Montenegro's 2012 budget deficit widens 3.1% to EUR 196mn.

By bne IntelliNews June 14, 2013

Montenegro’s budget gap expanded 3.1% to EUR 195.6mn in 2012 due to falling budget revenue and activation of state guarantees to the aluminium smelter KAP in April 2012, according to a report on the 2012 budget execution published on the government’s website. The report was approved by the government during its regular session on June 13. The government thus revised upwards its 2012 budget gap estimate from EUR 164mn or 4.9% of GDP previously.

The budget gap to GDP ratio remained broadly unchanged at 5.86% of GDP in 2012 compared to the year before, as the country’s economy contracted 0.5% in 2012. However, it overshot significantly the official target of 3.3% of GDP (EUR 190mn, following budget revision in mid-2012).

Total financing needs, including budget deficit and debt repayments stood at EUR 331mn, up from EUR 322mn a year earlier.

Budget revenue dropped 0.7% to EUR 1.12bn due mainly to declining VAT proceeds (down 9.6% to EUR 355mn). Revenue accounted for 97.5% of the annual plan and for 33.6% of GDP.

Expenditures also edged down 0.2% to EUR 1.32bn (39.4% of GDP) mainly due to capital expenditures’ cuts (down 30% to EUR 59mn). Current expenditures rose 1.9% to EUR 1.3bn on the back of higher wages and goods and services spending. Expenditures exceeded the full-year plan by 5.3%.

In 2013 the Montenegrin government plans to trim its budget gap to 2.7% of GDP, by rising taxation (VAT and personal income tax) and improving budget revenue collection. The IMF recently said that additional austerity measures are needed to curb the country’s rising public indebtedness (at over 50% of GDP).

Montenegro's state budget, EUR mn 2011 2012 Plan y/y,%
Budget revenue 1,129.1 1,121.0 1,150.1 -0.7
Tax revenue 704.1 687.4 725.6 -2.4
--VAT 392.2 354.7 381.2 -9.6
Social contributions 353.6 362.3 352.0 2.5
--Personal income tax 81.6 82.3 81.5 0.8
--Corporate profit tax 36.1 64.0 46.9 77.3
Budget expenditures 1,318.8 1,316.6 1,260.2 -0.2
Current expenditures 1,234.7 1,257.8 1,194.7 1.9
--Wages and contributions 371.3 374.7 376.6 0.9
--Goods and services 104.0 153.7 146.7 47.8
Capital expenditures 84.1 58.7 76.7 -30.2
Deficit 189.7 195.6 110.1 3.1
Source: MinFin        

Related Articles

EIB surpasses investment milestone in the Western Balkans by investing €1.2bn in 2023

EIB Global, the financial arm of the European Investment Bank (EIB) for activities beyond the EU, set a new record by investing €1.2bn in the Western Balkans in 2023, the EIB said on February 9. ... ... more

bne IntelliNews Southeast Europe Outlook 2024

This Southeast Europe Outlook 2024 has been prepared by bne IntelliNews as part of a series of annual reviews providing updates on the geopolitical, macroeconomic and commercial state of ... more

Montenegro’s central bank says Serbian company wants to buy Prva Banka

Montenegro’s central bank said on November 10 it has received a request for approval of the purchase of a 50% stake in Prva Banka Montenegro from a Serbian company, not a Bosnian businessman as ... more

Dismiss