-month measure.

The payments are intended to avert pressure from rising gasoline prices and were introduced after a planned strike by public transport drivers was called off.

In exchange for receiving the payments, drivers must comply with official fares set by the Public Works and Transport Ministry. Drivers who charge fares above the official rates will lose their eligibility for the subsidy.

However, the measure raises questions about how it will be enforced, including who will qualify, who will monitor fares and how violations will be identified and punished.

The report questioned whether authorities would be able to enforce the measure effectively, given difficulties in regulating other sectors.

Lebanon has about 40,500 public transport vehicles, including 34,000 taxis, 4,000 vans and 2,500 buses.

At 12 million pounds per month for each eligible driver or vehicle, the theoretical cost of the subsidy would be about 486 billion pounds a month, or roughly $5.5 million. Over three months, the bill would reach about 1.458 trillion pounds, or approximately $16.7 million, before the government determines the actual number of beneficiaries.

Housing loans face possible funding cuts

But the larger concern may be how the government intends to finance the new measures.

According to Al Modon, the government is considering reducing the funding allocated to the Public Corporation for Housing and redirecting part of the money toward transportation allowances and subsidies for public transport drivers.

The report said some ministers had proposed eliminating the entire $100 million allocation for subsidized housing loans in the 2027 budget. The amount would finance no more than about 1,400 housing loans under current conditions.

The more likely option, according to the report, is to reduce the allocation to $60 million rather than eliminate it entirely.

The proposal has raised questions about the government’s priorities because the housing-loan allocation is not a direct grant or permanent expenditure. Instead, it is used to finance dollar-denominated housing loans, with the state recovering the principal along with 3.5% interest.

That means the program could ultimately generate revenue for the state and Treasury rather than represent a permanent budgetary cost.

Subsidized housing loans remain a key demand for many Lebanese as property prices rise, purchasing power declines and affordable bank financing remains difficult to obtain.

Existing housing loans are also constrained by high interest rates and preferential access, according to the report.

If the housing-loan allocation is cut or eliminated, the Public Corporation for Housing could have less capacity to relaunch subsidized lending programs.