The Committee for Economy, Finance and Budget will subsequently declare on the fiscal strategy for the period from 2024 to 2027, because today's session was not attended by a sufficient number of deputies to have a quorum.
After its adoption by this parent Committee, the deputies in the parliament will express their opinion on that document.
At the session, all the criticisms of this document that were heard in the past months could be heard, namely that there is no risk analysis for the proposed measures, that public finances are endangered, that the laws for this key document have already been adopted while it is only now before the deputies ...
Fiscal strategy presents fiscal policy goals, measures and activities to achieve those goals, and macroeconomic and fiscal projections in the period 2024 - 2027. The draft document was published in July, and foresees the introduction of minimum wages of 600 and 800 euros, the reduction of the contribution rate from 20,5 to 10 percent of gross wages, which increases the deficit of the PIO Fund to 386 million euros in the following year, as well as proposing an increase in VAT a, excise tax and other duties and measures to cover that deficit.
The laws enabling this were adopted during September, but the Assembly still did not adopt the Fiscal Strategy itself. The most significant indirect taxes are VAT and excise duties.
Minister of Finance Novica Vuković stated that the fiscal strategy is a key development document, and he reiterated that this document has not existed since 2021, and that this is the first time that the strategy is comprehensive.
He emphasized that this document contains all the tax measures planned for the implementation of the Europe Now 2 program. He also pointed out that based on the reduction of contributions for pension and disability insurance (PIO), it is projected that the state budget will be deprived of the amount of 180 to 200 million , which will be compensated through tax reforms, reduction of the gray economy and other measures.
"The document enables the predictability of the Government's policies and visions until 2027, and the main goal is to create preconditions for the reform of the tax system. The Ministry of Finance will also develop an alternative scenario, the so-called "stress-test" scenario. The program includes an increase in wages for all employees and pensions. After this reform, Montenegro becomes the country with the lowest tax burden on labor in Europe, and the program is fiscally neutral and there is no increase in the general VAT rate. There is no charge for this reform," Vuković added.
The law on wages is the basis for the fall of the government
The director of the Action for Social Justice Ines Mrdović asked Vuković whether he would stay with the adoption of amendments to the Law on Salaries in the Public Sector, which planned a 30 percent salary increase for all public officials.
She emphasized that the adoption of this law would be the real basis for the fall of the Government.
Vuković pointed out that the law is under public debate, and that he can submit all criticisms of the regulation that way.
She asked whether social benefits and pensions will grow in the coming years only on the basis of harmonization, how the Government will protect citizens from artificial inflation, i.e. huge profits of markets, pharmacies, banks, expensive groceries...
In addition, she asked for answers about what is being done to optimize the state administration and reduce the number of employees, and she also showed several documents, which, as she claims, contain contracts for consulting services in the Ministry of Health, which do not include the references of the employees or the legal basis. ...
Vuković clarified that they are in the process of a strict scan of the public administration and that the signing of contracts with all municipalities has been initiated, in order to determine tax debts because they will no longer be forgiven.
"We have initiated the return, and I will not give up until every cent that has gone from the central level has been collected. I do not have the sensibility at all to block state-owned enterprises in this way, nor to block enterprises at the municipal and municipal level. But I am in favor of the measure possible, so that their liquidity is not jeopardized and let's see what their cash "flow" can offer and create a situation in which it will be a regular system. The Ministry of Finance is no longer willing to wait for you to recover, not at all. I personally refused to activate the guarantee for the "Regional Waterworks" when I was in the State Treasury, now the issue is much more complicated and the company will have to manage itself in case of securing liquidity. The state no longer appears as a Spartan who will protect regardless "responsibility in business. If it is under bankruptcy, goodbye, under bankruptcy," Vuković pointed out.
He stated that they have a Directorate that deals with the issue of municipalities, whereby they rejected a significant part of the requests, while the municipalities and companies managed in the meantime. Vuković stated that he plans to deal with the issue of medicines in Montenegro, but also that the World Health Organization will provide them with a consultant who will monitor the sector with them for the year, and find room for optimization, because health care costs are increasing every year while the citizens are not satisfied with the service.
"We are working on amending the Law on Budget and Fiscal Responsibility, so that the Ministry would be required to issue approvals for work contracts. We have also raised the budget inspection to a significant level, and my goal is to strengthen it to the extent that it really protects the public interest. This is how we send a signal that budget spending is a strong focus," said Vuković and added that he wants clear rules on how they apply when it comes to the public interest.
He also emphasized that some administrations keep workers on work contracts for ten years, without giving them permanent employment.
The discussion is pointless, there is no analysis
Board President Boris Mugoša said that this is an important development document, and that all projects should have been included in the fiscal strategy, regardless of their status. He pointed out that there is no risk analysis, that the document was submitted in September while the laws were already being adopted.
