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Realized record revenues, deficit by 42.1% lower than planned

Published on: Feb 2, 2022 11:02 AM Author: Ministarstvo finansija i socijalnog staranja

Report on the execution of the budget of Montenegro for 2021:

Excluding interest expenses, a primary surplus of 12.5 mill. €  was recorded in 2021

 A strong recovery in economic activity, driven by a successful summer tourist season, has led to record revenue collection in 2021, as well as a multi-month consecutive budget surplus. The recorded positive results largely offset even the effects of the non-adoption of certain amendments to the law planned as part of the measures to generate new revenues. In addition to all that, as well as thanks to the fact that all categories of discretionary spending have been reduced, the budget deficit for 2021 was realized at a significantly lower level than planned by the Law for Budget. Excluding interest expenses, in 2021 was realized a primary surplus in the amount of 12.5 mill. €.   

According to preliminary data , the budget deficit in 2021 amounted to 101.6 mill. € or 2.1% of estimated GDP, which is less than planned by 73.7 mill. € or 42.1%, and by 324.6 mill. € or 76.2% less compared to the deficit realized in 2020. Last year's budget deficit is lower than in 2019, by 41.7 mill. € or 29.0%.

According to preliminary data, budget revenues in 2021 amounted to 1,910.0 mill. € or 39.1% of GDP and compared to those collected in 2020 are higher by 271.5 mill. € (16.6%), while they are higher than planned by 29.8 mill. € (1.6%).

The recorded increase in revenue is primarily the result of a significant recovery in economic activity, and thus a recovery in revenue collection. Revenue collection is even higher than in 2019, which was a record year in terms of revenue, by 24.8 mill. € or 1.3%. 

The best indicator of the recovery of economic activity, after a decline of 15.3% in 2020, are revenues from VAT, which are higher by 162.2 mill. € or 30.6% compared to those collected in 2020, and compared to the planned by 80.1 mill. € or 13.1%. The successful summer tourist season, as well as the implementation of electronic fiscalization of tax cash registers, i.e. improved tax discipline, contributed to the achieved good result based on the collection of this category of income.

Despite the fact that the proposed legal solutions were not adopted, which provided for an increase in excise duties on certain excise products, revenues from excises increased by 7.7 mill. € or 3.2%, as compared to the previous year by 43.3 mill. € or 21.1%. The growth of this category was most influenced, in addition to the recovery of the economy, by increased tax discipline, i.e. activities carried out in order to combat the „gray economy“ in the tobacco market.

Revenues from corporate income tax also recorded a significant increase compared to the planned in the amount of 14.7 mill. € or 24.5%, which is an indicator of a high degree of tax discipline, even when doing business in a pandemic. Compared to 2020, corporate income tax revenues are lower by 3.7 mill. € or 4.7%.

In addition to the above, the category of fees recorded an increase compared to the plan in the amount of 10.6 mill. € or 26.0% due to collection under the program "Economic Citizenship", as well as in relation to 2020 in the amount of 23.3 mill. € or 83.7%.

Significant growth compared to the previous year was also recorded in the category of other revenues in the amount of 20.4 mill. € or 54.2% as a result of the payment of profit realized in 2020 from companies majority owned by the state. Compared to the plan, this category is lower by 7.8 mill. € or 11.9% as a result of the fact that the planning takes into account the assessment of financial results of companies, and payments are in accordance with their final financial statements.

On the other hand, taxes and contributions on salaries recorded lower realization than planned in the amount of 55.5 mill. € or 7.0% primarily as a result of planned but unrealized effects of the Law on Amendments to the Law on Personal Income Tax due to the non-adoption of the Draft Law on Tax Administration for 2021, which should have created preconditions for revenue collection based on taxation of undeclared income. Compared to 2020, revenues based on this category are higher by 32.0 mill. € or 4.9%.

Budget expenditures in 2021 amounted to 2,011.6 mill. € or 41.2% of the estimated GDP and are lower than planned by 44.0 mill. € or 2.1%, while compared to 2020 they are lower by 53.1 mill. € or 2.6%.

Additional fiscal adjustment was made by reducing all categories of discretionary spending.

In the structure of budget expenditures, current expenditures were realized at the level of 876.2 mill. € and are slightly above the plan - by 2.5 mill. € or 0.3%. Compared to 2020, current expenditures are higher by 18.1 mill. € or 2.1%, primarily as a result of higher gross wages and contributions at the expense of the employer due to increased wages in the health and education sectors, as well as different treatment of the gross wage fund of the University of Montenegro in 2020 compared to the period of temporary funding in 2021. 

Capital expenditures were realized in the amount of 204.5 mill. €, which is 31.1 mill. € or 13.2% less than planned, while compared to the execution in 2020 it is less by 25.4 mill. € or 11.1%. The lower realization is conditioned, first of all, by the lower realization of the project of the priority section of the Bar-Boljari highway, which is why unrealized amount is planned in the budget for 2022.

Attachment: GDDS 12 montly data

* 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.


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