The Ministry of Finance (MoF), which, with the Decision on Temporary Financing for January, provides funds for the functioning of the state during this month, warns that the budget for this year needs to be urgently adopted in order to avoid damage to the state and its citizens, the MoF announced today.
"There is an urgent need for the Parliament of Montenegro to adopt the state budget as soon as possible, in order to ensure fiscal stability, the continuation of reform processes and the fulfillment of international obligations. We note that 2025 is a challenging year, and failure to adopt the budget and temporary financing could significantly hinder the functioning of the state and jeopardize the timely financing of all obligations. Timely action is crucial for preserving economic prosperity and stability," the statement emphasizes.
The Ministry of Finance added that they point out that temporary financing reduces the funds available for the implementation of planned reforms, capital projects and regular activities of institutions.
"A special challenge is ensuring the liquidity of the state, bearing in mind that through the adoption of the budget and decisions on borrowing, the prerequisites are created for securing sources of financing for the regular servicing of the state's obligations. Without an adopted budget and a decision on borrowing, the state relies on regular revenues and transferred funds on deposits, which are not sufficient for the regular servicing of all obligations, because in 2025 we also have an inherited old debt of around 820 million euros that must be repaid," said the Ministry of Finance, headed by Novica Vuković.
The government department said that the inability to service public debt on time could jeopardize the state's solvency and lead to a reduction in its credit rating, which, they said, would further complicate financing and increase borrowing costs.
"We are obliged to point out all these challenges arising from the failure to adopt the budget and temporary financing, after the Parliament of Montenegro, by 31 December 2024, failed to adopt the Law on the Budget for this year. Accordingly, the Ministry of Finance has a legal obligation to approve monthly funds to spending units up to 1/12 (one twelfth) of the actual expenditures in the previous fiscal year, until its adoption. In the context of determining the expenditures distributed to spending units, we note that certain spending units, whose financing is a legal obligation, were established in the second half of 2024 (new ministries)," the Ministry of Finance said.
They also stated that expenditures that represent a legal obligation, the so-called mandatory expenditures, for which adjustment is made with economic trends or years of service (social benefits, pensions, salaries), as well as other mandatory expenditures, are determined based on the application of actual calculation, noting that the actual calculation of these expenditures, already in December 2024, was greater than 1/12, i.e., the actual expenditures of the average from the previous year.
"In addition, servicing the public debt, which is a legal obligation, requires timely execution according to the defined dynamics, with the costs of debt repayment this year being significantly higher than the previous one. This situation further reduces the funds available for the implementation of planned reforms, capital projects and regular activities of institutions," the Ministry of Finance said.
They also stated that the failure to adopt the budget prevents the adoption of annual and medium-term plans, including public procurement plans and personnel plans, which, according to the Ministry of Finance, may delay the implementation of significant activities, such as capital projects, reform processes, etc., which may have negative effects on the overall macroeconomic and fiscal environment and the achievement of planned macro-fiscal projections.
"As we have indicated, delaying the adoption of the budget may jeopardize the regular financing of obligations towards citizens and partners. We emphasize that in 2025, around 820 million euros need to be provided to repay the debt from the previous period, the largest part of which is due in April for the payment of government bonds issued on the international market in 2018 in the amount of 500 million euros," the Ministry of Finance said in a statement.
The government department said that in addition to the above, it is necessary to secure funds for obligations under loan arrangements with the World Bank from 2018 and 2020, in the amount of around 55 million euros, a Chinese loan from 2014, in the amount of around 60 million euros, a loan from Deutsche Bank from 2023, in the amount of around 40 million euros, as well as a loan from the IMF for financing the budget due to Covid-19 from 2020, in the amount of around 20 million euros, and the like.
"Also, the failure to adopt the budget jeopardizes the implementation of the EU Reform Agenda - Growth Plan for the Western Balkans, which provides Montenegro with access to financial support in the amount of around 400 million euros. These funds are crucial for the implementation of reforms important for European integration, and their implementation requires the adoption of legal assumptions defined by the annual budget," the Ministry of Finance said.
On December 26, Parliament Speaker Andrija Mandić concluded the session of the Parliament, the agenda of which included, among other things, the draft law on the budget of Montenegro for 2025.
This meant that the budget for the following year would not be adopted and that temporary financing would be used.
According to the Law on Budget and Fiscal Responsibility, if the law on the state budget is not adopted by December 31, the Ministry of Finance, until its adoption, approves monthly "up to one twelfth of the actual expenditures in the previous fiscal year" to consumer units.
The opposition Democratic Party of Socialists (DPS) announced the day before yesterday that it will not allow the Parliament session to be held on January 21st, the agenda of which includes this year's budget.
DPS leader Danijel Živković said at a press conference in the Parliament that Prime Minister Milojko Spajić could only expect, but that DPS would not be in the Parliament on January 21st.
"We will not allow sessions to be held in the coming period until things return to the previous state," said Živković.
The opposition believes that the Constitution has been violated because the parliament, without the mandatory notification of the Constitutional Court, decided in mid-December to terminate the judicial office of Judge Dragana Đuranović due to her reaching the retirement age in accordance with the Pension and Disability Insurance Act (PIO). They claim that this was done in order to “govern without elections,” that is, to postpone local and state elections until 2027.
The Assembly concluded that Đuranović's judicial office had been terminated based on the conclusion of the Constitutional Committee.
Bonus video:
