Minister Radunović: Fiscal Strategy measures to reduce public debt, budget surplus and equitable distribution of social funds

Podgorica, Montenegro (5 June 2017) -- Minister of Finance Darko Radunović met today with representatives of the Chamber of Economy, presenting to them the Fiscal Strategy measures in the period from 2017 to 2020. After the meeting, Minister Radunović stated that the objective of Fiscal Strategy is a slight decline of public debt in 2019 and a significant reduce to 67% in 2020, as well as reduce the deficit, with an expected surplus of 4.5% in GDP in 2020.

Explaining that it is the measures which are on both the revenue and the expenditure side, the Minister stressed that their overall effect is a net amount of EUR 117 million, which should result in savings of 2.1% of GDP. “On the revenue side, we will have an increase in the amount of EUR 132.9 million. On the expenditure side, we expect savings of EUR 41.5 million. However, due to the commitments that we have for the next three years, amounting to EUR 57.4 million, the net effect will be EUR 117 million.”

The Minister said that the planned measures include increasing the excise tax on cigarettes, alcohol, coal and carbonated water that is sweetened, as well as increasing the general VAT rate from 19 to 21% from 1 January 2018, noting that a lower VAT rate remains unchanged.

“The lower VAT rate will not be changed and it remains at the same level. This is done with the intention to preserve the standard of the most vulnerable population in Montenegro, and also because of the importance of tourism as a mainstay of economy,” Minister Radunović said.

As the Minister noted, employment in the public sector will be suspended. Measures stipulate that personnel income of employees in the public sector, working in A, B and C tasks group, are reduced by 6 percentage points, making a total of 15% along with reductions in the New Year.

Minister Radunović paid special attention to measures relating to social policy. According to him, the social policy is redesigned, so that social benefits will increase in cases of family material support and in cases of child allowance by 20%. The Minister added that the Ministry of Labor and Social Welfare will make a proposal for mothers with three or more children.