Press release from Cabinet session: Draft Budget, salaries, taxes, social benefits

Podgorica, Montenegro (18 December 2016) — At the 5th Cabinet Session chaired by Prime Minister Duško Marković, the Government of Montenegro has adopted the Draft Law on the Budget of Montenegro for 2017, which contains the draft Measures for adjusting the amount of public debt and budget deficit 2017-2021.

The draft Law on the Budget for 2017 envisages the total of 2.005.950.010,40 EUR of revenues and expenditures, which is roughly 119 million EUR less compared to the Law on the Budget for 2016. The current budget amounts to 863.009.701,95 EUR, the state funds budget to 639.446.205,30 EUR, the capital budget to 283.078.600,00 EUR, and the financing transactions to 220.415.503,15 EUR.

In presenting the Budget, the Deputy Prime Minister for Economic Policy and the Financial System noted that the Cabinet discussed and rejected the possibility of raising the VAT rates, raising the income tax to 15% for all workers in Montenegro whose salaries are above the average, halting the adjustment of pensions, and reducing overall social benefits, all of which have been identified as notable sources of fiscal pressure.

The Government decided to reduce the salaries of public officials by eight per cent in job groups A, B, and C, whereas the salaries for the D job group will remain the same. Under the Draft Law on Budget and the plan of fiscal consolidation, there will be no adjustment in 2017 and 2018 of the gross income based on past work in the public sector. The Cabinet also adopted a solution that introduces corrections to the amount of benefits provided for families with three or more children. The proposal suggests reducing the amount from 336 EUR to 264 EUR, and from 192 to 144.

It has also been decided to raise the excise on mineral oils, to tax the computer equipment under the general rate of 19%, as well as to extend until 2019 the elevated tax rate of 11% for personal income that is above the average salary.

The discussion noted that the Draft Budget is an optimal possible combination of measures aimed at strengthening fiscal stability, ensuring sustainable economic growth, maintaining the level of protection of the most vulnerable categories of citizens, stable functioning of public institutions, timely servicing of public and state needs, strengthening of the overall macro-economic stability and competitiveness of Montenegro’s economy, enhancing access to international financial markets, and the improving performance in the process of EU accession.

With this in mind, the Government adopted the Draft Law on the Reprogramming of Tax Claims, which defines the requirements, the write-off of interest and procedure expenses, and other issues of importance for the reprogramming of tax claims. The Government also adopted draft amendments to the laws on excises, VAT, public sector salaries, personal income tax, and social and child care.

GOVERNMENT OF MONTENEGRO’S PUBLIC RELATIONS SERVICE