Montenegro’s parliament on June 24 adopted a budget revision proposed by the government to reflect the lower income and higher spending due to the coronavirus (COVID-19) pandemic, setting the deficit at 7.3% of GDP.
The revision was expected as Podgorica is implementing measures to soften the impact of coronavirus on its economy.
Finance Minister Darko Radunovic told MPs the government has projected an economic contraction of 6.8% in 2020 and a 4.9% growth in 2021.
Tourism revenue, which is the main contributor to GDP growth, is estimated to fall by 40% in 2020, resulting in 17% lower budget revenue, which is estimated at €1.7bn.
Budget spending is seen to be by 3% lower from the initial plan and is set at €2.04bn. The government expects lower spending as it has redistributed funds to meet the higher spending.
Despite that, the government will need to find €877.5mn to patch the budget gap. Public debt is expected to reach 82.5% of GDP in 2020.
FDI is also seen falling, by 5.4% of GDP.
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