Bulletin of the Ministry of Finance

Transcription

ISSN 1800-6906
lulnyv
êvmêtvu{puhujl
ylw|ispj
z{yêvmêm
{olêtpup
Ministry of Finance of Montenegro
BULLETIN XII
april - june 2008
www.min ist ars tvo-fin an sija.vlad a.cg.yu
TAX ADMINISTRATION: www.poreskauprava.vlada.cg.yu
CUSTOM ADMINISTRATTION: www.upravacarina.vlada.cg.yu
DIRECTORATE FOR ANTI-CORRUPTION INITIATIVE: www.antikorup.vlada.cg.yu
ADMINISTRATION FOR THE PREVENTION OF THEMONEY LONDERY:
www.gom.cg.yu/aspn
DIRECTORATE FOR REAL ESTATES: www.nekretnine.cg.yu
PUBLIC PROCUREMENT DIRECTORATE: www.djn.vlada.cg.yu
Bulletin of the Ministry of Finance of Montenegro/April - June 2008
TABLE OF CONTENTS
6-7
8-10
11-12
13
14-15
16
4
INTRODUCTION
- Minister of Finance, dr Igor Lukšić
INFLATION, PROBLEM OR INCENTIVE?
- mr Damir Šehović, Secretary of Ministry of Finance
NEWS IN TAXATION OF JURIDICAL PERSONS
- Koviljka Mihailović, Assistant to Minister
- Gordana Balan, Higher Adviser II for direct taxes
Decree on conversion of citizens’ foreign currency savings and Decision on emission of bonds of
Montenegro for the citizens’ foreign currency savings invested with the banks outside Montenegro
- Marina Popović, Independent Advisor I
- Nataša Novaković, Independent Appointee I
COOPERATION OF MONTENEGRO WITH EUROPEAN INVESTMENT BANK (EIB) ON IMPLEMENTATION OF
INFRASTRUCTURAL CAPITAL PROJECTS
- Ivan Petrović, Advisor
FROM WORK OF COMMISSIONS FOR RESTITUTION AND REMUNERATION
- Zoran Radulović, Independent Advisor I
17-18
PROPOSAL OF BUDGET FINAL ACCOUNT OF MONTENEGRO FOR THE YEAR 2007
- Dušan Perović, Assistant to Minister
- Stanimirka Mijović, Independent advisor I
19-20
Strategy and Action Plan for Financial Reporting Improvement in Montenegro
- Aleksandra Popović, Higher Advisor III
21-22
Activities of Directorate of Customs during the main tourism season
- Edina Osmanagić, Independent Appointee II, Directorate of Customs
23-26
ACTIVITIES OF THE MINISTER OF FINANCE FOR PERIOD APRIL – JUNE 2008
- Ivona Mihajlović, Assistant Spokesperson
27-30
INFO/OVERVIEW OTHER LATEST NEWS FROM THE MINISTRY OF FINANCE FOR THE PERIOD 1 April - 31 June 2008
- Ivona Mihajlović, Assistant Spokesperson
31-33
34-36
37
38-40
41-42
43-49
50-55
56-62
63-72
73-77
78-80
Information on foreign currency savings payment
invested with the authorized banks with headquarters
outside Montenegro
- Dušan Perović, Assistant to Minister
- Marina Popović, Independent Advisor I
RULES AND PROCEDURES OF PROCUREMENT FINANCED BY EU FUNDS
- Central unit for financing and contracting
- Aleksandra Anđelić, Higher Appointee I
- Bojana Kaluđerović, Higher Appointee I
MINISTRY OF FINANCE AS A SIGNIFICANT CREDITOR IN BANKRUPTCY
PROCEDURES OF ENTERPRISES
- Nataša Novaković, Independent Appointee I
- Dušan Zec, Appointee IV
Types of EU aid in programming process
- Olja Šuković, Central unit for financing and contracting
Resolving internal debt registered
with the Ministry of Finance
- Milodarka Novosel, Associate
- Ljiljana Krgović, Independent Advisor
Amendments and appendixes to the Law on budget of
Montenegro for the year 2008
- Slobodanka-Mila Popović, coordinator of Sector for budgetary operations
- Radovan Živković, Independent Advisor I
- Tamara Gačević, Independent Advisor I
- Vladislav Karadžić, Independent Advisor I
IMPLEMENTATION OF PUBLIC CONSUMPTION ON LOCAL
LEVEL for the period January – March 2008
- Gordana Radović, Independent Advisor
- Slobodanka Labus, Independent Advisor
CAPITAL BUDGET REBALANCE FOR THE YEAR 2008, Section
for public investments planning
- Ljiljana Crnčević, Independent Advisor I
- Snežana Mugoša, Independent Advisor II
MIDTERM MACROECONOMIC AND FISCAL FRAMEWORK FOR
MONTENEGRO 2009-2011
- Slobodanka Mila Popović, Coordinator of Section for budgetary operations
- Tamara Gačević, Independent Advisor I
CONSOLIDATED PUBLIC CONSUMPTION IN MONTENEGRO
IN PERIOD I-IV 2008
- Stanko Jeknić, Independent Advisor I
LEASING MARKET - REPORT FOR FIRST QUARTER 2008
- Bojana Bošković, Advisor
Ministry of Finance
of Montenegro
Bulletin of the Ministry of Finance
April-June 2008
NUMBER:
12
PUBLISHED:
quartely
PUBLISHER:
Ministry of Finance
FOR PUBLISHER:
Igor Lukšić, PH.D.
