The budget proposal for 2023, which is projected at 2.85 billion, foresees significantly more money in almost all items compared to this year, but also compared to the so far record 2019, the last year before the economic crisis caused by the coronavirus pandemic.
Next year, tax collection of almost one and a half billion euros is expected, which is 170 million more than from the rebalancing for this year, and 290 million more than in 2019. These optimistic forecasts are based on the continued growth of consumption and tax discipline, the reduction of the gray economy, the initiation of investments in energy, tourism and transport and the growth of the economy.
In the record economic year of 2019, the government at that time borrowed one billion and 15 million euros, while for the next year, a debt of 599 million is expected, the largest part of which relates to the return of old loans and obligations from previous years in the amount of 365 million and interest of 108 million. The remaining part of the debt relates to the capital budget and the creation of reserves.
Open to amendments
Prime Minister Dritan Abazovic and the Minister of Finance Aleksandar Damjanović said yesterday that the Government expects the support of the parliamentary council for the most important economic act in the coming year.
"I call on the deputies to support the budget and we are open to amendments," Abazović said at the press conference dedicated to the budget proposal, which entered the parliamentary procedure within the legal deadline.
Damjanović said that not a single cent in the proposal was planned without a legal foundation.
The collection of value added tax (VAT), the main state revenue, according to the final budget account for 2019, amounted to 695 million, this year's rebalancing is foreseen in the amount of 814 million, and for the next 958 million, which is half of the total current revenues.
According to this projection, VAT collection would be 263 million more than in 2019. That increase alone is greater than the state budget losses caused by the abolition of health insurance contributions and the reduction of income tax through the introduction of the non-taxable part.
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In 2019, the state budget received 187 million from health insurance contributions, and it was abolished on January 1 of this year. The state treasury collected 22 million from this contribution this year, which refers to debts from the previous period, and next year the expected income is only 1,2 million.
In 2019, the state received 125 million from income tax (on employees' wages). This year, due to the introduction of the non-taxable part, that income was reduced to 94 million, and next year, due to changes in the law that transfers the additional part to the municipalities, the part belonging to the state treasury will be reduced to 61 million.
Income from pension insurance contributions was worth 2019 million in 329. This year, due to the increase in the minimum wage and salary, it was increased to 418 million, and for the next year, 438 million is expected from this contribution.
Income from excise duties amounted to 2019 million in 235, and this year it increased to 261 million primarily due to almost double the collection of excise duties on tobacco products due to the successful fight against the gray cigarette market.
Wage talks next week
The state's income from fees is increasing significantly. It was 2019 million in 28, 54 million this year, and 111 million euros is expected next year. The most significant reason for the increase in this income is the fees from the economic citizenship project.
The government has significantly increased expenditures on employee wages, pensions, social benefits...
2019 million euros were paid for net earnings in 278, 412 million euros were planned this year due to growth due to the "Europe Now" program, and 470 million euros in the next year due to an additional salary increase due to agreements with unions and an increase in coefficients.
Damjanović announced that next week he will start negotiations with the unions on salary increases.
"The government has conservatively planned budget revenues and predicted wage growth in the public sector that will follow the rate of inflation, while tax rates will not change," said Damjanović.
The cost of paying all pensions in 2019 was worth 420 million, and this year it was increased to 495 million, and the next will be 529 million. This growth was due to the increase of the minimum pension limit by almost 70 percent, but also four adjustments of other pensions in the total amount of about 16 percent. From the first of January, a new increase of the minimum pension by 10 percent and a regular adjustment of all pensions are foreseen.
In the payment of rights from the field of social protection, there was the largest increase in state expenditures. Payments to the poorest citizens in 2019 amounted to 79 million, this year they were increased to 144 million and the next will be 190 million.
This growth was mainly due to the introduction of child allowance, which did not even exist until a year ago. This year, 27,4 million is earmarked for children's allowances, and next year it will increase to 50,4 million, as all children up to the age of majority will receive an allowance of 30 euros.
Allocations for health care are also increasing significantly. Transfers to the Health Fund and health care institutions in 2019 were worth 108 million, and this year they were increased to 173 million, of which about 65 million were for the payment of old debts of the Health Fund, so this institution ends the year with zero euro debts , first time. Next year, there will be no such debts, and transfers for health care will amount to 170 million, which means that the Fund and health institutions will receive record amounts of money.
247 million is planned for capital expenditures, which is formally less than in previous years, but if we exclude earlier costs for the construction of the highway, which amounted to more than 150 million per year, that is more money for other public investments.
The money is ready, but the main project is waiting
The budget proposal for next year leaves the possibility of borrowing EUR 200 million to continue the construction of the second section from Mateševo to Andrijevica. Given that the participation of European banks is expected in the financing of the continuation of the construction of the highway, the construction of new sections must be in accordance with European standards, that is, the complete project must first be completed and then the contractor must be selected through a tender. The first part belongs to citizens without a project, because CRBC made it during construction, and this Chinese company was not chosen in a tender, but on the basis of an interstate contract with China.
The government previously announced that the project for the new section of the highway should be completed in 2023, money secured and a tender announced, and that the construction itself should begin in 2024. five million euros, which refers to the financing of project development and consulting services.
Next year, for the first time, as announced by the Government, the amount of money for defense and security will be within the NATO standards.
In addition to the regular part of the budget for the Army and the Ministry of 55 million euros, 80 million euros will be allocated for the purchase of equipment and weapons, which will be financed from loans. 40 million is planned for the procurement of general equipment and resources, and 20 million for the procurement of anti-tank weapons and self-propelled mortars.
