MEK: Citizens and the economy need a Budget

The past year, in which Montenegro faced the coronavirus pandemic, according to economic indicators, represents the most difficult year since the restoration of independence and as a result, the proposed Budget for 2021 has multiple significance for the recovery of the economy, and the consequences of its failure to adopt are numerous and very dangerous. for both citizens and the economy, the Ministry of Economic Development (MEK) announced.

"After the Government submitted the Draft Law on the Budget to the Parliament within the legal deadline, even today, after more than two months, Montenegro does not have a Budget but uses the legal possibility of temporary financing. Any delay in the adoption of the Law on the Budget for 2021, as a systemic law, creates enormous pressure on the vision of the Government of Montenegro in the direction of achieving some of its priority goals: healthy finances and economic development, digital transformation, as well as Montenegro's membership in the EU," the announcement states.

Minister of Economic Development Jakov Milatović once again called for understanding the importance of adopting the Budget as soon as possible. "I appeal to the deputies to urgently adopt the budget, not only as a minister, but also as a citizen of Montenegro, for whom the basic measure is unity and the betterment of the country. We all want a prosperous country where citizens work and companies do business successfully. Otherwise, we will witness economic imbalances, which will call into question the economic recovery of Montenegro, which this year, according to the forecasts of international financial institutions, could be a record".

The Ministry says that the failure to adopt the Budget in the year after the great economic crisis, which brought the country into a state of economic recession, can have disastrous economic consequences. "Without the adopted Budget, the Government does not have the possibility to deal with the dynamization of economic activities in an adequate and desirable way. The plans and policies that the Government incorporated through the Budget proposal cannot manifest numerous positive and multiplying effects until its adoption and implementation. Starting new ones and finishing them earlier of contracted capital projects represent necessary activities for the recovery of the economy."

They said that with temporary financing, the Government managed to a certain extent to bring under control many negative economic phenomena that were expected in the first half of the year, but that the proposed budget must be adopted in order to fully stabilize the situation in our economic system.

The Ministry says that the non-adoption of the Budget has more negative consequences on citizens and the economy.

Among other things, as they stated, the concept of conducting economic policy is being undermined. "The concept of conducting economic policy is based on short-term, medium-term and long-term plans. The Government's work program and the Budget for the current year are the two umbrella documents for the implementation of the Government's policy, and the failure to adopt the Budget puts this Government in a situation where it cannot plan certain activities for longer than month."

They note that state spending is also at risk. "Due to the non-adoption of the budget, the state of Montenegro does not have a personnel plan, there is no possibility of announcing public procurements, financing existing and starting new capital projects. Without fresh money for the economy, which would be made possible through public procurements, public consumption is reduced, which has the consequence direct and indirect effects on economic activity, as well as on the reduction of planned public revenues in the state through multiplicative tax effects."

As they add, the implementation of certain measures to support citizens and the economy is also called into question. "Planning and implementation of the package of economic support measures for the first and second quarter was and still is a big challenge in the conditions of non-adoption of the Budget. The implementation of certain measures adopted by the Government, which in the first quarter alone amounted to around 160 million euros, and more in the second quarter, may be threatened due to the lack of budgetary mechanisms related to their operational implementation."

The Ministry points out that the failure to adopt the Budget impairs the recovery of the tourism industry. "In 2020, Montenegro lost at least 500 million euros in income from tourism, mostly due to the political decision to close the borders. Therefore, the Ministry of Economic Development is working hard to rehabilitate and recover the tourism industry. Failure to adopt the Budget may jeopardize these efforts, and certain measures which refer to the support of the tourism economy of Montenegro can be called into question. Let us remind you that the tourism economy of Montenegro has a serious chance of achieving 65% of the income from 2019 only if all social actors act in sync."

As one of the consequences of the failure to adopt the Budget, the Ministry cites the obstruction of the diversification of the Montenegrin economy. "The Ministry of Economic Development cannot implement the much-needed diversification of our economy through incentive and development programs to support the economy, planned by the Government Work Program for 2021, for which we have allocated over 10 million euros in 2021. The funds provided in the Budget, and which cannot be operational due to the non-adoption of the Budget, refer to: support programs for industrial and regional development (1,3 million euros), programs for encouraging innovation (2,4 million euros), while encouraging investments and improving competitiveness as much as 6,4 million euros. Also, the monitoring of investment projects, as well as international and domestic promotional activities, is at risk. Finally, the implementation of operational employment measures is prevented."

The Ministry adds that the failure to adopt the Budget slows down the process of European integration: "It should be emphasized that the failure to adopt the Budget for 2021 endangers projects that are tied to funds contracted from EU funds."

From that department, they once again appealed to the MPs to adopt the Draft Law on the Budget as soon as possible, in order to enable the recovery of the economy as soon as possible, ensure financial stability and "improve the quality of life of the citizens of Montenegro, who deserve it".