EDITOR-IN-CHIEF:
Gordana Jovanović
EDITORIAL BOARD:
Koviljka Mihailović
MA Milorad Katnić
Krsto Racković
TRANSLATOR:
Aida Ramusović
DESIGN:
Adil Tuzović
TeHnical ASSISTANT:
Ivona Mihajlović
CONTACT:
PR Office of the
Ministry of Finance
TEL:
+382 20 242 835
FAX:
+382 20 224 450
E-MAIL: [email protected]
WEB:
www.ministarstvo-finansija.vlada.cg.yu
ADRESS:
Stanka Dragojevića br 2, Podgorica
PRINT:
DPC - Grafotisak
COPYES:
400
5
Minister of Finance
IGOR LUKŠIĆ PhD
CONTACT:
PHONE:
+382 20 242-835
FAX:
+382 20 224 450
E-MAIL:
[email protected]
WEB:
www.ministarstvo-finansija.vlada.cg.yu
Introduction
Dear readers,
In regard of the first half of year
2008, we may notice that no degradation had occurred in economic
parameters in budgetary sense,
having in mind the global world
financial crisis, together with the
significant increase in agricultural products’ prices and oil prices
in world markets. Still, one may
speak of decrease of liquidity in
the financial market, as well as the
consequential increase of the interest rates. Likewise, the problem of
inflation, which was absent for several years now, had returned during past two years, although in less
unfavorable form in comparison
with some other Eastern European
countries with the same monetary
system, i.e. with the fixed or mostly
fixed foreign currency exchange
rate.
The inflation issue determines
an appropriate fiscal policy. Two
approaches may be applied. Irresponsible, fiscally short term
6
approach, which in the long run
severely damages the macroeconomic landscape; and a non-popular in short term, but the only
acceptable in long term fiscally
responsible approach. It is clear
that the second option assumes
non-rushed reaction in line with
populists’ calls, which are no different than the ones in other European countries. Therefore, it is necessary to maintain a full control over
salaries’ and pensions’ levels, since
the state still largely influences
the aggregated demand, therefore
an irresponsible reaction in that
sense would further speed up the
inflation spiral. With such revenue
policy, it is necessary to continue
with structural reforms with the
objective to provide for the longterm sustainable economic growth
and increase of competitiveness of
the economy, in order to increase
immunity against similar economic leaps.
Structural reforms, in this sense,
include adopting and application
of new working legislation, eliminating business barriers, especially
in the area of civil engineering, but
also other sectors. Afterwards, the
full application of taxation reforms
with the objective of cutting down
taxation of work within the timeframe prescribed by the adopted
laws (by the year 2010), including
recent decrease of dividend tax
down to 9%, making an additional step towards establishing the
taxation system which treats all
forms of revenues in the same and
unique manner. The important
reform structure is also adoption
and application of new property
rights law, which shall stimulate
continuation of investment in different areas. Updated proposal by
the Ministry of Finance had taken
into account certain suggestions
from public debate and therefore,
hopefully, opened space for its
adoption in the Parliament with
necessary majority. Afterwards,
production of new draft Law on
state property shall be performed,
regulating the relationship and act-
ing of state regarding its property.
Such context assumes that the
state will continue with significant
investments in infrastructure, thus
contributing to remedying different sorts of bottlenecks holding off
the economy growth. Therefore,
directions of macro-fiscal policy
for the upcoming three years prescribe gradual decrease of current
public consumption from central
budget and state funds down to
33% of GDP, with an appropriate
increase of capital investment. In
parallel, it is of crucial importance
to continue investment in energy
sector, since it is impossible to
provide for the long-term growth
without investments, both in new
facilities and distributive system.
Respectfully
Minister of Finance
Igor Lukšić, PhD
7
Inflation, problem or
incentive?
