Government spending increased significantly during the first half of the year, resulting in a budget deficit despite higher revenue collections, according to the latest fiscal report released by the Ministry of Finance and Public Enterprises.

The report shows the state generated USD 1.45 billion in revenue by the end of June, an increase of USD 129.7 million compared with the same period last year.

However, total expenditure rose even faster, reaching USD 1.51 billion, up from USD 1.25 billion a year earlier, leaving the government with a USD 63.29 million budget deficit.

The increase in spending was largely driven by higher subsidy payments and rising recurrent expenditure.

Subsidy costs nearly doubled during the six-month period, climbing 92 percent from USD 90.79 million to USD 181.58 million, as the government increased support to stabilize fuel and commodity prices amid the economic impact of the conflict in the Middle East.

Recurrent spending also rose following the implementation of the government's salary harmonization program.

Expenditure on public sector wages increased from USD 466.93 million during the same period last year to USD 505.84 million.

Despite the higher spending, government revenue continued to strengthen.

Tax collections reached USD 1.12 billion, compared with USD 985.73 million in the first half of 2025.

Corporate income tax contributed USD 110.25 million, representing a 6.2 percent increase over the previous year.

The report also showed that foreign grants totaled USD 434.2 million, exceeding the government's target of USD 373.6 million by USD 60.6 million.

According to the ministry, the government's revenue remains sufficient to cover its routine operating expenses.

The fiscal report recorded a primary surplus of USD 110.25 million, indicating that current revenue exceeded expenditure when debt servicing costs were excluded.