Representatives of the economy, trade unions and the financial sector appeal to the Government to be careful in implementing the budget for 2025, they point out that it carries certain risks, that the program is too optimistic, that it is planned to increase revenues from tourism even though this year Montenegro experienced a decrease in them ...
These are some of the key assessments that could be heard at the thematic session of the Committee for Economy, Finance and Budget, which considered the Bill on the Budget for 2025.
The continuation of the session is scheduled for Tuesday, December 17.
The original revenues of the budget for the year 2025 are planned at 2,88 billion euros, while the expenditures are planned in the amount of 3,16 billion, which would result in a planned deficit of 278 million euros.
Director of the State Budget Directorate in the Ministry of Finance, Bojan Paunović, said that positive economic trends and a growth rate of 4,8 percent are expected, that it will be made up of domestic consumption, i.e. private investments, while reducing contributions will stimulate employment.
He added that inflation is the lowest since 2021 and that it is expected to gradually slow down, and that growth is expected based on the increase in income from VAT, excise taxes, excise taxes on still wines, games of chance...
"The most significant allocations are for mandatory spending and infrastructure projects, for public finances debt repayment and interest amounting to 1,2 billion euros. A spending budget deficit of 278 million euros is expected, borrowing of 900 million is projected for debt repayment, and the state debt is expected to be around 60 percent of GDP. At the beginning of 2025, the state will focus on the state market, in order to diversify the sources of financing", stated Paunović and added that the finance department is negotiating with the World Bank to obtain guarantees based on development policies, so that loans are as favorable as possible.
He added that the capital budget includes the implementation of 341 projects, with a total value of 3,7 billion euros, and that there are also 28 new projects on the list.
Projections are optimistic
Zoran Jelić, a member of the Senate of the State Audit Institution (DRI), pointed out that the budget was drawn up correctly, but that according to the rebalancing of the budget for this year, the deficit for November and December is planned at 130 million - which shows the scale of what the budget is facing through the program "Europe Now 2".
"In this part, there is a risk that the budget for 2025 may violate the Law on Budget and Fiscal Responsibility and macroeconomic and fiscal policy guidelines. Our analysis shows that the deficit for the next year is 3,5 percent in relation to GDP, and the Maastricht criteria are three The deficit exceeds this limit. Article 22 of the Budget Law stipulates that the growth rate of the budget limit must be lower than the planned GDP growth rate, while the growth limit rate for the capital budget cannot be higher. o the nominal GDP growth rate. The planned GDP growth is 4,8 percent, while the current budget spending limit is seven percent. It is recommended that we stay within the Maastricht criteria, because the current budget spending limit is higher than the GDP growth. in order to preserve macroeconomic stability," said Jelić.
Jelić said that the revenue side of the budget is based on optimistic projections because VAT revenues are the main item, with an increase of 14 percent compared to 2024, and make up almost half of the total revenues. He pointed out that the VAT growth rate is 4,8 percent, which is planned through the growth of tourism, which recorded a decline this year.
He pointed out that it is planned to spend the same amount of foreign citizens as the previous goins, even though they are now leaving the country.
"The execution of the capital budget must be higher compared to previous years. Borrowing of 2,3 billion is foreseen, of which 884 million for covering the deficit, capital projects and debts, 1,1 billion for project loans and 275 million for reform projects. New debt is necessary with the repayment of Eurobonds and we recognize the risk due to changes, which weaken the income side of the budget. It is important that the new debt has lower interest rates, and there is no public optimization administration, reducing non-productive consumption...", he pointed out and added that the energy sector will also be in trouble due to the reconstruction of the Pljevljam Thermal Power Plant, but also that more money is needed to improve the competitiveness of the economy and increase employment.
He appealed to the Ministry of Finance to implement the recommendations submitted by the SAI in the report on the efficient spending of state money, because some budget units spent money improperly. Jelić said that the second one refers to the reduction of the budget of the SAI in the position of planned salaries of 360 thousand euros, and that an amendment is being made to return the money to the SAI.
Director of the Financial Stability, Research and Statistics Sector of the Central Bank (CBCG), Marijana Mitrović Mijatović stated that the budget reflects everything stated in the fiscal strategy, and she emphasized that the estimate of GDP growth is optimistic and that the budget is ambitious.
"CBCG points to caution and careful monitoring of the realization of planned revenues, bearing in mind that next year additional stabilization of inflation is expected, which in 2024 affected revenues through VAT. We point to potential macroeconomic risks, to the realization of the planned growth rate of 4,8 percent can be affected by the global economy and internal shocks, reduction in the number of non-residents, overhaul of the Thermal Power Plant... Increasing the VAT rate in tourism from 7 to 15 percent can have a negative effect, because are the countries of the region sensitive to price competitiveness," Mitrović Mijatović said.
As she added, they believe that the budget is both consumer and social, so they call for caution when planning expenditures, and they also warned about compliance with budget laws. Mitrović Mijatović added that rationalization is needed for efficient revenue collection, to leave room for green budgeting in the future, and that the CBCG indicates that the risk that the interest rates at which they will borrow may be higher in the coming year.
They also recommended compliance with the Maastricht criteria.
The budget should also go before the Social Council
The President of the Union of Employers of Montenegro, Slobodan Mikavica, directed criticism because the practice is not applied, discussions on these issues before the Social Council, especially topics such as the extension of maternity leave, shorter working hours...
He pointed out that macroeconomic trends are unfavorable, that the budget is getting bigger and exceeds GDP growth. Mikavica said that projections should not be made on the basis of citizens of Turkey, Russia and Ukraine, and that he does not see the possibility of raising tourism to the planned levels.
