The government has prepared a budget rebalance: They are taking up to half a billion for debts that will arrive in 2020.

The government is preparing to rebalance this year's budget to borrow to cover the debt for bonds in 2020, because it is estimated that it will be cheaper now

13604 views 35 comment(s)

Several sources claim that the state does not need that money for this year, but will be used for the following ones, Photo: Shutterstock

Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

Ivana Gudović

10.07.2019. 16:09h Ažurirano: 10.07.2019. 17:17h

The government will propose a rebalancing of this year's budget, which plans an additional debt of up to 500 million euros, and this money will be spent next year for old debts that are coming due, "Vijesti" has learned from the executive branch.

In addition, they plan to increase the allocation for state guarantees in the amount of three million euros.

Such a proposal for changes to the state treasury was discussed yesterday at the session of the Government Commission for Economic Issues (KEP).

The Government claims that they decided to do so in order to "provide more favorable terms for loans, as the conditions on the international market are expected to worsen next year."

Several sources claim that the state does not need that money for this year, but will be used for the next year, and the assessment is that it is better to borrow now under better terms to repay the debt. The possibility of directing part of the new loan for this year's needs is also not excluded.

So far, the Ministry of Finance has borrowed about 2019 million euros through government bonds for 142, while a total of 190 million is planned to be issued.

According to the Strategy for Public Debt Management, about EUR 580 million of bonds issued by the state in 2015 and 2016 will come due next year.

With the rebalancing, they plan to change Article 14 of this year's Budget Law, which, among other things, now defines that "for the purposes of refinancing and creation of reserves, the Government may, in 2019, conclude a credit arrangement with financial institutions, through the issuance of bonds on the domestic or international market in the amount of up to 250.000.000 euros, with a guarantee from the World Bank (Policy Based Guarantee - PBG)".

According to the knowledge of "Vijesti", they add a part of "up to 500 million through the issuance of bonds and government bills on the domestic and/or foreign market" to that article.

The government will decide on this on Thursday, and the final decision will be made by the Parliament of Montenegro by the end of July.

Finance Minister Darko Radunović told "Vijesta" at the beginning of January that at that moment he saw no reason to rebalance the budget, but that he would not hesitate to propose a rebalancing if the need arose.

"Budget rebalancing is not, in itself, a sign of careless or superficial planning. During the budget period, the ambient circumstances change. Factors that were not known and could not be predicted when the initial budget was drawn up are appearing," said Radunović. Yesterday, Radunović did not answer the phone calls of "Vijesti" to explain the reason for the changes in the state treasury in 2019.

The government rebalanced the budget twice last year - the first time for additional borrowing from the planned 296 million to 440 million, and after that they raised the borrowing limit to 739 million.