"In this way, the debate as well as the public debate is rendered meaningless, and the deputies adopted all of this before the Government submitted the final document. Rarely does anyone deal with the revenue side of the budget, and I have a dilemma in that part. I am not a supporter of the path that Montenegro is taking, that is, that it relies on taxes, because it is a limited consumer model. You stated that the projections are based on a strong growth in tourism spending of eight percent, but you see in nine months that we have a decline in income and the number of overnight stays. Montenegro's tourism competitiveness is weaker than in 2019, and weaker than Turkey, Albania and Bulgaria. Competitiveness is less than before, we are less competitive in price than Turkey, Albania and Bulgaria, and we are increasing the VAT rate for accommodation from seven percent to 15 percent. Other elements are getting worse and worse, you can see our air availability, construction sites, communal cleanliness..." emphasized Mugoša.
He said that VAT cannot increase abnormally now that inflation has stabilized, and that taxes hit the poorest the hardest. He also referred to the trade deficit, i.e. that imports will decrease and exports will increase, especially since Montenegro will import electricity next year, due to the reconstruction of the Pljevlja Thermal Power Plant.
He also stated that it is not the first time that Montenegro has a current consumption surplus, and that it was also recorded seven or eight years ago. He also pointed out that the Central Bank has expressed concern about the issue of higher taxes for tourism and the deficit from the PIO Fund, and added that there are many question marks due to this economic program.
As a minus of the fiscal strategy, the representative of the Civic Movement URA Miloš Konatar stated that there is no risk analysis for the measures from this document. He pointed out that she was sorry that the document did not plan that Montenegro would be within the criteria from the Maastricht Agreement by 2027, while the public debt is growing.
"We are now discussing the fiscal strategy, and part of the law for it has already been adopted, and the question is whether all that we are doing makes sense. It was said that all salaries will be increased by 25 percent, that was on the famous calculator and the website of the Movement Europe This fiscal strategy does not provide for that, the first yellow card for the prime minister, the minimum wage is 700 euros, and my suggestion is to delete the term average minimum wage. The third, that the working hours will be seven hours. It should have been included in the strategy, but it was not," stressed Konatar.
Konatar stated that even the budget deficit after 2027 will not be below three percent, and that the strategy also includes proposals such as changes in the tax rate, specifically for the tax on internet shipments of up to 75 euros, that the increase in the tax rate from seven to 15 percent in tourism, but it is not known what the effect of this measure will be.
He also claims that citizens must be aware that everyone will pay higher prices in tourism, that excise taxes on still wines will increase, which will affect the future of small wineries, and that it is also problematic that income from property confiscation, illegally acquired by criminals, is also planned. activities.
"However, we do not have an effective law, and both the Government and the parliamentary majority refuse to adopt a law that will enable this. We are waiting for intensification of investments in infrastructure and capital projects, but in the budget for 2025 it is stated that all other costs will grow more than those from of the capital budget. For us, the salaries of the administration are twice as high as the allocations for the capital budget," Konatar said, adding that he wants it to be the other way around.
He criticized the inclusion of 10 million euros in the capital budget for the Velje brdo project, for which there is no planning document. He believes that the minus of the fiscal strategy is that there is no risk analysis for the measures from this document. He also claims that the average salary has increased by six percent since the implementation of the Europe Now 2 program, and not by 200 euros, as promised.
He added that the assessment that the reduction of contributions will create a deficit in the PIO Fund creates concern, because it is the money of all citizens. He added that caution must be greater because there is a budget deficit, while salaries in the public sector in the next year will cost as much as a section of the highway.
The plans are conservative
Vuković emphasized that he has to boast about the surplus of current consumption, and the fall in inflation, as well as a better credit rating. He stated that the budget deficit from 2011 to 2020 averaged five percent, the public debt grew from 1,5 billion to 4,4 billion...
"When we mentioned through the fiscal strategy that the nominal amount of the debt would increase, we were conservative because we calculated the execution of the capital budget every year. When we talk about inflation, the budget and the Europe Now 1 and 2 programs had an impact on the reduction of the gray economy because salaries I think that the standard of living of the citizens has also improved. In the report of the Central Bank, we have no denial of the fiscal strategy," he said, adding that the public debt management strategy will be presented to the Board by the end of the year.
Vuković pointed out that the World Bank plans to continue economic growth this year, and it also praised the fiscal sector, while revenues from tax collection have increased. As she says, she also predicted growth in the coming period. The European Commission stated that growth continued this year, that employment is higher and expects growth to accelerate next year as well.
The MP of the Europe Now Movement, Tonći Janović, stated that until now all governments have borrowed for current consumption, and that now that debt must be returned, but that citizens are better off now.
His colleague Dražen Petrić emphasized that the Europe Now 2 program is sustainable and responsibly implemented, and that the seven-hour working time is a topic that can be included in the fiscal strategy only when some form of solution is reached. He said the same about confiscation of property acquired through criminal activities.
"There is a possibility that the concession of the Airport will end, but even those revenues are not part of the fiscal strategy. The document is a reflection of responsible planning. No one from Europe has said that salaries will be increased by 25 percent," he added.
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