Montenegro's consolidated budget, which includes the state-level and local governments’ budgets, recorded a deficit of EUR 87.9mn in 2013, equal to 2.7% of the GDP, down from 6.1% of GDP a year ago, data from the ministry of finance showed. The state-level budget posted a deficit of EUR 128.3mn (3.9% of GDP) due to higher-than-planned expenditures related to the bankrupt aluminum smelter KAP.
The local government budget, on the other hand, recorded a surplus of EUR 40.4mn (1.2% of GDP) as revenue increased while expenditures declined over the period. Local governments’ revenue grew 3.7% to EUR 185.5mn in 2013 lifted by higher tax proceeds. Income from local taxes rose 22.5% to EUR 62.4mn last year (34% share in total local budget revenue). Personal income tax revenue increased by 4.1% to EUR 28.5mn over the period. Local governments’ expenditures shrank 8.6% to EUR 146.5mn in 2013 as falling goods and services and capital spending offset higher employment expenses.
According to the 2014 budget law, Montenegro plans to cut its state budget deficit by half to 1.98% of GDP in 2014, due to expected higher budget revenue supported by a 3.6% GDP expansion. If the government meets its official target, this will likely also translate into lower consolidated budget gap.
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