Press release: Montenegro Budget execution in the period January – March 2021 (GDDS table 3)
The movement of fiscal parameters in the first quarter of 2021 is under the direct influence of measures that are being implemented in order to protect public health, and which are inevitably limiting economic flows.
Budget revenues in the period January - March 2021 amounted to 348.4 mill. € or 7.5% of estimated GDP (4,636.6 mill. €), which is by 15.9 mill. € or 4.8% more than planned, primarily due to higher collection of revenues from corporate income tax. Compared to the first quarter of the previous year, which was characterized by strong growth of economic activity as a continuation of positive trends in macroeconomic indicators in 2019, revenues are lower by 27.0 mill. € or 7.2% due to reduced economic activity.
The largest negative deviation compared to the comparable period of the previous year was recorded in the categories of value added tax and excise in the amount of 18.3 mill. € or 12.8%, or 6.7 mill. € or 13.6%, as a result of reduced turnover. In relation to the plan, the collection of revenues based on VAT is higher by 1.4 mill. € or 1.1%, while the collection of excise revenues is higher than planned by 2.9 mill. € or 7.2%.
On the other hand, despite a large decline in economic activity of 15.2% in 2020, the largest increase both - in relation to the plan and in relation to the previous year was recorded in corporate income tax revenues in the amount of 12.2 mill. € or 65.5%, or 6.6 mill. € or 27.1%. The realized collection on this basis is an indicator of a high degree of tax discipline, even in the conditions of a pandemic when economic activity is limited.
Also, the category of fees continues to grow by 33.1% compared to the same period last year, as well as 23.3% compared to the plan, due to the collection that is realized on the basis of the implementation of the Economic Citizenship Program.
Bearing in mind that the Law on the Budget for 2021 was not adopted by December 31 of the previous year, pursuant to Article 37 of the Law on Budget and Fiscal Responsibility, temporary financing was granted, according to which spending units are granted monthly funds up to 1/12 (one twelfth) actual expenditures in the previous fiscal year, in accordance with which the expenditure plan for January, February and March 2021 was determined.
Budget expenditures in the period January - March 2021 amounted to 451.9 mill. € or 9.7% of the estimated GDP and are lower than planned by 77.5 mill. € or 14.6%, while compared to the same period in 2020 they are lower by 0.7 mill. € or 0.2%.
The recorded discrepancy in expenditures is a consequence of the fact that the plan was determined from the assumption of creating the necessary fiscal reserve for financing measures and activities in conditions of uncertainty during the pandemic.
In the structure of budget expenditures, current expenditures were realized at the level of 189.1 mill. € and are lower by 28.6 mill. € or 13.1% compared to the planned. The lower realization compared to the planned ones is determined by the lower realization of almost all categories of current expenditures, primarly expenditures for services in the amount of 14.0 mill. €. Compared to the same period in 2020, current expenditures are lower by 0.7 mill. € or 0.2%.
On the other hand, capital expenditures were realized in the amount of 27.1 mill. €, which is less by € 17.0 mill. € or 38.6% than planned, while compared to the realization in the same period 2020, they are higher by 1.0 mill. € or 3.9%.
Compared to the same period in 2020, the largest deviation was recorded in the reserves category in the amount of 30.0 mill. € primarily due to the allocation of funds for founding capital of the new national airline "To Montenegro", but also the continued implementation of assistance to the economy and citizens through support packages, most of which relates to employee wage subsidies.
Also, the growth in relation to the comparable period of the previous year was recorded in the category of gross salary and contributions in the amount of 10.9 mill. € or 8.8% primarily due to the increase of the gross salary fund in the sectors of Health and Education.
The category of transfers to institutions, individuals, non-governmental and public sector recorded lower realization compared to the same period in 2020 in the amount of 22.2 mill. € or 28.0% primarily due to lower allocations in the part of transfers of institutions in the observed period in 2021.
In the period January - March 2021, the dynamics of budget revenues and expenditures affected the realization of the budget deficit in the amount of 103.5 mill. € or 2.2% of GDP, which is 93.4 mill. € or 47.5% less than planned.
* The data in the GDDS table represents an overview of income and expenses by economic classification in one month, compared to the plan and the same period of the previous year.