MSc Damir Šehović,
Secretary of Ministry of Finance
of Montenegro
One of the basic preconditions
for economic progress of Montenegro, being a small, open economy
with full currency substitution is a
macroeconomic stability, which is the
reason that its establishing was of
utmost importance several years ago,
and yet more important is certainty
of its future duration. Establishing
of this “pillar for market economy”,
Montenegro had opened some space
for high economy growth rates, which are, by the way, in previous years
almost two figured. Due to the fact
that the mentioned macroeconomic
stability means for citizens certainty
in planning purchase of products and
services several months in advance,
and for the businessman the possibility to make long-term plans and different calculations, it is no wonder that
the existing instability of prices is a
concern for great number of people.
What is indeed the phenomenon
of inflation and which are its consequences? Is the increased inflation
in past months specific for Montenegro only? What are the causes of
inflation? Which anti-inflation measures do we have available? These
are some of the questions receiving
attention by both lame and professional public.
The inflation phenomenon (lat.
inflatio – amplify, expand), dating
back from the antique period, had
always meant continuous and rapid
increase of price levels. Although the
textbook definitions are often complicated and indicate its heterogeneous nature (inflation – process of selfsupported prices increase invoked by
the different causes which gradually,
sooner or later, after exploiting stimulating effects of the price growth,
leads to decrease of standard for most
of the citizens, exploiting the national
foreign currency reserves, worsening
foreign currency balance and exchange rate of domestic currency and,
finally, disturbance of market obstructing the continuity of economy operations, invokes new disturbances in
distribution and feeds itself 1), those can still bring up a conclusion
that this is a negative event invoking
the greater consequences as it goes
further. Noted consequences have
direct and indirect character, which
appear stimulating to economy at the
1 - Definition of inflation given by dr Ivo Perišin, is considered to be one of the most comperhensive.
8
beginning, since the effect of “cash
illusion” occurs, manifested through
decrease of supplies and increase of
production, and later negative influences get the spotlight such as prices growth, decrease of export and
increase of import, drop of national
currency exchange rate, decrease of
competitive ability of national economy and similar.
Still, we do not require textbook models to understand that the
inflation mostly burdens the poorest
segments of population, considering
that the high collective awareness of
inflation damages is with us back
from the period of facing with hyperinflation in nineties, which was, after
the one registered in Hungary, the
greatest in the world, where the average monthly growth rate was near
800%. Although this issue was not
much written and discussed up until
recent period, due to the simple reason that there was a belief that the
world economy had become immune against this problem, the events
during 2007 and first half 2008 are
opposing that opinion.
The annual inflation rate in Euro
zone had, according to Eurostat data,
in May 2008 amounted 3.7%, which is 1.8% increase against the same
period in previous year, representing
the greatest price increase since Euro
introduction. The greatest annual
inflation rates amongst the European Union Member States are noted
in Latvia (17.7%), Bulgaria (14%), Lithuania (12.3%), Estonia (11.4%) and
Romania (8.5%), while the greatest
inflation rate in Eurozone was noted
in Slovenia (6.1%). Increase of costs
for food and energy did not pass by
USA, where the greatest inflation rate
in past 17 years was noted, amounting 4.1%, neither did it pass by Russia
(14%) or China (8.5%). Neighboring
states also note the increase of inflation rate – Serbia (11.8%), Macedonia (10%), Bosnia and Herzegovina
(7.5%), Croatia (6.5%) 2.
Based on everything stated, one
can clearly see that the inflation had,
after many years of stagnation, become the challenge against the economic stability of virtually all world
economies, including the economy
of Montenegro, considering that the
average inflation rate, measured by
the life cost indexes in first four months of this year, had reached the level
of 8.2% 3 in comparison with the same
period previous year. Therefore, the
question logically arises what had
caused this notable inflation growth
from 2007?
Theoretically, we differentiate
three contemporary views on inflation causes – demand inflation theory,
cost inflation theory and structural
inflation theory. Monetarists may claim that the inflation is always and
everywhere a monetary problem,
meaning that they explain the inflation occurrence by the first theory,
starting from the belief that with predefined price and salary level, there is
always a surplus in aggregated monetary demand in comparison with
quantity of goods, based on which,
through price increase, a new balance is being establish. From mid-twentieth century, when the significant
acceptance of Keynesian theory had
occurred, the inflation began to be
explained by the cost inflation theory,
therefore the inflation does not have
to occur as a consequence to surplus
in aggregated demand or misbalance
between goods offer and monetary
demand; instead, it occurs as a consequence to production costs increase. Here, we must note that there are
numerous factors that may cause the
inflation, amongst which we should
certainly note increase of salaries and
incomes above the work productivity
level, lack of perfect competition in
the market and influence of the external prices of foreign goods (products
for which the demand is not elastic).
