With the fiscal strategy from 2017 to 2020, 2018 was predicted to reduce the costs in earnings by EUR 5.2 million due to the reduction of gross earnings and coefficients, but in the first four months, we have a growth in gross earnings of four million more than the plan and 4.4 million more than in the same period last year.
"The increase in the gross earning fund was dominant as a result of filing in job vacancies for performing important jobs from the aspect of quality of public service delivery, primarily in the areas of health and social protection and education. There is also the need to strengthen personnel of newly established institutions, and that some existing institutions have recognized the need for job systematization instead of the actual engagement of persons based on contracts on temporary and temporary jobs," stated the Finance Ministry to the question of why the costs for public administration earnings increased even though it was supposed to be reduced.
Now in the public administration there are about 50,000 employees, which is about 30 of the total number of employees in Montenegro. Former Finance Minister Radoje Žugić proposed as a governor two years ago a reduction in the number of public administration employees by 10 percent. Although the over-sized public administration, which cannot be financed by all the weaker economy, has been warned for years by the World Bank and the IMF, the Government has not still decided on such a measure. In the past four months in Montenegro, there were two electoral cycles - presidential and local in most municipalities.
"Bearing in mind that the Government's aim to optimize public administration and make public administration more efficient in the forthcoming period, during the current year, they began implementing the Public Administration Reform Strategy, which in the coming period should result in the optimization of the number of employees and reduce the overall gross earnings fund in line with the goals of the fiscal strategy," promised the Ministry of Finance.
PHOTO: Savo Prelević
Loans and loans from domestic and foreign sources taken by the government in the first four months of this year amounted to EUR 251.6 million, while the budget planned for 98.6 million.
"The loan and loan amount includes the debt based on the Chinese EXIM loan for the construction of the priority section of the Bar - Boljare motorway, the indebtedness on the basis of the realization of development projects financed by the international financial institutions, the debiting of government bonds and the net debt from the bond issue at the international market. In order to finance the liquidity of the budget, in the mentioned period, the emission of government bonds was realized in a larger amount to finance all budgeted needs," the Ministry said.
They indicated that there was no increase in the level of debt, but in terms of the time dynamics of the withdrawal of funds, i.e. certain activities related to borrowing, they were realized in the shorter period than planned. In these four months, capital investments accounted for EUR 44.6 million, instead of the planned 85.9 million.
"The lower trend of capital budget implementation in this period is a result of a lower level of timing for works during the winter period, which is conditioned by weather conditions, which will be replenished in the coming months the same as in the previous years. In this respect, the execution of the capital budget in relation to the four months of 2017 increased by 180 percent, and in the last year the execution of the capital budget was high," the Ministry added.
For the repayment of securities and loans of residents, 84.8 million euro was spent, although the budget plan for this period should have been 13.3 million euro for this cost."The amount for repaying securities and loans to residents is higher than planned, because the amount of refinancing of government bills, which is not budgeted, is included. Also included in this amount is the repayment of domestic bonds as well as repayment of loans with domestic commercial banks. It should be noted that in accordance with the Law on Budget and Fiscal Responsibility, Article 23, the spending limit does not include expenditures based on the debt repayments.
At the same time, apart from the cost for government bonds refinancing, the remaining debt repayments were carried out in accordance with the plan and dynamics, defined amortization plans, which the Ministry of Finance has with creditors, which does not have to comply with the monthly plan, said the Ministry. The fiscal strategy predicted a reduction in "discretionary costs".
“Measures related to reducing the budget discretionary spending, created during the Fiscal Strategy development, are incorporated into the budget plan established by the Law on Budgeting for 2018 and are being implemented as such," the Ministry added.
Over the past four months, there has been a drop in VAT revenues of 5.4 million and 4.4 million in excise revenue.
"Excise revenues for the period January - April of the current year were charged in the amount of 56.8 million, which is at the level of the previous year, and compared to the billing plan it is lower as a result of the decrease in sales of tobacco products. VAT revenues in the same period are lower than the plan for EUR 5.4 million, which is partly a result of large returns from the month of March and partly a decrease in imports of tobacco products. Already in May, according to the preliminary data, the realization of VAT revenues is approximately at the planned level."
Due to three increases in cigarette excise taxes last year and organized smuggling, there was a drop in legal traffic of about 50 percent, significantly lower state revenues. Instead of the 70 percent higher income than the first three months of last year, there is a drop of 20 percent. Government institutions and special committees have been mute in relation to smugglers of the tobacco products for ten months. Finance Minister Darko Radunovic told the media a few days ago that he is now considering the possibility of reducing excise duty on cigarettes.
During this period, 8.4 million euro was paid for "liabilities from the previous years", which was not budgeted.
"The repayment of liabilities from the previous period, in the period referred to, concerned repayments on the basis of the personal income, material costs, energy, utilities, court decisions, unfounded deprivation of liberty and old foreign currency savings. For repayment based on court decisions, it is not possible to fully plan ahead, i.e., to establish a precise repayment schedule, due to the inability to predict the outcomes and the number of court proceedings. At the same time, we point out that repayment liabilities from the previous period are planned for the debt repayment so that the mentioned liabilities are included in the budget for the current year," explained the Ministry of Finance.
Text by Goran Kapor, on June 11th, 2018, read more at Vijesti