"Over time, the citizens of Turkey started to get their supplies directly from that country and the investment flow is not in our favor, as it was at the beginning. The number of days of stay of tourists is decreasing and I certainly would not give myself the freedom to expect that something that already has a negative trend, to improve it significantly. I would appeal to refrain from spending, there is also uncontrolled spending in public companies, so that is not a good message. We should think about whether the revenues should be left for debts and reserves," he said Mikavica.
He appealed to rationalize the revenue side and make budget corrections. for 2025
The president of the Association of Managers, Budimir Raičković, also said that the budget is for consumption and that there are small investments, that is, that the share of the capital budget is small. He supported the idea of rigorous savings and added that he believes that the capital budget could go up to 15 percent, and that the debts do not have to be at the planned level.
"It is clear that the budget is for the growth of public spending, and it would be good if we had a savings and rationalization plan. Before adopting it, care must be taken to reduce spending in all units, because the economy is really anxiously watching the boom in public spending. Savings measures are missing, and I think that something can be done about it. The gray economy is a serious source of income," said Raičković
The Chamber of Commerce, whose vice-president Dragan Kujović stated that the budget is for consumers, said that expenses are growing more than the capital budget, that the economy is slowing down, that industry and processing are fighting for air...
Kujović stated that a new impetus to the economy is needed, that they are afraid that tourism will not grow and that more money should be planned for both bakeries and the agricultural sector.
Economic Affairs Advisor of the Union of Free Trade Unions, Marko Subotić, pointed out that there is still a lot of "black" work in Montenegro, and that there is room for progress in that area. He requested that inspections be allowed to monitor online trade and enter private facilities where unregistered work is carried out, in order to punish the perpetrators.
"We have lost several tens, hundreds of millions due to the negligence of decision-makers, of whom we do not know whether anyone has been sanctioned for causing damage to the budget. We need to regulate the work of platform workers and freelancers, stop the creation of new tax debt, cancel tax benefits for companies that damage the budget, the amount the largest annual base for paying insurance contributions, i.e. Article 14 of the Social Security Act," said Subotić and added that they do not want the wage gap to widen, and he emphasized that expenses for transportation fees increased by 150 percent, travel by 36 percent, representation by 58 percent, banking services by 15 percent...
Lela Perović, associate in the economic affairs sector of the Union of Trade Unions, said that the deadline for considering the budget was short, and she also read a letter from the Health Union, which highlighted the problems of the difference in coefficients in that sector.
On behalf of the Maritime Union, she referred to the storm that previously caused great damage to Port Bar and pointed out that they were dissatisfied with the untimely response. She pointed out that the Government failed to act in accordance with the promises, the request of the Trade Union and the European Transport Federation, because the budget provided a loan guarantee and not money for the purchase of the crane. As the union says, it claims that the Government, through the World Bank, is working on a loan for the crane, which Luka Bar will pay at the end while they are looking for money for two cranes - of 10 million euros.
Žana Đukić, Secretary of the Finance Committee of the Community of the Municipality, emphasized that technical and project documentation is crucial for the realization of municipal projects, and that stronger communication of that sector with the Ministry of Finance is needed.
The President of the Montenegrin Association of Employers, Vasilije Kostić, said that he believes that the concept of the budget is wrong, and that it is unjustified to force consumption and not productivity. He pointed out that borrowing is not good as a concept of life and that the big public administration is also a problem.
The fighters claim that they have been forgotten
The Director of the NGO Association of War Veterans from the 1990s, Radan Nikolić, stated that last year, the Assembly passed a decision that allocated money for three veterans' associations, but that none of the requests for projects were answered - which is a violation of the principles of the Constitution. Nikolić added that there was no response from the Department of Finance, the Government or the Assembly...
The deputy of the Democratic Party of Socialists, Mihailo Anđušić, stated that the deputies have been making the same criticisms for months, which they are now hearing from the business sector.
Paunović told the veterans that he would have a meeting with the prime minister and officials, and that one of the programs of the veterans' associations was problematic, but that he believed it would be resolved.
He pointed out that he had heard a lot about the risks, but that the projections were planned conservatively, and that the economic reforms would give the perspective of alternative scenarios and that this was the starting point for income and expenditure. He pointed out that he believes that the deficit at the end of this year will probably be between 1,5 and XNUMX percent, as well as that the models and projections are conservative.
He added that they also planned higher interest rates, but that they will probably be lower when the bonds are issued. He pointed out that the budget is not perfect and that it can always be better, and that they are working on it adoption of the updated version of the public finance management reform program, which includes measures for more efficient spending and medium-term planning.
"We are working on the Universal Price List of Operating Costs with the EU and the World Bank, which will enable us to unify costs for all budget users, which will enable us to be more efficient in measuring fiscal measures, but to have a fairer approach. We are trying to work, but it is difficult without automating the process," Paunović pointed out.
Paunović also said that the higher salaries of officials are related to the linear increase in wages, which have not been increased since 2016. He added that it does not go into the popularity of positions and salaries, but that from 2020 to 2024, the cumulative inflation was 31 percent and was the guide for salary increases for the group, which did not have an increase. He added that those items will be seen at the public hearing, that is, what will be included.
He pointed out that the fiscal strategy was adopted on time, that meaningful projects were included, and that at the end of October the capital budget was implemented at 87 percent of the plan. Paunović added that he hopes that by the end of the year the realization will be 90 to 95 percent, that the Assembly should discuss the capital budget for the half year and that the problems should be pointed out and resolved.
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