At the end, theory of structural inflation notes that when the full balance
exists between aggregated supply and
aggregated demand on total goods
market, still the inflation may occur
as a consequence of structural misbalance on the goods market, therefore
this theory in a way represents the
combination of previous two. When
speaking about this theory, it is very
important to note that in the development countries, agricultural sector
may represent a significant source of
instability in production and revenue
trends, in such manner that the increase of agricultural products prices
leads to the pressure to increase salaries, so the real income could be kept
on the same level, which represents a
possible factor generating the inflation. With the agricultural sector, the
export sector of the economy may
also cause the inflation trends, especially in the countries where the total
revenues of export depend on one or
several products.
When speaking of the causes of
inflation in Montenegro, we notice that they are in the most direct
manner linked with the previously
explained theories, especially cost
inflation theory and structural inflation theory. Regarding that, it should
also be noted that the inflation in our
country is mostly the result of external factor, so it has the character of an
imported inflation. 4
- Grand growth of oil and other
material prices 5, present since the
year 2004, is the main cause of the
inflation world-wide, including Montenegro, having in mind our import
orientation, so this event is an exogenous shock, which is beyond the
control of economic policy creators.
Prices of raw oil had nearly doubled
in past twelve months, and the influence on increase of prices is not surprising, considering the importance
of oil in the chain of economy in one
country.
- Increase of agricultural products
prices has a vast influence on inflation, occurring after the dry season
covering all agricultural producers,
therefore the world reserves of wheat had dropped to the lowest level in
past thirty or so years, and the prices
of some types of cereals had doubled
in past year.
- Besides that, administrative alignment of prices of fuels 6 and telecommunications 7, increase of minimal wage from 50 to 55 EUR in 2007
together with the increase of work
demands rate for 30% for all public
sector employees in 2008, increase
of real estate prices and great credit
expansion 8 are also some of the factors influencing the increase of aggregated demand, carrying therefore a
potential inflation character.
Regardless of the fact that the
inflation in Montenegro has mostly
the imported character, there is a question which anti-inflation measures
are available to the economic policy
creators, which would result in significant control of inflation and its decrease to the level of several percentages which, according to Freedman, is
favorable for an economy. Having in
mind the fact that Montenegro is in
the group of 16 countries in the world
which had decided to de-monetize
national currency; its space for mane-
2 - Data acquired from the websites of Central banks of listed states and represent the growth of price levels in current month in comparison with the same month previous year.
3 - Inflation had amounted 7.7% in 2007.
4 - Regarding the causes and effects, the following types of inflation may be differentiated: demand inflation, cost inflation, structural inflation, imported inflation, psychological
inflation and inflation invoked by the socio-psychological factors.
5 - This is a typical example of so called imported inflation.
9
uvers is somewhat narrowed regarding use of the macroeconomic policy instruments. In that situation, fiscal
policy gains its significance, considering that it has the leading role in
managing the pressures of demand.
Therefore, the fiscal policy should also in the next period have the
restrictive character, in order to prevent the cycle. Besides that, modern
theory of finance, influenced by the
Keynes’ learning had discarded the
request from classical theory on constant budgetary balance in each year;
instead, the postulate of so called
cyclic budgetary balance was adopted. That means that when we have
the inflation present in the economy with high employment rate, the
budgetary surplus policy is in order;
while in the situation of recession and
unemployment, the budgetary slack
policy is being applied. Therefore, we
should continue with the budgetary
surplus policy, considering its stabilization character. Likewise, continuation of fiscal reforms, heading towards
decrease of taxation shall additionally
influence stimulating the economic
environment, therefore increasing
competitiveness of our economy and
influencing the investments attracting, which would finally be reflected
in increase of competition, therefore
influencing the prices decrease. Besides that, participation of public consumption in gross domestic product
is still high; therefore efforts towards
its decrease should be made in the
following period.
Decrease of fiscal burden against
the oil products would not give any
tangible result. Some corrections in
the sense of tax or VAT rate reduce
would however invoke much more
damage in the budget than the favors
regarding the inflation rate would
be. The reason for this is that these
corrections would not induce significant decrease of retail prices; instead,
they would swiftly be canceled by the
prices trends in global market. Besides that, we should also note that there are no valid arguments for mentioned decreases, considering that the
tax amount is established in absolute
sense, and that its share in total retail
price had decreased, but also the VAT
rate for the oil products is 17%, which
is by all means lower than rates in the
region, and beyond.
