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

The budget surplus amounted to 2.8 mill. € in October this year, which was recorded after a surplus for three months in a row (June, July and August), as well as primarily realized in September.

In October 2019, which was a record in terms of income from tourism, a deficit of 22.6 mill. € was recorded, while in the same month in 2020 was recorded a deficit of 51.1 mill. €.

A strong recovery of economic activity, led by a successful summer tourist season, has contributed improving the collection of budget revenues, while reducing the annual so-called "unproductive expenditures".

Budget revenues for the ten months of this year are above the plan, which once again indicates the success of revenue planning in conditions when there is still economic uncertainty due to the coronavirus pandemic. Also, current budget expenditures are lower by 45.8 mill. € or 6.3% compared to the planned.

The budget deficit for ten months was reduced to 1.3% of GDP and amounted to 61.8 mill. €, which is 119.2 mill. € or 65.8% less than planned, while compared to the comparable period in 2020 it is lower by 322.2 mill. € or 83.9%.

Budget revenues in the period January - October 2021 amounted to 1,504.6 mill. € or 30.8% of GDP, which is compared to the comparable period in 2020 higher by 201.2 mill. € or 15.4%, while compared to the plan it is higher 2.3 mill. € or 0.2%.

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 46.7 mill. € or 9.1%, while compared to the comparable period of the previous year they are higher by 120.6 mill. € or 27.5%. 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 yet 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 5.1 mill. € or 2.5%. Compared to the same period in 2020, the collection of excise duties is higher by 34.7 mill. € or 20.4%.

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 20.1 mill. € or 17.2%, 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 5.0 mill. € or 5.4%.

Budget revenues in October this year amounted to 160 mill. €, which is higher by 22.6 mill. € or 16.5% compared to the same month last year. The realized collection in October is above October 2019 by 3.4 mill. € or 2.2%.

Budget expenditures in the period January - October 2021 amounted to 1,566.4 mill. € or 32.1% of the estimated GDP and compared to the planned they are lower by 116.8 mill. € or 6.9%, while compared to the same period in 2020 they are lower by 120.9 mill. € or 7.2%.

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 676.9 mill. € and are lower by 45.8 mill. € or 6.3% compared to the planned. Compared to the same period last year, current expenditures are lower by 14.8 mill. € or 2.1%.

Capital expenditures were realized in the amount of 128.2 mill. €, which is by 59.2 mill. € or 31.6% less than planned, while compared to the execution in the same period in 2020 they are lower by 49.3 mill. € or 27.8%. The realization of this category of expenditures was significantly increased in September and October due to the improved dynamics of works, which is also expected in the coming period, especially having in mind the 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 31.8 mill. € or 7.7% 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