The Government has today sanctioned the Draft Law concerning the Final Accounts of Montenegro’s Budget for the previous year, revealing that the total state debt, excluding deposits, reached 4.51 billion euros or 60.53 percent of gross domestic product (GDP).

Following the session, the Government communicated that discussions on this subject highlighted a consistent increase in budget revenues last year, primarily reflecting the rise in economic activity within the country. This growth was also attributed to enhanced living standards for the population, due to improved disposable income.

“The total state debt, including deposits, at the year’s end was 4.13 billion euros, or 55.36 percent of GDP,” stated the government.

Preliminary data from the Statistical Office estimates last year’s GDP at a nominal value of 7.46 billion euros.

In the last year, current revenues amounted to 2.71 billion euros, which is 0.05 percent lower than planned and accounts for 36.4 percent of GDP. Notably, nearly all categories of current revenues experienced growth compared to both the planned amounts and the previous year, excluding one-off revenues in 2023.

“Within the composition of current revenues, the largest portion comes from tax revenues, totaling 72.5 percent or 1.97 billion euros, contributions revenues 21.5 percent or 584.7 million euros, and other revenues 3.4 percent or 92.2 million euros. The remainder of current revenues includes fees, making up 1.9 percent or 53.1 million euros, and other charges at 0.6 percent or 16.2 million euros,” the Government elaborated.

Total budget spending for the previous year was approximately three billion euros, accounting for 40.3 percent of GDP. Social benefits represented the largest segment of budget spending at 33.6 percent, equating to 1.01 billion euros, which is a significant 22.2 percent increase compared to the prior year, largely due to heightened enforcement of rights in pension and disability insurance, primarily owing to the rise in minimum pensions.

“Gross wages constitute the second major expense in the budget at 22.48 percent, reaching 675.2 million euros, which is 2.8 percent below the planned figures but shows a five percent increase from the prior year, aligning with applicable legal regulations, collective agreements, and the actual wage calculations,” clarified the Government.

Last year’s capital expenditures totaled 299.1 million euros, marking a 16.2 percent increase over budget projections and a 25.3 percent increase compared to the previous year, attributed to the accelerated implementation of planned capital projects.

“The budget’s cash deficit for last year was recorded at 247.5 million euros, which represents 3.3 percent of GDP. Adjusting for the rise in outstanding liabilities from previous years that are not classified as loans, the corrected cash deficit stands at 258.8 million euros, or 3.5 percent of GDP,” the statement detailed.

Debt repayments last year amounted to 495.6 million euros. When combined with the adjusted cash deficit, expenditures for securities purchases, loans and credits, as well as an uptick in government deposits, this resulted in a shortfall of 976.1 million euros. This amount was financed through domestic and foreign loans and credits totaling 942.1 million euros, 20.3 million euros from loan repayments, 2.3 million euros from asset sales, and an increase in net liabilities of 11.3 million euros.

During the Government session today, the Proposal for a Law on the Rehabilitation of Investment Companies along with the Report on the Public Debate was approved.

“The enactment of this law establishes the foundation for implementing the powers and resolution instruments outlined in the amended EU directive, greatly enhancing the regulatory framework for addressing issues faced by investment firms that encounter operational difficulties,” the statement noted.

Furthermore, to ensure complete alignment with the relevant EU legal framework, the Proposal includes several provisions that will come into effect following Montenegro’s accession to the European Union, further bolstering the prevention and resolution system for investment firms that belong to a group of investment firms from the EU.

“This law meticulously outlines mechanisms for protecting investors and creditors, mitigating risks to the country’s financial stability, while enabling timely and efficient recovery of investment companies in crisis scenarios,” asserted the government.

The primary aim of this legislation, as assessed, is to safeguard the stability of Montenegro’s financial system by establishing a legal framework that permits the resolution of insolvency issues and financial difficulties facing investment companies, thereby minimizing negative repercussions on the market and economy.

“This law introduces early intervention mechanisms and resolution strategies for investment companies, aimed at preserving their core functions, safeguarding clients, creditors, and investors, and reducing resolution costs for the state budget. By incorporating instruments such as resolution plans, internal resolutions, and the establishment of a Resolution Fund, the law offers a comprehensive framework for preventive measures and efficient responses in crisis situations,” concluded the Government.

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