Press realese: Montenegro Budget execution in the period January- September 2020 (GDDS table 9)

Economic trends in the country are still affected by the epidemiological situation, which results in a continuation of the declining trend in the collection of budget revenues both in relation to the previous year and in relation to the planned by the Law on Amendments to the Law on Budget. On the other hand, the implementation of socio-economic measures, in order to mitigate the negative consequences of the pandemic for citizens and the economy, has resulted in higher consumption.

Budget revenues in the period January - September 2020 amounted to 1,165.9 mil. € or 25.3% of estimated GDP (€ 4,607.3 million), which is 61,9 mil. € or 5.0% less than planned by the Law on Amendments to the Law on Budget.

In relation to the plan according to the Supplemental budget, the largest negative deviation was recorded in the value added tax in the amount of 59,8 mil. € or 13.3%, as well as excises in the amount of 13,7 mil. € or 8.3% due to a significant decline in tourist traffic, which continued in September. According to the Supplemental budget, tourist season is planned to be at the level of 60% of the previous year and the revenue plan based on categories that primarily depend on turnover is set at that level, budget revenues from value added tax and excise in the period January-September recorded a significant deviation in relation to the plan.

In addition to the above, there was a deviation in the category of donations due to the fact that the payment of the first tranche of the donation by the EU in support of Montenegro in order to combat the negative effects of COVID-19 virus in the amount of € 28,0 mill. € has not paid yet. Payment of the subject donor funds is expected by the end of the year at the latest.

Taxes and contributions on wages recorded a cumulative increase, in the amount of 36,2 mil. € or 8.9% compared to the planned, where the income tax is higher by 6,1 mil. € or 8.0% in relation to the planned, while the contributions in relation to the planned are higher by 30,1 mil. € or 9.1%, 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.

Also, a positive deviation was recorded in the collection of income on the basis of profit tax, as a consequence of the strong growth of economic activity from the previous year.

Budget expenditures in the period January - September 2020 amounted to 1,499.5 mil. € or 32.5% of GDP and compared to the planned they are higher by 18,6 mil. € or 1.3%.

The reasons for the positive deviation of expenditures from the planned ones are primarily the continuation of the payment of wage subsidies as measures envisaged by the third package of socio-economic measures to mitigate the pandemic, settlement of part of obligations according to the legal solution based on financial consolidation of national airline Montenegroairlines, as well as financing the increased costs of the health system caused by the corona virus pandemic.

In the structure of budget expenditures, current expenditures were realized at the level of 611,9 mil. € and are lower by 8,1 mil. € or 1.3% of the planned. On the other hand, capital expenditures were realized in the amount of 148,9 mil. €, which is 3,9 mil. € or 2.7% 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 33,9 mil. € or 18.6%, as a consequence of the reduced intensity of works on the construction of the priority section of the Highway.

Restriction of works on the priority section of the Highway, due to the pandemic, determined the movement of the Capital Budget, which in the period January - September 2020 was realized in the total amount of 119,0 mil. € which is for 3,4 mil. € more than planned, while compared to the previous year it is less by 50,2 mil. €.

Compared to the same period last year, total budget expenditures are higher by 123,2 mil. € or 9.0% due to the implementation of three packages of measures aimed at combating the negative effects of the pandemic and helping citizens and the economy.

In the period January - September 2020, the dynamics of budget revenues and expenditures affected the realization of the budget deficit in the amount of 333,6 mil. € or 7.2% of GDP, which is 80,5 mil. € or 31.8% higher than planned.

Attachment: GDDS 9_montly data-final.xlsx

* The data in the GDDS table represents an overview of income and expenses by economic classification in one month, compared to the plan and the same period of the previous year;

* Capital Budget data represent the amounts of planned and executed expenditures by project classification (all categories of expenditures that are in the function of implementation of the project financed by the Capital Budget)