Press release from 101st Cabinet session

PHOTO: 101st Cabinet session

Podgorica, Montenegro (07 December 2018) – The Draft Budget Law for 2019 was established at the 101st Cabinet session, chaired by Prime Minister Duško Marković.

The proposal envisages that the total amount of receipts and expenditures is EUR 2,384 billion.

The 2019 budget will feature faster revenue growth than expenditures, thus achieving a declining budget deficit trend - from an estimated 3.8 percent in 2018 to 2.97 percent in 2019.

In the next year, a surplus of current budget spending of approximately 200 million euros is planned, which allows borrowing to be made exclusively for financing capital projects (the so-called "golden rule"), which stimulates the economic growth of the country. Furthermore, the draft law envisages a budget deficit of 142 million euros. The budget deficit is fully generated in the segment of capital spending, conditioned by the implementation of the project for the construction of the priority section of the Bar - Boljare motorway. The capital budget for the next year is EUR 320 million, the highest amount of the capital budget so far. More than 70 percent of the capital budget refers to the Northern Region.

For the next year, budget revenue growth is projected to be EUR 71 million more than it was in 2018. Revenue growth is accompanied by growth in consumption conditioned by the above-mentioned construction of the motorway, but also by larger investments in the area through which the citizens will benefit directly - agriculture, education, science, health.

The intention is for the next year's budget to be focused on development, to continue for the third year in a row with the rule that the country will only borrow for development, not for consumption, and it is also envisaged to reduce certain "unproductive costs" such as costs for official travels, fuel and administrative material.

Projections of macroeconomic and fiscal indicators for the period 2018-2021 were also passed. They represented the starting point for the drafting of the Budget Law for 2019 and at the same time are the starting point for the preparation of the Economic Reform Programme for Montenegro 2019-2021, the most important document within the economic dialogue of Montenegro and the European Commission. Projections give estimates of revenues and spending of the budget, as well as state and public debt by the end of the current year. In addition, an overview of external factors influencing growth projections, as well as starting assumptions for the realization of macroeconomic projections in the period from 2018 to 2021, is given. Based on indicators, as well as expected developments in the second half of the year, it is estimated that the Montenegrin economy will have a real growth rate of 4.1 percent in 2018, while the estimated employment growth in 2018 is 2.2 percent.

In order to comply with the Law on State Administration and the Law on Civil Servants and State Employees, the Cabinet discussed the Draft Law on Amendments to the Law on Internal Affairs, which creates normative conditions for greater efficiency and more functional work of the Police Directorate.

The Cabinet passed the new Decree on the organisation and manner of work of the state administration.

The Cabinet discussed the Draft Law on Local Government Financing, which establishes a favourable regulatory framework for supporting the development of municipalities in the Northern Region and ensures their financial stability. The key novelty established by this Law is to grant more revenues from personal income tax to the northern municipalities. It is the increase from 12 percent to 50 percent, i.e. 70 percent to the municipalities with up to 3,000 residents. The Cabinet discussed the establishment of the Municipal Support Fund for the pre-financing of donor projects, which will create the conditions for withdrawing funds from the EU and other donors in order to increase investment and municipal development.

The Cabinet passed the Decision on the 2019 Energy Balance of Montenegro, which includes balances of electricity, coal, oil, petroleum products and biofuels.

In line with the commitments undertaken by signing the Stabilisation and Association Agreement, the Cabinet passed the Annual Report on Assigned State Assistance in Montenegro in 2017, the eleventh so far.

The Cabinet proposed to the Shareholders' Assembly of Port of Bar to elect Nedžib Ibrišimović, Vladan Radonjić, Dragan Čenić and Vojin Žugić as members of the new Board of Directors.

PUBLIC RELATIONS SERVICE OF THE GOVERNMENT OF MONTENEGRO