07 December 2018 - "The Government of Montenegro does not envisage any additional measures of fiscal consolidation other than those established in 2017, but next year we will focus on improving tax environment, further economic growth and employment increase," Minister of Finance Darko Radunović said introducing the 2019 Draft Budget Law, which was adopted last night by the Government.
By presenting the budget for the next year, the Minister reminded that the Government of Montenegro started the fiscal policy in the past two years with the implementation of the Plan for reduction of the budget deficit and the public debt, supplemented by the Government's 2017-2020 Fiscal Strategy, taking care that they do not slow down the economic growth, nor endanger the socially most sensitive segments of society.
"The following indicators show that the measures were well balanced: a strong economic growth of 4.7 percent in 2017, and 4.8 percent in the first half of 2018, with a projection of 4.1 percent by the end of the year, an increase in Montenegrin GDP per capita to 46 percent of the EU average and an increase in the number of employees by nearly 11,000 in relation to 2016, the regularity of payment of wages, pensions, social benefits (with the growth of certain categories), strengthening of the international investment position of Montenegro reflected through the improvement of the credit rating and the most successful issue of eurobonds aimed at refinancing part of the public debt, as well as obtaining the World Bank Policy-Based Guarantee, which is also important for refinancing the part of the public debt and establishing its declining trend," the Minister of Finance said.
The Minister of Finance expressed the belief that every Montenegrin family had the opportunity to see and feel something from the numerous activities that the Government undertook in an effort to improve the quality of life - either through subsidies from agriculture, scholarship or free education for thousands of students, through the possibility for citizens to take medicine for free that they may have had to pay earlier or more easily travel with time and fuel savings, some of the reconstructed roads through Montenegro.
Speaking of the proposed budget for 2019, the Minister of Finance and acting General Director of the State Budget Directorate Bojan Paunović stated that budget revenues increased by around 190.7 million as estimated for 2018 (or 12.2 percent compared to 2017); that the budget deficit was reduced from 5.5 percent of GDP in 2017 to an estimated 3.8 percent of GDP in 2018 and that a surplus of current consumption was achieved.
The Minister emphasised that this year we have the largest capital budget in Montenegro since the renewal of independence – 320.93 million EUR and that most of that money is foreseen for the Northern region.
"The 2018 Draft Budget Law envisages the total amount of receipts and expenditures of EUR 2,384 billion or 50% of GDP. This is less about the rebalance for 2018. The budget for 2019 is characterized by faster revenue growth than expenditures (i.e. controlled expenditure growth and further changes in their structure), thereby reducing the deficit to 142.3 million euros or 2.97 percent of GDP. The current budget spending in 2019 will be fully financed from the original income, and a current consumption surplus of 197 million euros will be generated. This meets one of the basic requirements for fiscal policy planning. Continuing a rational attitude towards budget spending is important. We have achieved an excellent surplus of current consumption this year; I think that we have the opportunity to achieve an even better result next year," Finance Minister Darko Radunović said.
The Minister, concluding the presentation of the proposed budget for 2019, assessed that its main characteristics are:
• The growth of original income by 71 million EUR about 2018;
• Optimization of current budget spending
• Increasing investments in infrastructure projects through the most significant amount of the Capital Budget since gaining independence (320 million EUR);
• Increasing allocations for education, sports, agriculture, entrepreneurship;
• Reducing the need for loans, i.e. reducing the missing funds to 556 million EUR (out of which 180 million EUR refers to deposits already available);
• The regularity of performing all public functions of the state (payments of pensions, social benefits, etc., with increase according to legal harmonization);
• Payroll regularity, with an increase in salaries of current public sector employees by 10.9 million EUR.
"Therefore, the 2019 Draft Budget Law is an expression of economic policy measures aimed at strengthening fiscal stability by implementing fiscal consolidation measures; support of competitiveness and development, as well as the regularity of performing all public functions in order to ensure sustainable growth of the economy, which helps further increase of the living standard of citizens" Minister Radunović concluded.
