Montenegro’s budget revenues are performing better than planned in 2026, but faster expenditure growth means that improved collection has not prevented the budget from recording a deficit.
Revenue collected during January-May reached €1.187 billion, an increase of €90 million or 8.2% compared with the same period of 2025.
Revenue also exceeded the five-month budget plan by €24.4 million, or 2.1%. The Ministry of Finance attributes stronger collection across major tax categories to higher economic activity, employment and wages as well as improved tax discipline.
Expenditure, however, increased even faster.
Budget spending reached €1.284 billion, rising €117.7 million or 10.1% year on year. The Ministry links the increase primarily to higher mandatory expenditure obligations.
As a result, Montenegro recorded a €96.8 million budget deficit during the first five months, equal to 1.13% of projected GDP.
There is an important qualification. Spending was still €106.4 million, or 7.7%, below plan, reflecting the timing of obligations. That means part of the fiscal picture may change as planned expenditure is executed later in the year.
The early-2026 numbers nevertheless highlight a central fiscal challenge.
Montenegro is benefiting from stronger employment, wages and economic activity, which are improving the revenue base. Yet mandatory spending commitments are expanding sufficiently quickly to absorb those gains.
This changes the policy discussion. The problem is not primarily weak tax collection; revenues are running ahead of plan. The more difficult question is how quickly structural and mandatory expenditure is increasing.
If revenue growth remains strong while spending moderates, the fiscal position could improve later in the year. If expenditure continues rising faster than income, however, strong economic activity alone may not be enough to produce fiscal consolidation.
Montenegro’s 2026 budget therefore provides an important lesson: revenue performance and fiscal balance are not the same thing. The government can collect considerably more money and still face pressure if spending commitments expand faster.
