Economic analyst Mirza Mulešković has commented on the recent data from the Ministry of Finance (MF) regarding Montenegro’s budget revenues and expenditures from January to July this year. He noted that it was anticipated that revenues, especially from corporate income tax, would rise compared to the same period last year. This increase is largely due to higher profits reported by major companies.
Mulešković emphasized that these revenues are based on last year’s corporate performance. He pointed out that the Ministry’s projections for these revenues might not have been entirely accurate.
Revenues
According to MF data, the state budget recorded a surplus of 42 million euros for the first seven months of this year, with a surplus of 11 million euros in July alone.
“Preliminary data show that budget revenues for the first seven months of 2024 totaled 1.57 billion euros, which is 124.7 million euros higher than the same period last year. Compared to the budget plan for January to July, revenues exceeded expectations by 95.5 million euros. Excluding one-time revenues, the budget revenues for this period are up by 237.2 million euros, or 18.2%, compared to last year,” the MF reported.
The MF also reported that corporate income tax revenues reached 197.6 million euros, surpassing the plan by 51.8 million euros, or 35.6%, and marking a 45.6% increase from the previous year. Additionally, income tax from individuals was 45.9 million euros, with an increase of 7.6 million euros, or 19.9%, above the plan, and 45.8% higher compared to last year. VAT revenues totaled 655.4 million euros, exceeding the plan by 13.8 million euros, or 2.2%, and showing a 15.4% increase from the previous year. Contributions amounted to 321 million euros, which is 16.2 million euros, or 5.3%, above the plan and 10.8% higher compared to last year.
Mulešković noted that better estimates of these revenues should have been made, especially with the current fiscalization system, which should make predicting company profits more accurate.
He also observed that the rise in VAT revenues was expected due to increased minimum pensions boosting consumption, along with a rise in consumer debt further driving up VAT collection.
Expenditures
On the expenditure side, Mulešković observed that there had not been significant reductions, noting that major reforms are needed, particularly in public sector wages, which have increased compared to last year.
He criticized the lack of progress in reducing temporary contracts and other forms of employment in public administration, suggesting that more focus should be placed on this issue.
Nonetheless, he acknowledged the positive step of reducing unproductive and office supply costs, as previously announced by the MF. For a complete assessment of public finances, he mentioned that it is necessary to wait until the end of the tourist season.
“We will need to evaluate the state of public finances more thoroughly as the collection of taxes and other revenues from tourism is crucial. We will also need to assess how the lower number of tourists this year will impact financial stability and whether it will threaten public finances, and how this will be balanced by the end of the year,” Mulešković concluded.
The MF data revealed that budget expenditures for the first seven months of the year amounted to 1.52 billion euros, an increase of 232 million euros compared to the same period last year.
“The largest deviations compared to the previous year are seen in Gross wages, Transfers for social protection, Transfers to institutions and individuals, NGOs, and the public sector, as well as in the Capital budget,” the MF stated.
