Press release: Execution of the Budget of Montenegro for the period January - August 2020

The epidemiological situation in the country, but also at the global level, determines the economic activity in August, and consequently the collection of budget revenues. Bearing in mind that the collection of budget revenues in August was predominantly conditioned by the collection of revenues based on the realized tourist traffic, the significantly lower number of arrivals and the realized number of overnight stays caused a decrease in the total collected revenues.

Budget revenues in the period January - August 2020 amounted to 1.023,3 mill. € or 22,2% of the estimated GDP (4.607,3 mill. €), which is by 22,1 mill. € or 2,1% less than planned by the Law on Amendments to the Law on Budget.

Lower collection of revenues compared to the planned ones, is primarily the result of lower collection of consumption tax, of which value added tax was realized below the plan by 42,3 mill. € or 10,9%, while the collection of excises is below the planned by 9,5 million € or 6,7%. The lower collection of revenues is primarily due to the decline in tourist traffic caused by the pandemic of the COVID - 19 virus, ie the generated revenues generated on the basis of foreign tourist arrivals.

Taxes and contributions on wages recorded a cumulative increase, compared to the plan, in the amount of 28,1 mill. € or 7,8%, with income tax higher by 4,7 mill. € or 6,9% compared to the planned, while the contributions are higher than planned by 23,4 mill. € or 8,0%, as a result of collection of part of the tax debt of the national airline "Montenegroairlines" in the amount of 10,0 mil. €, as well as subsidizing the salaries of the economy within the second and third package of Government measures.

In addition to the above, in the observed period, higher collection of income on the basis of profit tax was recorded compared to the planned one as a consequence of the strong growth of economic activity from the previous year.

Budget revenues compared to the same period last year are lower by 148,9 mill. € or 12,7% due to the decline in economic activity caused by the COVID - 19 virus pandemic and the implementation of measures to limit it.

Budget expenditures in the period January - August 2020 amounted to 1.335,3 mill. € or 29,0% of GDP and are higher than planned by 23,8 mill. € or 1,8%. The reasons for the positive deviation of expenditures from the planned ones are: continuation of payment of wage subsidies as measures envisaged by the third package of socio-economic measures to mitigate the consequences of the pandemic and settlement of part of obligations according to the legal solution based on financial consolidation of national airline Montenegroairlines. In the structure of budget expenditures, current expenditures were realized at the level of 549,5 mill. € and are lower by 4,7 mill. € or 0,9% of the planned. On the other hand, capital expenditures were realized in the amount of 129,8 mill. €, which is 4,8 mill. € or 3,8% more than planned, as a result of the continuation of works on the started capital projects, while compared to the previous year they are lower by 36,5 mill. € or 22,0%, as a consequence of the reduced intensity of works on the construction of the priority section of the Highway.

Compared to the same period last year, total budget expenditures are higher by 108,3 mill. € or 8,8% due to the implementation of three packages of measures aimed at combating the negative effects of the pandemic and helping citizens and the economy, as well as financing the increased costs of the health system caused by the coronary virus pandemic.

The movement of budget revenues and expenditures was also reflected in the movement of the budget deficit, which in the period January - August 2020 amounted to 312,0 mill. € or 6,8% of GDP, which is by 45,9 mill. € or 17,3% more than planned.

Attachment: GDDS 8_montly data.xlsx

* Data in the GDDS table represent an overview of revenues and expenditures by economic classification in one month, compared to the plan and the same period of the previous year;

* Data on the Capital Budget represent the amounts of planned and executed expenditures according to the project classification (all categories of expenditures that are in the function of the implementation of the project financed from the Capital Budget)