Montenegro's Cabinet Session

Podgorica, Montenegro (9 June 2017) -- In accordance with the Law on Budget and Fiscal Responsibility, the Government of Montenegro adopted the Proposal of Fiscal Strategy 2017-2020 at yesterday's session, chaired by Prime Minister Duško Marković. The Strategy defines the objectives and priorities of economic policy, presents challenges on the path of sustainable growth and prosperity, as well as the manner of their mitigation or elimination. Bearing in mind the growing fiscal pressures, additional measures of fiscal consolidation are determined in order to ensure the full credibility of the public finances, the contribution to the budget surplus, the establishment of the declining trend in public debt, with a more equitable distribution of social funds, a further rise in pensions and stable economic growth. In making such conception, attention was paid to ensuring the equitable distribution of the tax burden, the equitable distribution of social benefits and protection of the most vulnerable classes of society. The need for Montenegro to remain a competitive destination for foreign investment in terms of the amount of tax burden was accepted. The Strategy identifies measures on both the revenue and the expenditure side, and their overall effect on the net amount is EUR 117 million.

The increase in budget revenues will be ensured by implementing the measures of tax policy relating to: excise tax increasing on cigarettes; excise tax increasing on carbonated water supplemented with sugar; the introduction of excise tax on coal; and increasing the general VAT rate from 19 to 21 percent, whereby the application of these measures is planned from 1 January 2018.

The lower VAT rate remains unchanged, so the most important products are still taxed at a rate of 7 percent, so it will not jeopardise the standard of economically vulnerable population.

The reduction of budget expenditures is planned through the implementation of appropriate measures of rationalisation and savings, and care was taken to establish a set of measures that will have the least negative impact on the living standards and economic growth.

Accordingly, the measures that will be implemented are the reduction in gross wages fund by decreasing the allocation for the variable part of the profits and recruitment, as well as reduction of yield for the A, B and C groups of jobs for 6 percent, making a total of 15 percent along with earlier reductions.

In addition, the social benefit policy was redefined, especially measure of fee for mothers with three or more children, the implementation of which implies a greater degree of fairness and non-discrimination in the distribution of social funds.

For the purpose of enhanced care for the youngest, increasing the amount of child support is envisaged for the children beneficiaries of financial family support, children beneficiaries of the allowance for care and assistance, children beneficiaries of personal disability and children without parental care, by 20 percent.

The Government adopted the Law on Amendments to the Law on Social and Child Protection. The Law improves the existing provisions relating to the exercise of basic material benefits, as well as other provisions to ensure the goal of social and child protection.

In accordance with the constitutional obligation of the Government, Draft Law on Enforcement of Decision of the Constitutional Court of Montenegro U-I No 6/16 of 19 April 2017 was adopted. The Draft Law regulates the legal status of the beneficiary of the right to compensation on the basis of the birth of three or more children, under the Law on Amendments to the Law on Social and Child Protection that have ceased to be valid on the day of publication of the Constitutional Court's Decision of 19 April 2017.

The Action Plan to combat the gray economy was adopted, as well. The Plan sets out measures to combat gray economy under the jurisdiction of various state bodies, aiming to contribute to reducing the fiscal deficit and to encourage businesses to introduce commerce into legal. To this end, the Commission to combat the gray economy was created.

In accordance with the need to involve all stakeholders in the public administration reform process, Decision amending the Decision of the Council for Public Administration Reform was adopted. Apart from the members of the Government, the Council will include representatives from the areas of business and civil society, trade unions, the Association of Municipalities and independent experts in the field of public policies.

The Government adopted Draft Law on the final account of the Budget of Montenegro for 2016.

As part of the harmonisation of the current legislation with the new Law on Administrative Procedure, Draft Law amending the Law on Tax Administration was adopted.

The Government also adopted Report on Activities of the Investment and Development Fund of Montenegro for 2016, with the financial statements and Independent Auditors' Report for 2016.

The Draft Law on amendments to the Law Against Discrimination was adopted. The Draft Law regulates certain provisions relating to the particular forms and fields of discrimination and certain penalty provisions, given the fact that current legal provisions did not cover all forms and fields of discrimination and did not show the expected results.

The Government adopted the Regulation on amendments to the Regulation for the implementation of the Customs Law, which allows for substitution of particular provisions to accelerate and simplify the customs procedure with express shipments.

Regulation amending Regulation on detailed criteria and methodology for determining the market value of property was adopted, as well.

PUBLIC RELATIONS SERVICE OF THE GOVERNMENT OF MONTENEGRO