The budget proposal foresees the issuance of short-term securities (government bills).
They accelerate the repayment of restitution debt
The government planned to speed up the repayment of restitution debts, which, according to Damjanović, amount to 80 million euros.
"We allocated a total of 10 million to the compensation fund, that is, 7,5 million more than this year, in order to speed up the payment of debt to citizens whose property was confiscated on the basis of restitution," the minister said.
Abazović said that they especially took into account social benefits when drafting the budget proposal.
"For the alimony fund, it will be 500.000 euros, and the Health Fund will receive 65 million more, and for the first time, this fund enters without debt in one year," said Abazović.
The Prime Minister said that they expect additional money from economic citizenship by the end of the year, and that all municipalities will have one million for the project they are applying for.
Rushing into ruin or populism
Former Minister of Finance Sweetie Spajic assessed that the budget proposal for 2023 is unsustainable and politically made to bring down the country, although he believes in good intentions.
Spajić said that according to the proposed budget, current expenditures are higher than income, that there is no data in it about the movement of the public debt, and he claims that there are no measures that would bring more money on the revenue side.
"I wouldn't recommend him even to an enemy. I hope that the Government, with the help of the Assembly, will fix it," said Spajić at the press conference yesterday.
Commenting on this attitude, Damjanović said that his predecessor made an inappropriate comment and that he has the least right to talk about it.
"He illegally and secretly issued bonds without a decision in the Official Gazette. He received a negative opinion from the SAI, which he calls politicized, but he was not bothered by the SAI's assessment of the issuance of bonds. He left the healthcare sector in great doubt," Damjanović said.
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He recalled that Spajić asked for 1,5 billion debts, which the parliament blocked.
"He knows very well what the IMF told him regarding the hedging arrangement, and I was told at the IMF that the state should open its eyes to this business," said Damjanović.
Abazović said that he understood the political context, but that he expected more correctness from Spajić, to whom the URA supported the budget proposal with revenues that were not realistically planned.
"The budget cannot be called hostile when there are so many social benefits. We fully support this proposal. We don't need populism, but a realistic story," Abazović said.
In the next three years, two billion old debts and interest must be returned
The projection of the state budget 2023-2025 shows that in the next three years old debts of one and a half billion euros and interest of 430 million will come to be paid to Montenegro.
In the next year, EUR 338 million of old loans and EUR 109 million for interest must be returned, in 2024 the principal of EUR 423 million and interest of EUR 139 million will be due, and in 2025 the state must pay the principal of the debt of EUR 755 million and interest of EUR 183 million . This amounts to a total of one billion and 947 million euros.
These obligations, as well as part of the capital projects, would be financed with new debts of two and a half billion euros.
Project loans 506 million euros
Project loans for 2023 in the budget proposal are worth 506 million euros, and there are 14 projects on the list. With the Development Bank of the Council of Europe (CEB), two loans are planned, namely 10 million for the "1000 plus" project, which involves solving the housing needs of citizens on favorable terms, and 15 million for the prison in Mojkovac.
On the list is the reconstruction of the water infrastructure in the capital Cetinje, which will be financed with a loan of 10 million euros from the European Investment Bank (EIB), and with a loan in the amount of 32 million euros from the same creditor, Railway Infrastructure (ŽICG), a project of general overhaul of the railway, rehabilitation of steel bridges and tunnels, as well as the modernization of depots and workshops.
Through project loans, the highway reconstruction project will be financed in the amount of 20,1 million euros, for which a creditor has yet to be determined, and the plan is to find a creditor who would give 200 million euros for the second section of the highway from Mateševo to Andrijevica .
Guarantees for EPCG, CGES, ŽICG, ŽPCG and RV
Next year, the state plans to issue guarantees of 160 million euros, which would be used for credit loans of the Regional Water Supply (RV), Railway Infrastructure, Railway Transport, Montekargo, Montenegrin Electric Transmission System and Elektroprivreda.
The regional water supply is planning a loan of 12 million euros from the European Bank for Reconstruction and Development (EBRD) to solve the issues of water supply and sewerage infrastructure in the settlements of Dobre vode, Veliki pijesak and Utjeha in the municipality of Bar and the settlement of Kruče in the municipality of Ulcinj.
From the EBRD, ŽICG should take 11 million to finance the purchase of track maintenance machinery and new equipment for the auxiliary train used to eliminate the consequences of accidents and accidents, and ŽPCG 20 million to acquire new trains.
The list also includes a guarantee for a loan of two million for ŽPCG with EUROFIME (Specialized financial institution for financing the purchase and repair of rolling stock) for the urgent repair of trains.
ŽICG plans to get 30 million euros from the European Investment Bank (EIB) for the purchase of new signaling on the Bijelo Polje-Bar line, while Montekargo needs to find a creditor who will give it XNUMX million to purchase wagons to maintain the readiness of the rolling stock.
The Montenegrin Electric Transmission System (CGES) needs to find a creditor that would finance the construction of the future Brezna transformer station in the amount of up to 30 million, the transmission line from Vilus to Herceg Novi in the amount of up to 13 million euros, and the installation of a variable choke in the Lastva transformer station, in the amount of up to nine million euros.
Elektroprivreda (EPCG) will borrow 30 million euros from the German Development Bank for the installation of aggregates A8 of the "Perućica" hydropower plant.
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