Likewise, growth of wages in
public sector should be connected
with the productivity growth, since
otherwise a stronger inflation pressure would be made, which significantly
increases the inflation expectations
and opens space for psychological
inflation acting, which leads towards
establishing so called inflation spiral,
which acts in such manner that the
prices increase heats up requests for
higher nominal salaries, and higher
nominal salaries additionally influence increase of prices, closing the
vicious circle.
Continuance of structural reforms,
in the sense of continuance of privatization process of remaining state
ownership 9 , increase of energy efficiency and construction of new energy supply facilities having in mind
the principles of sustainable development, traffic infrastructure improvement, further development of financial market, significant implementation
of legislation in the area of competition and further improvement of
business environment and continuance of administrative reforms implementation shall influence significant
improvement of competitive ability,
decrease of import dependency and
elimination of fiscal risks, as well as
the dependence of our economy of
global demand, which would in total
have the positive influence both on
living standard and finally on decrease of prices in long term.
Therefore, the inflation we are
facing is not unsolvable problem, but
it can also be a chance to change the
mindset and break away from the
rooted economy stereotypes, which
is by no means easy considering that,
as Keynes says, the difficulty is not in
adopting new beliefs, but in discharging the old ones which are rooted
“in all corners of our mind”. Mental
transition should bring to braking
of with mercantilist logic of closeness and self-sufficiency, since it leads
to limiting competitiveness, withholds the innovation and productivity
growth, therefore decreases the life
standard. Keeping the clear, established property rights, strong institutions and courts which would enforce
them is the prerequisite to provide
so called counter-effect invoked by
undisturbed acting of market laws. 10
In parallel, turbulences in global economy, manifested through additional
pressures invoked by growing inflations, can also be viewed from another
angle, in the manner that we would
see them as an additional incentive to
react swiftly, since in the modern global economy “big ones do not eat the
small ones; fast ones eat the slow ones
instead”. That would turn inflation
trends in the world from the problem
towards an incentive for faster resolving of our internal economic problems, i.e. the intensive implementation of structural reforms. Having in
mind our traditional relaxed attitude,
which is not such a bad thing. On
contrary.
6 - Price growth in first half 2007 was predominantly influenced by growth of prices of liquid fuels and lubricants, increased 8.7%, with participation in total inflation of 32.8%.
7 - Price growth in first half 2007 was also significantly influenced by the increase of traffic and postal and telecommunication services, with increase of 4.1%, with participation
in total inflation of 37.6%.
8 - Credit growth rate in 2007 in comparison with 2006 amounted 165%, which is much more than in any neighboring countries, which had caused the Central bank to take measures for the purpose of limiting credit arrangements, for the annual expansion to be limited to approximately 40%.
9 - So far, more than 85% of capital in Montenegro companies was privatized.
10 - See the results of research directed at reformulation of general balance theory, produced by Kenneth Arow (USA) 1972 and Gerard Debre (USA) 1983, bringing them the Nobel
Prize for economy.
10
NEWS IN TAXATION OF
JURIDICAL PERSONS
The Parliament of Montenegro
had, on the sixth meeting of first
regular session, held on June, 20th
2008, legislated the Law on amendments and appendixes of the
Law on juridical persons’ profit tax, published in the “Official
Gazette CG”, no. 40/08, and being
applied since June 27, 2008.
Obligation of payment of tax
on profit of juridical person was
introduced by the Law on juridical
persons profit tax (“Official Gazette
RCG”, no. 65/01), with solutions
being applied since January 1, 2002.
According to the provisions of this
law, tax payer is a resident or nonresident juridical person, doing its
business for the objective of profit.
Subject of profit taxation of resident juridical person is a profit this
person achieves within or outside
Montenegro, while subject of profit
taxation for non-resident is profit
this person achieves within Montenegro. Profit tax rate, according to
the provisions of this law, was 15%
for profit up to 100,000 EUR and for
profit higher than 100,000 EUR –
15.000 EUR + 20%. In order to create
better scenery for development of
entrepreneurship, at the end of 2004
amendments were made to this law,
therefore decreasing the profit tax
rate to 9%, which is one of the lowest
rates in the region.
According to the provisions of
Koviljka Mihajlović
Gordana Balan
this law, revenues of dividends and
profit shares of juridical persons to
be paid to resident and non-resident
juridical and private persons shall be
taxed on the source (tax is deducted
when paying such revenues) with
15% rate. Revenues earned by nonresident juridical persons (persons
without permanent business unit)
according to the authors’ fees, capital income, real estates and movable
assets, shall be taxed with 15% rate,
and interest revenues with 5% rate.
kers and investment in stocks and
bonds).
