Montenegro’s government has adopted an urgent budget revision to redirect funds for social payments due in November and December, a statement on the government’s website said on November 8.
Earlier in November, Finance Minister Rasko Konjevic said that the budget should be rebalanced urgently there is a shortage of money for social payments. The proposal was backed by Deputy Prime Minister Vujica Lazovic.
Prior to adopting the rebalance, the government decided to auction a €100mn four-year T-bond issue later this month in order to cover budget spending. The funds raised via the T-bond issue will be used to finance the budget deficit, capital spending and debt servicing, and for fiscal reserves.
The budget rebalance had been suggested back in February, when the finance ministry said that the 2016 budget would need a rebalance in the second half of 2016 due to the public sector wage hike and unexpectedly high costs of benefits for mothers of three or more children. In the 2016 plan, the government set the end-year budget deficit at 7.2% of the projected GDP.
Legislative amendments, under which mothers of three or more children who have worked for at least 25 or 15 years respectively will receive lifetime benefits equal to 70% of the average wage, came into force in January this year. In February, Montenegro also decided to raise public sector wages by up to 16% this year.
As of July 1, Montenegro raised pensions by between 3% and 20%. The increase will affect around 9,000 people and will cost the budget an additional €6.5mn this year.
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