Press release: Montenegro Budget execution in the period January - October 2020 (GDDS table 10)

The health situation caused by the COVID-19 virus pandemic, both in Montenegro and globally, predominantly determines economic trends. The unfavourable epidemiological situation, i.e. the measures of limiting economic activity in order to bring the pandemic under control, determined the budget trends from the beginning of the pandemic until today.

This is primarily reflected in the drastic reduction of budget revenues compared to the previous year, i.e. the need to revise budget spending in order to provide fiscal space for financing three packages of socio-economic measures aimed at limiting the negative effects of the pandemic on citizens and the economy, as well as financing the increased needs of the health system in this period. Despite the challenges with the collection of budget revenues in the conditions of significantly reduced economic activity and the implementation of the mentioned packages of support measures, the liquidity of the Budget has been preserved and all planned budget obligations have been settled in a timely manner.

Budget revenues in the period January - October 2020 amounted to 1,302.4 mill. € or 28.3% of the estimated GDP (€ 4,607.3 million), which is by 96.6 mill. € or 6.9% 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 categories that primarily depend on the realized turnover, i.e. in the value added tax in the amount of 69.7 mill. € or 13.7%, as well as excises in the amount of 16.3 mill. € or 8.8%. The main reason for the negative deviation of these income categories compared to the planned ones is the significantly lower tourist turnover during the summer tourist season, due to the corona virus pandemic.

In the part of Donations, there is a negative deviation of 19.7 mill. €, as a result of the fact that the payment of the first tranche of the donation by the EU support of Montenegro in order to combat the negative effects of the COVID-19 virus in the amount of € 28.0 million was originally planned in September, while the payment of funds was made in November.

Also, due to the fact that in October was planned the collection of debt by Montenegroairlines in the amount of 9.0 mill. €, there is a deviation in the category of receipts from repayment of loans.

In the category of other revenues, there is also a negative deviation, primarily due to the fact that the planned payment based on the dividend of energy companies majority owned by the state was not made.

As a result of subsidizing the salaries of employees in industries, especially affected by measures to limit the activities within the second and third package of economic measures, but also as a result of collecting part of the tax debt of the national airline "Montenegroairlines" in the amount of 10.0 mill. €, taxes and contributions on salaries recorded a cumulative increase, in the amount of 22.7 mill. € or 4.8% compared to the planned, where the income tax is higher by 2.8 mill. € or 3.1 in relation to the planned, while the contributions in relation to the planned are higher by 19.9 mill. € or 5.2%.

Due to the strong growth of economic activity from the previous year, the trend of growth of collection on the basis of profit tax continued, which is higher by 11.1 mill. € or 17.1% compared to the planned.

 

Compared to the same period last year, budget revenues are lower by 192.4 mill. € or 12.9% due to limited economic activity caused by the COVID-19 virus pandemic and the implementation of measures to mitigate the negative effects on the economy and citizens.

Budget expenditures in the period January - October 2020 amounted to 1,688.2 mill. € or 36.6% of GDP and are lower than planned by 24.8 mill. € or 1.4%.

The most significant deviation from the plan was recorded in the reserve category, which was lower by 18.1 mill. € or 15.1%.

Current expenditures amounted to 692.3 mill. € and are lower by 8.6 mill. € or 1.2% of the planned, which is a result of the realized savings in the categories of Gross salaries and Other personal income. On the other hand, primarily as a result of the increase in salaries of employees in Education and Health, but also one-time benefits in the form of incentives and overtime paid to health workers during the pandemic, Gross salaries increased by 23.5 mill. € or 6.0% compared to the same period last year.

Social security transfers were realized at the level of 462.4 mill. € and are lower by 15.6 mill. € or 3.3% in relation to the planned due to the lower realization in the category of Pension and disability insurance in the amount of 10.5 mill. € and Social security in the amount of 3.0 mill. €. On the other hand, primarily as a result of the implementation of the new Law on Pension and Disability Insurance, this category recorded an increase of 5.5 mill. € or 1.6% compared to the same period last year.

Transfers to institutions, individuals, NGO and public sector recorded an increase both in relation to the plan and in relation to the previous year, due to larger transfers to the Health Insurance Fund in order to remedy the consequences of the pandemic.

On the other hand, capital expenditures were realized in the amount of 177.7 mill. €, which is by 15.4 mill. € or 9.5% 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 43.7 mill. € or 19.7%, as a consequence of the reduced intensity of works on the construction of the priority section of the Highway.

In the same period, the capital budget was realized in the total amount of 141.0 mill. € which is for 8.7 mill. € more than planned, while compared to the previous year less by 57.7 mill. €, which is primarily the result of the reduced intensity of works on the section of the Highway due to the pandemic.

Compared to the same period last year, total budget expenditures are higher by 132.6 mill. € or 8.5% 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 - October 2020, the dynamics of budget revenues and expenditures affected the realization of the budget deficit in the amount of 385.8 mill. € or 8.4% of GDP, which is 71.8 mill. € or 22.9% higher than planned.

 

Attachment: GDDS 10 monthly data (1).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)