The Law prescribes the possibility to use numerous taxation favors
(for doing business in insufficiently
developed municipalities regarding
economy, employment of new wor-
The main reasons for amending
this Law were conditioned by the
need of alignment of the existing
solutions with the Acquis communautaire, especially in the segment
regarding taxation treatment of dividends from holding and subsidiary
companies, transfer prices, connected persons and status change of
tax payers. This obligation was confirmed by the National program for
integration of Montenegro with EU
(NPI), as a short-term measure, planned for implementation in 2008.
Listed changes of the Law on juridical persons profit tax had induced
11
decrease of taxation rate on dividends and shares in profit (from 15 to
9%), which should contribute to creating more favourable scenery for
development of entrepreneurship
and attracting foreign investment.
Likewise, this Law had remedied the
possibility of double profit taxation,
when subsidiary pays dividends to
holding company, Montenegro resident.
The possibility to use taxation
favors is introduced when investing
in permanent assets (facilities, equipment, and similar) used for production of energy from renewable
sources (solar energy, wind, etc.)
and energy efficiency (50% of such
investments are resolved from profit
tax payment).
Partially, the taxation of capital
revenues was also changed. According to new law solution, capital
revenue incomes are included in
taxation base for the year they are
achieved, with 50% value. According
to the previous law solution, capital
revenue incomes were fully included in the taxation base, but there
was an option to use taxation favors
for investment in stocks and bonds.
Capital revenues achieved by selling
stocks and bonds, to be reinvested
within 12 months to buy new stocks
and bonds were excluded from taxation, as well as capital revenue obtained by selling stocks and bonds held
in tax payer’s portfolio for more
than two years.
Also, the definition of purchase price used to determine capital
revenue was changed, so according
to new law it is evaluated or fair property value (land, buildings, property rights, shares in capital and stocks
and bonds).
The Law is predominantly aligned with the relevant legislation
of European Union from this area:
Directive of EU Council 90/435 EEC
on common system of taxation for
holding and subsidiary companies
from different member states (last
changed by the Council Directive 2003/123/EC); Directive of EU
12
Council 90/434 ECC on common
system of taxation on mergers, subdivisions, transfer of property and
exchange of shares amongst companies from different member states
(last changed by the Council Directive 2005/19/EC); Directive of EU
Council 2003/49/EC on joint system
of interest and authors fees taxation
amongst the connected companies
from different EU member states.
Further alignment of profit taxation regulations with Acquis communautaire shall be performed in line
with the dynamics stated in National
program for integration of Montenegro with EU (NPI), with dedication
to align those activities with the economic interests of Montenegro and
obligations derived from SPP.
Since January 1, 2010, the majority of taxes in Montenegro shall be
paid with single-figured taxation rate
(taxation of juridical persons profit;
income tax; taxation on deduction
for dividends; shares in profit, authors’ fees and interests; payments
for health insurance shall be paid
with 9% rate).
Koviljka Mihailović
Assistant to Minister
Gordana Balan
Higher Adviser II for direct taxes
Decree on conversion
of citizens’ foreign currency
savings and Decision on emission
of bonds of Montenegro
for the citizens’ foreign
currency savings invested with
the banks outside Montenegro
For the owners of foreign currency savings, who had achieved the
right to get foreign currency savings
reimbursement according to the Law
on payment of foreign currency savings invested with the authorized
banks with headquarters outside
Montenegro, the Decree on conversion of citizens’ foreign currency
savings provides for, when receiving the second payment, obtain the
confirmation on foreign currency
savings conversion in bonds per
savings account. On that occasion,
the bank shall align the total on
foreign currency savings account,
where the converted foreign currency savings shall be registered in
the savings booklet, which would be
cancelled after issuing the confirmation of converted foreign currency
savings. Confirmation on converted
foreign currency savings bonds shall
contain the personal data on savings’ owner.
The bonds may be traded on
stock exchange, and after expiry
of deadline established by the Law,
the bonds may not be transferred or
used for any other purposes.
Funds for payment of obligations
for funds shall be reserved within the Montenegro Budget. Rights
based on bonds are enforced by
Marina Popović
Nataša Novaković
the owner when submitting the evidence of ownership of bonds due
for payment.
property tax or capital profit tax.
Owners of the foreign currency
savings bonds may, before the due
date of bonds, purchase shares of
state owned companies, funds, use
them for purchase of apartments,
office space, land and other property owned by the state, determined
by the Government of Montenegro
in its special act; and pay for taxation
obligations towards the Montenegro
Budget. The bonds are not subject to
Decision on emission of bonds
had established the date of emission of DOB series bonds, which
shall be issued with different market
designations, depending on the due
date of such bonds. Due date for the
bonds shall be 1 July, , for the period
from 2009 to 2017.
