Next year, the government will borrow 556 million euros, which is missing from the state budget for old debts and other obligations, and it will enter the New Year with austerity measures imposed long ago, which include a crisis tax on salaries, a value added tax of 21 percent...
In 2013, VAT was increased from 17 to 19 percent with the promise that it was a temporary measure, but as of January of this year, it was increased to 21 percent. The crisis wage tax of an additional two percent on earnings over 480 euros has been "temporarily" in effect since the beginning of 2013, when that income is collected "for the purpose of further fiscal consolidation".
According to the Budget Proposal, the Government avoided increasing the profit tax amounting to nine percent for the next year as well, thus providing additional money in the budget from those who have the most, as well as taxing luxury consumption more.
The state budget for the next year is projected at 2,38 billion euros, which is more than 300 million more than last year. The deficit is projected at 142 million euros (2,97 percent of GDP).
"In the previous two years, the stability of public finances was strengthened and economic growth was stimulated. Fiscal consolidation measures in the previous two years yielded positive results - budget revenues increased, the budget deficit decreased and current consumption surplus was achieved, investment in infrastructure increased. The need for borrowing was reduced, that is, the missing funds were reduced to 556 million euros. We will try to provide the missing funds on the domestic market. I expect that we will have a response, because next year is not particularly demanding from that side. The conditions under which we will provide these funds are important, and I hope that it will be significantly more favorable than before and this year", said Finance Minister Darko Radunović at yesterday's presentation of the budget proposal for the next year.
And for the beginning of this budget year, the Government sent optimistic forecasts regarding the budget and fiscal consolidation measures, but two budget rebalancings were done within half a year. The second rebalancing of the state budget in just six months showed that almost nothing of what was planned in the "year of savings and stabilization" was achieved because there was a drastic drop in excise revenue, current expenditures were not kept at the previous level but increased, the number of employees in the public administration was not reduced but increased, the deficit grew from the originally planned 114 million to 142, and the need for borrowing was not the originally planned 295 million but 739 million.
In the next year, the Government projected 1,82 billion in original income, which is 71 million more than this year. An increase in income is expected based on increased economic activity and the continuation of fiscal consolidation measures.
"Revenues are planned conservatively. In addition, additional income is expected from the economic citizenship project", stressed Radunović.
More for wages, pensions, health, education, defense
As in previous years, the Government has promised regular payments of salaries, pensions, and social benefits. Gross earnings for salaries are projected for 472 million euros and are higher by 10 million due to the increase in wages by one percent, in accordance with the law on wages in the public sector. In the coming year, there will be a regular adjustment of pensions, for which 6,4 million more than this year will be set aside, and a total of 429 million euros for pension benefits. The subsidy was increased by 4,1 million euros compared to this year, and it primarily refers to the increase in the agricultural budget in order to provide greater support to farmers. More money is provided to the health system, education, defense and security...
The budget proposal for the following year is being adopted by the Government with a delay compared to the legal deadline, which expired on November 15. Radunović pointed out that it was not the fault of the Ministry of Finance, which prepared everything on time, but that it was waiting for the Parliament to adopt the Law on State Administration. That act was adopted by the parliament last Friday.
"The adoption of the law in the parliamentary procedure took a little longer, and then last night we worked on the budget proposal late, because we were waiting for the government to determine the regulation on the organization of the work of the state administration. "I don't see any fault of the Ministry of Finance and we were ready with all the projections before, but these administrative challenges required additional time," Radunović said.
Assistant Minister of Finance for the Budget Bojan Paunović said that the capital budget for the next year is projected at 320,93 million euros and that it has been increased by 30 million more than this year.
"Expenditures for the construction of the priority section of the highway are planned in the amount of 220 million, while 100 million will be invested in more than 150 active capital projects throughout Montenegro. Over 30 projects are expected to be completed next year," explained Paunović.
Less for travel, fuel, material
Paunović said that the reconstruction of 167 kilometers of highways is expected to begin, followed by the consumption of 63 million euros for the construction and reconstruction of educational and scientific facilities, sports, culture, improving the tourist offer...
"More than 70 percent of the capital budget is directed to the north with the aim of balanced regional development," Paunović said.
He announced less money for "non-productive expenses" - official trips, fuel, representation, administrative material - in the total amount of about two million euros and a reduction in rental costs by about half a million euros. The rationalization of administrative spending through the application of the centralized public procurement system was announced.
The main goals of the budget in 2019, and what was announced earlier, are the projected reduction of the budget deficit, after which it moves into the surplus zone of 0,2 percent of GDP in 2020 and 2,21 percent in 2021. In addition, a gradual reduction of the public debt to 67 percent in 2019 and a return to 60 percent in 2022.
The government has established a bill on the financing of local self-government, the aim of which is to reduce regional differences between the north and the central and southern regions. For this purpose, the executive power will transfer a total of 11,5 million euros annually from the central budget to local governments.
They give a guarantee to the Regional Waterworks to get out of the blockade
Radunović said that the Government will give a guarantee to the Regional Waterworks in the amount of 11 million euros so that the state enterprise will get out of the problem it has been facing since this summer. With that money, the Regional Water Supply will pay the debt to the Austrian company Štrabag, which blocked the account of the water supply in August after winning a legal dispute before an international court.
Radunović said that the national airline "Montengro Airlines" is not included in the budget, because they still do not know what the model for its future is.
Radunović stated that the guarantees are in the total amount of 83 million euros, and that they include some for a long period that will be given to international financial institutions for the needs of state-owned companies.
EPCG will receive grants for the modernization of HPP "Perućica" (33 million), the Regional Waterworks another 12 million, the Railway Infrastructure two guarantees of 14 and 13 million each.
This budget has no basis in real economic parameters either
Independent member of parliament and former chairman of the Parliamentary Committee for Economy, Finance and Budget, Aleksandar Damjanović, told "Vijesta" that the law was drastically violated and that the government was almost a month late with the deadline for submitting the budget proposal to the parliament.
"Thus, the short deadlines for a serious discussion are shortened even more, collapsing even more the function of the parliament in the budget process. The delay was necessarily justified by the adoption of other laws, so when that argument also fell away, the reasons should be sought within the executive power that produced such a proposal. Until the proposal is submitted to the parliament and analyzed in detail, it should be pointed out that with the policy of quarterly rebalancing, this government has made the budget and public finance system meaningless. that it can stand the test of time", Damjanović pointed out.
As he added, while the citizens of serious countries, such as France, defend their rights against the policy of "belt tightening" and the decline of the standard of living through the policy of increasing tax and non-tax levies, in Montenegro, a similar policy with even worse consequences (which is reflected in to the budget proposal) is presented as the "economic boom" of the non-transparent government.
"The fact that this debate about the budget proposal and its scope, deficit, public debt, high VAT and high excise taxes will remain in the shadow of other more pressing and current political events is something that citizens should think about when they decide to trust those who implement budget policy", pointed out Damjanović.
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