Montenegro posted a budget deficit of €419.5mn in 2020, equal to 9.8% of GDP, due to significantly higher spending to enable the economy to tackle the coronacrisis, finance ministry data showed on February 3.

Montenegro’s government set the deficit at 0.99% of GDP in 2020, with the revenue seen at €1.99bn and economic growth projected at 3.4%. However, due to the coronavirus (COVID-19) crisis the revenue was below the initial budget and the government revised the plan, setting the deficit at 7.3% of GDP, while economic growth was seen contracting by up to 17% in 2020, before a return to robust growth in 2021.

The end-December data is above the government’s plan for a budget deficit of €335.9mn for the year, and much higher compared with the €143.3mn deficit posted a year ago.

Total budget revenues decreased by 13.1% year on year to €1.64bn in 2020. The decline was mainly due to the effect of the coronavirus on economic activity, the deferred tax payments that have been allowed by the government to help companies to survive in the crisis, and the lowered capacity of state administration during the outbreak.

Only revenue from profit tax posted a rise in 2020, rising by 7.7% y/y to €78.4mn. Income tax moved down 5.3% y/y to €118.3mn. VAT revenue decreased by 23.9% y/y to €529.8mn. Revenue from excise duties decreased by 12.8% y/y to €205.4mn. The revenue from contributions moved down 2.8% y/y to €531mn.

Budget spending stood at €2.06bn up to the end of December, up 1.5% y/y.

Montenegro budget, €mn	Jan-Dec'20		Jan-Dec'19	y/y, %
	Plan	Execution	Execution
TOTAL REVENUE	1,705.0	1,639.1	1,885.2	-13.1%
Tax revenue	1,055.4	966.1	1,172.7	-17.6%
- Personal income tax	112.7	118.3	125.0	-5.3%
- Corporate tax on profit	67.6	78.4	72.8	7.7%
- VAT	615.8	529.8	695.7	-23.9%
- Excise duties	221.4	205.4	235.5	-12.8%
Social contributions	492.5	531.0	546.3	-2.8%
Duties	12.2	10.6	15.7	-32.3%
Fees	24.8	27.8	28.2	-1.5%
Other revenue	52.9	36.7	75.8	-51.6%
TOTAL EXPENDITURE	2,040.9	2,058.6	2,028.5	1.5%
Current  expenditure	840.1	857.9	822.8	4.3%
- Salaries	498.5	499.2	472.9	5.6%
- Other personal income	14.9	12.9	15.2	-15.2%
- Supplies	35.7	40.0	33.2	20.3%
- Services	61.8	74.1	77.7	-4.6%
- Current maintenance	26.0	24.4	22.5	8.3%
- Interests	103.3	111.0	105.8	4.9%
- Rent	11.1	11.5	11.0	5.4%
- Subsidies	39.1	36.3	34.6	5.1%
- Other expenditure	49.6	48.5	50.0	-3.0%
- Social security transfers	577.7	558.7	554.3	0.8%
- Transfers to institutions, individuals, NGO and public sector	276.7	281.3	219.7	28.0%
Capital spending	194.9	223.9	344.9	-35.1%
Loans and credits	1.6	1.6	3.2	-49.3%
Reserves	133.6	116.4	24.3	379.1%
Repayment of debt	539.6	665.8	507.3	31.2%
BUDGET BALANCE	-335.9	-419.5	-143.3	192.7%
Source: Montenegro's finance ministry