Vuković: The Montenegrin economy will maintain stable growth, achieving real GDP growth of 3,2 percent

The Parliament today concluded its debate on the Budget Bill for the next year and the decision on borrowing, which will be decided upon at a later date.

The Minister of Finance, Novica Vuković, said in his introductory speech that the Montenegrin economy is expected to maintain stable growth, achieving real gross domestic product (GDP) growth of 3,2 percent next year.

According to him, the dynamics of economic growth in the medium term will primarily be determined by strong domestic demand with private consumption and investments as drivers of economic activity.

"Based on the projected total source revenues of the budget, together with the planned deposits that will be carried over from this year, as well as the planned debt projections, the total state revenues are projected at the level of 3,79 billion euros, which are distributed among the current budget, reserve, state funds budget, capital budget and transactions, financing of expenditures," Vuković specified.

He stated that, compared to the Budget Law for this year, current budget expenditures increased by 100,1 million euros, state funds budget by 99,1 million, capital budget by 25 million, while financing transactions decreased by 459,3 million and reserves by 3,3 million euros.

The most significant allocation relates to the areas of social welfare, public finances, healthcare, education, science and sports, public safety and defense, transport, agriculture and forestry.

"Taking into account the expected revenues in the coming year, as well as planned expenditures, a budget spending deficit of 3,2 percent of GDP, or 278 million euros, is expected, with a projected medium-term downward trend of 2,7 percent in 2027 and 2,8 percent of GDP in 2028," Vuković added.

New borrowing is exclusively related to servicing the government's debt and financing capital expenditures, thus satisfying the so-called golden fiscal rule.

In the coming year, he said, borrowing of 500 million euros is planned for the purposes of repaying the debt in the amount of 384 million and financing capital expenditures.

Speaking about the Proposal for a Decision on Montenegro's Debt for the Next Year, Vuković said that it defines the amount of funds that need to be provided for debt repayment and financing of capital expenditures, i.e. development infrastructure projects for the next year, which amount to up to 710 million euros.

In the coming year, it is necessary to provide around 383,6 million euros to repay the debt from the previous period.

"Leaving the possibility of borrowing another billion euros does not mean that we will actually borrow, but rather we are creating a legal basis to, if the market situation is favorable, create deposits for the coming period in order to relieve the budget and timely secure large amounts for repayments that are due," explained Vuković.

Representative of the ZBCG - New Serbian Democracy Club, Dejan Đurović, said that the proposed budget represents a clear expression of the state's commitment to fiscal stability, institutional responsibility and long-term development.

"The budget framework was set with the aim of ensuring the predictability of public finances and reliability in fulfilling key obligations towards citizens, primarily with regard to the regular payment of salaries, pensions and social benefits," said Đurović.

According to him, the budget for next year is based on realistic macroeconomic projections and the principles of responsible planning of both revenues and expenditures.

"The development component of the budget is reflected in a strong orientation towards capital investments and infrastructure projects that have multiplier effects on economic growth," added Đurović.

Europe Now Movement (PES) MP Dražen Petrić assessed that Montenegro currently has fiscally responsible and sustainable public finances and they are in the best interest of citizens.

"The budget is socially responsible and developmental, with a significant fiscal component," Petrić assessed.

He stated that the stable situation dispels all the criticism we have heard in this and previous years about the decisions made by PES regarding higher salaries and pensions.

"Now it is showing that it was a sustainable solution and in the interest of citizens. We have a current spending surplus so that when all costs are covered, we have 95 million euros in the budget," Petrić said.

Speaking about the Pension and Disability Insurance Fund (PIO), he said that we hear stories about how it is unsustainable, while pensions are being paid regularly.

"We also heard when it came to financing the healthcare system that we have problems there, and we see that we have enough medicines," added Petrić.

According to him, in addition to financing pensions from the budget, it has an additional social component because numerous debts to workers have been settled.

Democratic Party of Socialists (DPS) MP Danijel Živković said that political instability has been going on for five years, which has caused economic instability.

"We have populism that is eroding Montenegrin society. I don't know if you have the strength in the executive branch to stop that populism. But it will eat away at the economic substance. The money we are talking about should be there, we don't have," said Živković.

He stated that first one round of inflation was initiated, then another occurred.

"It is undeniable that there has been an increase in salaries and pensions, but the question is whether a citizen can buy more today than they did before 2020. Citizens feel the overall inflation firsthand. Anyone will tell you that what they buy in the market today, which cost 50 euros in 2020, costs 100 or 110 euros today," said Živković.

According to him, today we have rising inflation due to structural problems that we are not addressing.

"Year after year, there is no foreign direct investment. Without it, we cannot establish a sustainable economic model. What has the state invested in terms of new projects," Živković asked.

He added that we are entering the sixth year in which there is no continuation of the second section of the highway.

Social Democrat (SD) MP Boris Mugoša said that he finds it disgusting that MPs in parliament are telling citizens whether they have a better standard of living or not, because they know best.

"Citizens pay most attention to prices, when you look at GDP growth. If you look at the structure of that growth, over 60 percent are the effects of inflation. Our economy is growing but not developing and prices are rising drastically," said Mugoša.

He asked how there can be a development budget if less than nine percent is a capital budget and over 80 percent is mandatory expenses.

"It has become disgusting to me to hear that we are lecturing citizens on how to live and that we are convincing them how they live," Mugoša added.

Speaking about the economy, he said that 0,2 percent of source revenues were allocated to improving competitiveness.

"We are also saying that this budget is helping the industry, and it has been operating at a loss for the sixth year in a row. Small, micro and medium-sized businesses are suffocating," Mugoša said.

Speaking about tourism, he said that we are experiencing a second year of decline in overnight stays.

"Our business environment is worse now than in 2019," Mugoša added.

MP from the Civic Movement URA, Miloš Konatar, assessed that the situation was serious.

"We decided to believe in a political program that cost citizens a billion euros and which future generations will continue to pay for in the future," said Konatar.