Based on information on the tourist season and other macro data available so far, the growth rate of the Gross Domestic Product (GDP) of Montenegro is expected to be 4.3%, said the Director General for Central Harmonisation in the Ministry of Finance, Ana Krsmanovic, said after today’s Government’s session.

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Ana Krsmanovic

She added that the Proposal of Projections for Macroeconomic and Fiscal Indicators for the period up to 2018 was also adopted. She reminded that according to Monstat data, the real growth rate in Montenegro in the first quarter of this year had amounted to 3.2%, while the Ministry’s estimated that there had been 3.6% growth in the second quarter, the news agency Mina-business carried.

“All sector had positive impact on growth, particularly construction and tourism,” Ms Krsmanovic said. According to her, average GDP growth of 3.8% was projected for the period up to 2018. “Next year the growth rate will be 4.1%, whereas in 2017 and in 2018 it is expected to be 4% and 3% respectively”, Ms Krsmanovic said.

In the same period, as she said, a slight price increase is also expected primarily due to the significant investment activities that are expected in the coming year and the strengthening of economic activity. When it comes to the fiscal position in this year, Mr Krsmanovic said that the budget revenues for the first eight months of this year amounted to €839.8 million, which was 23.2% of the estimated GDP.

“The planned revenues in that period amounted to €834 million, so that it was achieved €5.8 million more than it was planned. Compared to the same period last year, revenues increased by €17.8 million or 2.2%,” Ms Krsmanovic said. As she said, budget expenditures in the eight-month period amounted to €934.8 million or 25.8% of GDP and they were 5.3% higher compared to the same period last year.

“This is caused by an increase in interest expense due to the early repayment of debt, higher spending in capital budget and repayment of liabilities from the previous period,” Ms Krsmanovic explained. In the first eight months, as she said, there was €95.1 million cash deficit or 2.6% of estimated GDP.

“As for the trends by the end of this year, budget revenues are expected to be €1.34 billion, which is by €12.6 million higher compared to the amount planned by the Budget Law,” Ms Krsmanovic said. According to her, budget expenditures will remain at the planned level of €1.56 million.

“Based on current estimates, the budget deficit for this year will amount to €223.2 million, or 6.2% of estimated GDP, which is €12.6 million less than planned,” she added. Ms Krsmanovic said that spring-date projections of GDP growth and other macroeconomic indicators relevant for running economy policy in the medium term were updated through the Proposal of Projections.

“These projections will serve as a basis for preparing the budget for next year,” Ms Krsmanovic said. She said that Montenegro, as an open economy, was under influences from its environment.

“The growth of economic activity in the coming mid-term period is based on high inflow of investments and high investment activity of domestic investors, as well as the inflow of foreign direct investments and the continued implementation of structural reforms that should contribute to increased competitiveness of the Montenegrin economy,” she said.

According to Ms Krsmanovic, developments on the world market, which inevitably influence the Montenegrin economy, were taken into account in the projections. The Government also adopted the draft amendments to the Law on Excise.

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