The Government has determined the Fiscal Strategy Proposal of Montenegro for the period 2024-2027. year, with the Report on the conducted public discussion.
The fiscal strategy presents fiscal policy goals, measures and activities to achieve those goals, and macroeconomic and fiscal projections in the period 2024 - 2027.
"The objective of the fiscal policy during the term of office of the 44th Government of Montenegro is: a predictable and encouraging fiscal policy that will contribute to increasing the attractiveness of Montenegro as an investment destination and a more favorable business environment in order to create new sources of economic growth, create new jobs and accelerate GDP convergence per capita towards the EU average. Bearing in mind the proclaimed goal of full membership of Montenegro in the EU in 2028, responsible management of public finances and fulfillment of economic criteria for membership, as well as harmonization of fiscal policy regulations with relevant EU regulations, is an absolute priority when adopting new and changing existing policies. Short-term reduction of the public finance deficit, borrowing exclusively for the financing of capital projects, i.e. achieving a surplus of current budget spending, along with continuous growth of budget revenues and optimization of current budget spending, are preconditions for macro-fiscal stability," it was announced. after the Government session.
It is added that according to the basic macroeconomic scenario, the Montenegrin economy in the medium term will grow at an average annual rate of 3,7 percent, i.e. by year 3,8 percent in 2024, 4,8 percent in 2025, 3,1 percent and 3,2 percent in 2026 and 2027.
"Due to the slowdown in price pressures at the European level, a gradual slowdown in inflation is expected, which will average 3 percent in the period 2025-2027. In accordance with the fiscal framework for the same period, the original budget revenues are in the range of 2.772,6 million euros or 38,1 percent of GDP in 2024, up to 3.081,2 million euros or 35,8 percent of GDP in 2027. Income stability despite a significant reduction in the tax burden on labor is ensured through the implementation of new tax and policy measures improving the business environment, strengthening the competitiveness of the economy and improving the conditions for attracting investments", announced the Government.
Budget expenditures of the central level, it was added in the announcement after the session, range from 3.009,6 million euros or 41,3 percent of GDP in 2024 to 3.364 million euros or 39,1 percent of GDP.
"When it comes to the management of public spending, the policy strategy is based on: reform of the social protection system with the aim of directing social funds to those who need it and development of the system of social protection services, reform of majority-owned enterprises by the state, optimization of public administration through the implementation of functional analyzes that they should identify areas in which it is necessary to rationalize the number of employees and those areas that require additional personnel strengthening in the context of the requirements from the EU agenda and better provision of public services, reform of the wage system in the public sector, as well as maintaining a high level of allocations for financing capital projects" .
As announced by the Government, the trend of strong growth in budget revenues, on the one hand, and the growth of the aforementioned categories of public spending, on the other hand, determine the level of the budget deficit, which ranges from 3,54 percent of GDP in 2025 to the level of 3,3 percent of GDP in 2027.
"In this sense, in the observed period, the fiscal rule, provided for by the Law on Budget and Fiscal Responsibility, was not violated, despite the fact that the state waives a part of the income based on the reduction of the tax burden on work for the benefit of the employee and the employer. Bearing in mind the above, it is necessary should be noted that in all years the sub-section achieves a surplus of current budget spending, which speaks in favor of the fact that the state finances all its current liabilities from current revenues, that is, that borrowing is carried out exclusively for the needs of the realization of capital projects that support projected economic growth." the announcement concludes.
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