Between January and March 2025, Montenegro’s public finances showed a deficit of €81.1 million, equal to 1% of the estimated GDP of €7.965 billion. Although revenues were below targets, lower spending helped reduce the overall budget gap.
Total public revenues amounted to €666.2 million, or 8.4% of GDP, which was 2.8% less than planned and slightly down by 0.4% compared to the same period last year. Meanwhile, public spending reached €747.3 million, or 9.4% of GDP. Spending was 7.4% below the planned amount but 13.5% higher than the previous year.
State budget revenues for the first quarter totaled €580.4 million (7.3% of GDP), representing a modest increase of 0.8% from Q1 2024, though only 97.8% of the planned target was achieved. Value-added tax (VAT) revenues rose by 11.9% year-on-year to €282.3 million, driven by stronger economic activity and a reduction in the informal economy. Excise tax collections increased by 6.8% to €71.5 million, notably due to a 19.4% rise in tobacco product excise revenues, including a 10.3% increase in cigarette sales and 23% growth in smoke-free tobacco products.
However, revenues from social security contributions dropped significantly by €30.4 million, or 26.5%, compared to the previous year, and were 8.3% below the budgeted amount.
Overall budget expenditures for the quarter reached €644.4 million (8.1% of GDP), rising by €61.3 million from the previous year mainly because of higher mandatory spending. Social protection expenses were the largest item at €269.2 million, up 15.2% year-on-year and exceeding the planned figure by 1.5%. Investment and development spending totaled €21 million. The budget deficit was €64 million, much lower than the projected €120.8 million.
At the local level, municipal budgets experienced a deficit of €17.2 million. Revenues of local governments fell by 7.9% to €85.8 million, while expenditures surged by 36.8% to €103 million. The biggest share of spending went toward transfers to institutions, individuals, and NGOs (€30.4 million). Local government deposits also declined by €13.4 million.