Marina Popović
Independent Advisor I
Nataša Novaković
Independent Appointee I
13
COOPERATION OF MONTENEGRO
WITH EUROPEAN INVESTMENT
BANK (EIB) ON IMPLEMENTATION
OF INFRASTRUCTURAL
CAPITAL PROJECTS
Montenegro as a modern state,
fully understanding the significance
of large infrastructural projects as prerequisites for the sustainable development, dedicates a significant part of
its funds to the investment in capital
projects. By investing in such projects,
we in fact invest in our future. Infrastructural projects provide the support for renewal and reconstruction of
social and economic infrastructure.
The problems Montenegro had
faced in this area in previous period
are numerous: quality of road and
railway network was low, electro-energetic system had had major problems,
water supply problem in Montenegro
seaside region was not solved in quality manner, followed by always significant issue of regional development,
set of environmental problems, etc.
However, these problems are seen as
the challenge, as something that actually needs to be done.
Having in mind the quantity of funds needed for solving these problems,
it is obvious that their solving could
not have been started without quality
credit support by the leading world
financing institutions. For that purpose Montenegro had, first through the
institutions of State Union of Serbia
and Montenegro, and afterwards as
an independent state, established an
exceptional cooperation with major
European and world banks, among
the others with the European Investment Bank (EIB).
The European Investment Bank is
14
Ivan Petrović
the most significant financial institution in the EU, with the headquarters
located in Luxemburg. The EIB role
is to provide the funds for capital
investments with the purpose of EU
development and integrations. This
bang grants the loans with minimal
annual interest rates, primarily for
development of insufficiently developed regions, modernization of traffic,
communication and energy infrastructure, European industry competitiveness, development of small and medium-sized enterprises, environmental
protection, and similar. Total value
of loans granted by EIB amounts to
approximately 20 billion EUR per year,
having in mind that it does not participate in financing any particular
project with more than 50%. EIB gathers its funds from the capital market,
where its credit rating (AAA) provides
it with the possibility to require more
favorable loans, to be forwarded on.
As the table shows, all credit arrangements were signed during the existence of the State Union of Serbia
and Montenegro. Termination of the
State Union of Serbia and Montenegro
meant termination of the European
Considering the favorable credit conditions granted by the bank, Montenegro had in cooperation with EIB implemented numerous projects:
No.
Project name
Date of signing
Agreed amount in €
13.12.2001
16.000.000
2.
Urgent repair of traffic in the Republic of Montenegro (Bar port - 6 mil. €
and reconstruction of road infrastructure - 10 mil. €)
Reconstruction of Montenegro railways
19.03.2002
15.000.000
3.
Energy sector reconstruction
15.08.2002
11.000.000
4.
5.
Modernization of airports of Montenegro
European roads A – Sozina tunnel
27.02.2004
17.05.2004
12.000.000
24.000.000
6.
Comprehensive reform of flight control infrastructure
(Loan for RCG amounts 8% of 34 mil. €, assigned for SiCG)
10.06.2005
2.720.000
7.
Repair of roads and bridges
12.12.2005
9.000.000
8.
Water and sewage in Montenegro (municipality Nikšić- for Project of waste
water filtration)
03.04.2006
5.000.000
1.
Investment Bank mandate to act on
the territory of Montenegro, which
meant suspension of credit arrangements with funds dedicated to implementation of projects in Montenegro.
In order to re-establish cooperation
with EIB, the Framework agreement
between Montenegro and European
investment bank regulating the EIB
activities in Montenegro was signed
with Bank representatives on May 22,
2007. Signing the Framework agreement between Montenegro and European investment bank had terminated
the Framework agreement between
the Republic of Yugoslavia and European investment bank, regulating the
activities of EIB in Yugoslavia (“Official Gazette SRJ – International agreements”, no. 02/02), which had been
previously regulating the EIB activities
on Montenegro territory.
The mentioned agreement represents the framework conditions under
which the EIB shall finance projects
on the Montenegro territory, in line
with its Statute and valid legislation of
Montenegro. The Agreement regulates the issues regarding activities and
taxation of the bank, currency convertibility, public bidding, status and
treatment of the bank in Montenegro,
privileges and immunities, resolving
disputes regarding the bank’s activities and the agreements, subrogation,
coming into force, agreement expiry
date, data confidentiality.
