Press release: Montenegro Budget execution in 2018 (GDDS table 12)

According to preliminary data on the execution of the budget for 2018, total budget revenues were realized in the amount of 1,746.4 mil. € or 37.9% of the estimated GDP (€ 4,604.5 million).

Compared to the planned, revenues are lower by 10.6 mil. € or 0.6%, while compared to the previous year they increased by 180,1 mil. € or 11.5%. Significantly higher revenue generation, compared to 2017, was created as a result of the implemented fiscal consolidation measures as well as positive developments in the macroeconomic environment.

Accordingly, all the most important categories of tax revenues recorded growth compared to the previous year, whereby: the collection of corporate income tax increased by 38.5%, the tax on the real estate turnover 20.4%, the value added tax 12.4% income tax 11.5% and contributions by 6.0% in relation to the same period of the previous year.

At the same time, non-tax revenues also recorded growth, so that the collected fees were higher by 23.0%, fees for 39.3%, while other revenues were twice as much collected as a result of higher income from capital due to the dividend payment based on ownership countries in the Electric Power Industry of Montenegro.

The negative deviation of revenues in relation to the planned ones is, first of all, the result of lower revenue from Excise caused by unfavourable developments in the market, which was also the reason for the redefinition of the excise policy in July 2018, in accordance with the Amendments to the Law on Excise.

Budget expenditures in 2018 amounted to 1,905.6 mil. € or 41.4% of the estimated GDP, of which the current budget spending in the amount of 1,640.9 mil. € and Capital budget in the amount of 264.7 mil. € which was realized at a very high level of over 90%. For the performance of works on the priority section of the Highway in 2018, 165.2 million € was spent. The remaining funds relate to the implementation of capital projects in the field of infrastructure, i.e. on the construction, reconstruction and maintenance of local, regional and main roads, as well as projects aimed at solving problems in traffic on the network of Montenegro, rehabilitation of bridges and landslides on the road directions.

In addition, significant funds in 2018 were spent on the continuation of significant infrastructural projects in the fields of education, sport, culture, social welfare, health care and tourism infrastructure.

The total budget expenditures were realized at the planned level, bearing in mind that the deviation from the plan was only 0.3%. In the structure of total budget spending, Current budget spending is higher than planned for 30.1 mil. € in the largest part as a result of repayment of liabilities from the previous period. Capital budget realized in a smaller amount than planned for 24.4 mil. €, dominantly due to a slower withdrawal of funds for the implementation of the priority section of the Highway, while the execution of the Capital Budget in 2018, excluding the expenditures related to the Highway Project, amounts to € 90.83 million or 111% of planned expenditures. The reason for this execution of the capital budget is primarily the result of more intensive activities in the performance of works on other significant capital projects. At the same time, the Capital Budget was higher by 12.8 mil. € compared to the realized in 2017.

Bearing in mind the different methodological treatment of the category “Repayment of liabilities from the previous period” in the budget planning and execution, it is necessary to treat the mentioned category in a unique manner in the plan and in the execution of budget expenditures. Namely, in the situation when the mentioned category repayment of liabilities from the previous period is excluded from the budget expenditures, the preliminary cash deficit of the central budget in 2018 was realized in the amount of 136.3 million € or 3.0% of GDP, which is below the Law planned deficit of 142.8 million € or 3.1% of GDP.

Including repayment of liabilities from the previous period to the scope of execution of budget expenditures, the preliminary cash deficit of the central budget was realized in the amount of 159.2 million € or 3.5% of GDP. Including the mentioned category in the coverage of expenditures during planning, the planned deficit would amount to 173.1 million € or 3.8% of GDP. This indicates that the realized deficit was lower than the planned 0.3 pp of GDP, or € 13.9 million or 8,0%.

Compared to the previous year, the budget deficit was lower by 77.6 million. € or 32.8%, indicating that fiscal consolidation measures have yielded positive results.

At the same time, the surplus of current budget spending amounted to 105.5 mil. € which indicates that the budget deficit was created exclusively due to the realization of the capital budget.

Attachment: GDDS 12_montly data-f.xlsx