Montenegro's budget deficit hits 1.6% of GDP in Jan-Feb.

By bne IntelliNews March 13, 2012
The budget deficit of Montenegro reached EUR 54.9mn in Jan-Feb 2012, or 1.6% of the projected GDP for the year, the finance ministry reported. The cumulative gap expanded due to EUR 39.6mn deficit reported in Feb alone, compared to EUR 21.6mn in Feb 2011. Total revenues stood at EUR 116.4mn in the first two months, which is 9% lower compared to the same period last year. The inflows also lagged behind the plan by 15.5%. All major tax accounts registered annual decreases of inflows - revenues from personal income tax dropped by 9.2% y/y, VAT proceeds narrowed by 16.5% y/y and excise taxes revenue declined by 11.8% y/y. Thus total tax income fell by 14.6% on the year in Jan-Feb. At the same time, total expenditures rose by 18.7% y/y in the period, exceeding the plan by 44.4% in Jan-Feb. The growth of expenditures was fueled mainly by a 32.9% annual increase in costs of services and supplies (to EUR 201mn), a 31.2% rise in interests cost (to EUR 5.7mn) and 28.7% increase in gross salaries and contributions. The latter accounted for 24.5% of total budget expenses in Jan-Feb. In 2012, the government has projected narrowing of the budget gap to 1.05% of GDP, compared to 4% in 2011 and 4.9% in 2010. Total budget revenues are seen rising to 39.4% of GDP in 2012, from 38.9% a year earlier. Total expenditures are expected to drop to 40.5% of GDP this year, down from 42.9% in 2011. Due to rising fiscal imbalances, the IMF mission in the country suggested containing wage increases in 2012, advancing pension reform and abandoning fiscal support to troubled aluminium and steel plants even at the expense of more liquidations. The IMF also said that VAT and income tax rates fall below the region average, which leaves room for tax increases, to support the revenues side.
Budget execution, EUR mn
Jan - Feb 2012 y/y Feb-12 y/y
Current revenues 116.43 -9 67.72 -7
Taxes 74.68 -14.6 38.79 -14.3
Personal Income Tax 7.92 -9.2 5.33 -13.6
Value Added Tax 42.52 -16.5 21.32 -19.7
Excises 18.35 -11.8 9.08 6.4
Contributions 34.87 5.6 25.14 7
Duties 1.58 -21.7 0.8 -33.6
Fees 1.63 -34.6 0.79 -32.4
Expenditures 171.36 18.7 107.37 13.7
Gross salaries and contributions charged to employer 41.92 28.7 36.51 20.5
Expenditures for supplies and services 20.14 132.9 14.15 97.5
Current maintenance 2.03 9.8 1.99 10.8
Interests 5.73 31.2 1.66 70.2
Rent 0.84 -8.8 0.75 -11.7
Subsidies 10.78 1224.3 3.88 619.8
Other expenditures 0 -100 0 -100
Social security transfers 78.33 7.3 40.8 9.6
Deficit -54.93 233.6 -39.65 83.3
Source: finance ministry
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