From 2011 to 2020, Montenegro only had a budget surplus twice—when the general VAT rate was raised from 17% to 19%, and then to 21%. Since then, there has been no surplus until the last four years, where the country has consistently had a current budget surplus. Prime Minister Milojko Spajić emphasized that this positive financial trend should be the main focus, rather than discussing what Montenegro may be lacking. “If you have a budget surplus, the country doesn’t lack anything,” he stated during the presentation of the 2025 budget proposal, which was approved by the government on Friday.
Spajić credited the “revolution in thinking about public finances” that began at the end of 2020 for Montenegro’s ability to meet Maastricht criteria for the past four years. “With debt below 60% of GDP, a deficit under 3%, and the fact that we will have SEPA (Single Euro Payments Area) starting January 1st, we are already meeting the conditions for joining the Eurozone as soon as we become an EU member,” Spajić noted. “We are just waiting for the political decision, the substantial conditions are already met.”
Economic growth and fiscal stability
Spajić predicted that Montenegro’s GDP will double next year to nearly 8 billion euros, highlighting that the growth is real. “The average real growth over the past four years was more than 6%. No one can boast such results,” he said. He criticized previous fiscal deficits, noting that Montenegro once faced a fiscal deficit exceeding 10%, which is something no country should experience. “Having a fiscal deficit of 10.2% is like being attacked behind the corner and beaten. That’s how it feels when you have such a deficit,” Spajić remarked.
He also pointed out that critics of the current economic situation should be asked where they were when the country was in real financial trouble, with a current account deficit as deep as the Tara Canyon. “Now, when we have a current surplus, which is the golden rule of public finance, everyone remembers that the country is missing something,” he added. “Let’s see what’s missing, when we’ve reduced the gross debt-to-GDP ratio from 105% to 62% and the net debt from 80% to 52%.”
Criticism of previous governments
The Prime Minister also criticized the previous government under Dritan Abazović for withdrawing profits from hedging arrangements that had been initiated by the government of Zdravko Krivokapić in late 2020. “They withdrew the funds when they no longer had money in the treasury, and now they mock me for saying the country was on the brink of bankruptcy. Of course, you didn’t go bankrupt when you withdrew the hedging funds and transferred money from economic citizenship to the main treasury account. That was just a way to artificially improve 2023 results,” Spajić stated.
Revenue and budget projections
Despite a reduction in pension insurance taxes, Spajić assured that the state will generate 100 million euros more in revenue next year. The entire deficit for 2025 will be allocated to the capital budget, with part of it funded from current revenue. “This year, we paid 250 million euros of old debt from current revenues, which has never happened before. You remember the old ‘balance is zero’ concept, well, it’s not zero this time, it’s a positive 250 million euros,” Spajić said. He emphasized the need for significant growth, reduced debt-to-GDP, and increased salaries, pensions, and capital investments.
The government plans 2.88 billion euros in revenues, with total expenditures projected at 4.03 billion euros—505 million more than this year. The budget, which is conservatively planned, does not include potential revenues from airport concessions. Salaries will account for 718 million euros, with 777 million euros allocated for pensions, and 1.06 billion euros in total social welfare payments. The transport sector is set to receive 242 million euros, while health will be allocated 474 million euros and education and science will receive 362 million euros.
Capital budget and infrastructure projects
The capital budget for 2025 is set at 280 million euros, with 341 planned projects. Of this, 100.2 million euros will go towards the second section of the motorway, while 115 million euros will be allocated for projects managed by the Capital Projects Administration, and 64.98 million euros for the Transport Administration. Spajić also noted that 10 million euros will be allocated for the “Velje Brdo” project, which will be used for infrastructure preparation.
Branko Krvavac, head of the Prime Minister’s Cabinet, added that the budget also includes 40 million euros for the potential restructuring of the “Dr Simo Milošević” Institute, or the purchase of securities. Additionally, it is expected that 240 million euros will remain in reserves at the end of the year, which will be carried over to 2026.
Borrowing and debt management
The government has also approved a borrowing plan, which will allow the state to borrow up to 900 million euros next year. Finance Minister Novica Vuković explained that this money will be used exclusively to pay off old debts and finance capital expenditures. The 2.3 billion euros in debt that Vuković had mentioned refers to obligations due in the next three years. “Next year, 820 million euros of principal will be due for repayment, and the capital budget stands at 280 million euros. This has been defined at 1.14 billion euros, but because of the reserves we’ve managed to build this year, we believe we’ll be able to borrow up to 900 million euros, with the possibility of an additional 500 million euros for debt refinancing and building a fiscal reserve by 2027,” Vuković stated. He also noted that the government has borrowed much less than initially planned this year.
Impact on tourism
Regarding changes in tourism taxation, Vuković stated that the introduction of a 15% VAT rate on tourism services would not negatively impact tourism businesses. “Tourism will not suffer from this fiscal strategy. For years, the government has provided maximum support to the sector,” he said.
Inflation and economic outlook
Prime Minister Spajić also reported that the government has managed to stop the rise in prices, and inflation is now lower than in many developed countries. “In September, we had deflation, and in October, inflation was zero,” Spajić noted. “November is expected to have zero inflation, along with higher wages. I think this is a reason for optimism,” he added.
Parliament’s decision on advisors
In response to a question about whether funds had been approved for hiring advisors for MPs, Vuković stated that the full amount requested had not been approved, without specifying whether this difference relates to the advisory positions. “The Parliament, as a separate legislative branch, has the authority to decide on laws, coefficients, and employment systems. The government has no influence over this,” Vuković explained. He added that while members of the PES party had opted not to hire assistants, it would be up to the MPs to decide whether such positions are necessary and how to allocate funds from their budget. “As the executive branch, we cannot decide on this,” Vuković concluded.
