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Press realese: Montenegro Budget execution in the period January - July 2020 (GDDS table 7)

Published date: 01.09.2020 14:38 | Author: Ministarstvo finansija

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The epidemiological situation in the country, but also at the global level, in July determines the most significant part of economic trends, which is reflected in the collection of budget revenues. Having in mind the pronounced seasonality when it comes to the collection of budget revenues in July, conditioned by the collection of revenues on the basis of realized tourist traffic, significantly lower number of arrivals and realized number of overnight stays caused a decrease in collected revenues.

In order to limit the negative impact of the pandemic on economic flows, ie provide additional support to the economy but also create conditions for long-term growth and development, the Government of Montenegro in July adopted the Third package of socio-economic measures to support citizens and the economy estimated at more than 1 billion euros. This package contains short-term and long-term measures aimed at faster recovery of the Montenegrin economy through diversification of the economy and increase of domestic production. At the same time, the focus is on dynamizing activities on the realization of strategic goals from key sectoral policies (IT sector, tourism, agriculture and industry including energy) that are developed through the concept of rapid breakthroughs.

Budget revenues in the period January - July 2020 amounted to 881,9 mil. € or 19,1% of estimated GDP (€ 4.607,3 million), which is by 12,3 mill. € or 1,4% 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 21,8 mill. € or 6,7%, while collection of excise duties was below the planned by 2,9 mill. € or 2,4%. Lower collection of income is predominantly conditioned by the decline in turnover in domestic and foreign trade, which primarily depends on the tourist season, ie the realized income that is generated on the basis of the arrival of foreign tourists.

Taxes and contributions on wages recorded a cumulative increase compared to the plan in the amount of 10,7 mil. € or 3,4%, where the income tax is higher by 1,8 mill. € or 3,1% compared to the planned, while the contributions are higher than planned by 8,9 mill. € or 3,5 %, as a result of subsidizing part of the salaries of employees, which continued to be implemented within the third package of Government measures, but also a slight increase in salaries of employees in education and health.

In addition to the above, in the observed period, a higher collection of income from income tax was recorded than planned as a result of strong growth of economic activity from the previous year.

Budget revenues compared to the same period last year are lower by 116,2 mill. € or 11,6%, which was expected in the economic conditions determined by the pandemic and the implementation of measures to limit its consequences.

Budget expenditures in the period January - July 2020 amounted to 1.152,9 mill. € or 25,0% of GDP and are higher than planned by 6,5 mill. € or 0,6%. Compared to the same period last year, budget expenditures are higher by 113,5 mill. € or 10,9% as a result of the implementation of a package of measures aimed at combating the negative effects of the pandemic and assistance to citizens and the economy, as well as greater allocation for the needs of financing the health system in a pandemic. In the structure of budget expenditures, current expenditures were realized at the level of 491,1 mill. € and are approximately at the planned level. In addition to the above, capital expenditures were realized in the amount of 109,2 mill. €, which is 4,3 mill. € or 4,1% more than planned, as a result of continued implementation of capital projects while compared to the previous year they are lower by 11,3 mill. € or 9,4%.

Restrictions on the execution 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 - July 2020 was realized in the total amount of 87,3 mill. € which is 5,0 mill. € more than planned, while compared to the previous year it is lower by 24,0 mill. €.

In the period January - July 2020, the budget deficit was realized in the amount of 271,0 mill. € or 5,9% of GDP, which is 18,8 mill. € or 7,5% higher than planned.

Attachment: GDDS 7_montly data.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 (1all categories of expenditures that are in the function of implementation of the project financed by the Capital Budget)