Report on the budget execution in the period January – November 2021

From the beginning of January to the end of November this year, the budget deficit was reduced to 1.6% of GDP and amounted to 76.2 mill. €. That is for 112.1 mil. € or 59.5% less than planned, while the deficit for 11 months is lower by 321.1 mill. € (80.8%) compared to the comparable period in 2020, or by 34.5 mill. € (31.1%) compared to the same period in 2019.

Budget revenues in the period January - November 2021 amounted to 1,663.2 mill. € or 34.1% of GDP and are at the level planned, which once again indicates the success of revenue planning in conditions when there is still economic uncertainty due to the coronavirus pandemic. Compared to the comparable period in 2020, the collection of revenues is higher by 207.8 mill. € or 14.3%.

The best indicator of the recovery of economic activity after the recorded decline of over 15% in 2020 are revenues from VAT, which are above the planned by 61.2 mill. € or 10.9%, while compared to the comparable period of the previous year they are higher by 140.4 mill. € or 29.1%. The implementation of electronic fiscalization of tax cash registers also contributed to the good collection on this basis.

Despite the fact that the proposed legal solutions have not been adopted, which provided for an increase in excise duties on certain excise products, and which have been in the parliamentary procedure since mid-May, excise revenues continue to grow by 5.9 mill. € or 2.7%. Compared to the same period in 2020, the collection of excise duties is higher by 40.2 mill. € or 21.6%.

Revenues from corporate income tax have already exceeded the plan for the whole year, which is an indicator of a high degree of tax discipline, even when the business took place in a pandemic.

Personal income tax revenues are lower than planned in the amount of 23.3 mill. € or 17.8%, as a result of the planned but unrealized effects of the Draft Law on Amendments to the Law on Personal Income Tax due to the non-adopted Draft Law on Tax Administration, which was supposed to create preconditions for collecting revenues based on taxation of undeclared income, and which has been in the parliamentary procedure since mid-May this year. Compared to the same period last year, revenues based on the mentioned category are higher by 6.8 mill. € or 6.8%.

Budget revenues in November this year amounted to 158.6 mill. €, which is higher by 6.5 mill. € or 4.3% compared to the same month last year. The realized collection in November is above November 2019 by 11.3 mill. € or 7.7%.

After several months of consecutive budget surplus, in November a deficit of 13.6 mill. € is recorder and is almost four times lower than the deficit in November 2019. Compared to November 2020, the deficit is slightly higher by around 300.000  € due to the fact that in November last year the first tranche of EU donation in support of Montenegro in order to combat the negative effects of coronavirus was paid in the amount of 28.0 mill. €.

Budget expenditures in the period January - November 2021 amounted to 1,739.4 mill. € or 35.6% of the estimated GDP and compared to the planned they are lower by 112.0 mill. € or 6.1%, while compared to the same period in 2020 they are lower by 113.3 mill. € or 6.1%.

A lower realization was recorded in almost all categories of expenditures compared to the planned ones.

In the structure of budget expenditures, current expenditures were realized at the level of 748.3 mill. € and are lower by 41.9 mill. € or 5.3% compared to the planned. Compared to the same period last year, current expenditures are lower by 16.6 mill. € or 2.2%.

Capital expenditures were realized in the amount of 147.7 mill. €, which is by 68.3 mill. € or 30.2% less than planned, while compared to the execution in the same period in 2020 they are lower by 49.4 mill. € or 25.1%. The realization of this category of expenditures was significantly increased in September, October and November due to the improved dynamics of works according to deadlines for the completion of the construction of the priority section of the highway.

Compared to the previous year, higher expenditures were recorded in:

Gross salary and contributions in the amount of 36.1 mill. € or 8.0% due to the increase of salaries in the sectors of health and education, as well as the different treatment of the gross salary fund of the University of Montenegro during 2020 in relation to the period of temporary financing during 2021.[1]

[1] In 2020, all costs of the University of Montenegro (including gross salaries) were planned on the expenditure Transfers, while temporary financing reclassified by expenditures, which increased the total fund of gross salaries in 2021