Having in mind that all listed credit
arrangements were signed during the
existence of State Union of Serbia and
Montenegro, but the funds dedicated for some of the projects were not
withdrawn in full. Therefore, for the
Airport modernization project, rema-
ining funds amount 1 million EUR,
for the Energy sector reconstruction
project 2,976,910 EUR, for Roads and
bridges repair project 4 million EUR
and for Waste water filtration project 5
million EUR.
In order to withdraw the listed funds, with the total amount of 12.976.910
EUR, negotiations with the EIB representatives were closed during 2008,
and it is expected that the agreements
providing for funds withdrawing to be
signed mid-July 2008.
In line with the Framework agreement, the Government of Montenegro
had allowed signing a new five-year
credit arrangement, with the funds
amounting 34,000,000 EUR to be used
for rehabilitation of railway infrastructure in Montenegro. From that amount, it is planned for the agreement
to be signed in 2008 for the amount
of 7,000,000 EUR, which would represent a first batch of this arrangement.
Signing this arrangement determines
the total funds dedicated for establishing modern railway network amount
approximately 70,000,000 EUR.
Simultaneously, with the purpose of continuation and intensifying
cooperation with the European investment bank, it is planned that the
Memorandum of understanding shall
be signed during the year 2008, defining which capital projects shall be
financed by EIB funds in the following
period. Those projects shall be carefully selected in line with Montenegro
development goals, having in mind
the state debt amount.
Besides the before mentioned, cooperation with EIB has another significant component. Each of the projects
implemented in Montenegro is subject
to monitoring and supervision by the
Bank experts. In such manner, project implementation units established
within the domestic enterprises, have
the possibility to acquire necessary
knowledge and experience, of utmost
importance for the efficient implementation of both current and future projects. Likewise, leading experts from
different areas, hired by the Bank, are
participating in production of Feasibility studies for those projects, which
contributes to quality of solutions contained in the very projects. With the
same objective, the European bank for
renewal and development (EBRD) had
in the Annual meeting in Kiev 18 – 19
May 2008 had accepted the resolution
reserving 25,000,000 EUR in the form
of technical aid for the Western Balkans states.
At last, but not the least, the significant interest of great banking groups
for investment and aid should be mentioned, not only for Montenegro, but
also for other states in the region. In
that context, it is important to note the
possibility of joint acting of European
investment bank and European bank
for renewal and development in the
Western Balkans states, which would
by all means represent a strong impulse to continue the investment cycle in
the region.
Ivan Petrović
Advisor
15
FROM WORK OF
COMMISSIONS FOR RESTITUTION
AND REMUNERATION
After somewhat more than three
years of practical application of the Law
on restitution and remuneration, in the
meeting of the Parliament of Montenegro, which took place on July 25, 2008,
the Law on amendments and expansions to this Law was legislated which,
among the other things, changes the
system of governmental institutions authorized for decision making on requests
submitted by the former owners.
By these amendments and expansions, the legislator had, for the purpose
of more efficient and swift resolving
submitted requests, replaced the previous gigantic system of first degree instances consisting of 21 municipal commissions five members each with the
appropriate professional offices within
each municipality with three regional
commissions located in Podgorica (for
territories of municipalities: Podgorica,
Danilovgrad, Nikšić, Šavnik, Plužine and
Cetinje), Bar (for territories of municipalities: Bar, Budva, Herceg Novi, Kotor,
Tivat, Kotor and Ulcinj) and in Bijelo
Polje (for territories of municipalities:
Bijelo Polje, Berane, Kolašin, Andrijevica, Plav, Rožaje, Mojkovac, Pljevlja and
Žabljak.
Establishing of these commissions
by the Ministry of Finance, which also
provides all necessary conditions for
their work, had primarily enabled that
all conditions under which those commissions work are uniformed, i.e. that
all commissions work under the same
conditions.
After establishing these commissions in October 2007 and providing
appropriate spatial conditions for their
work, communication with applicants
and handling the administrative procedure, the commissions had taken
over the documentation from previous
municipal commissions and successfully completed vast workload on its arranging, signing and registering.
At the beginning of this year, the
commissions had proceeded with the
cases processing – requests filed by
the previous owners. A vast number of
cases is under procedure in different,
practically all phases of the procedure,
from opening to closing, so it is realistic
16
Zoran Radulović
to expect each month an increase in the
number of processed – finished cases
and produced decisions.
The commission for equalizing the
procedure is also a novelty introduced
by the Law on amendments and expansions to the Law on restitution and
remuneration. It has the obvious task to
monitor, equalize, direct the work of the
first degree regional commissions and
to give its consent on their decisions
which may be delivered to the parties in
procedure only if this commission gives
the consent on proposed decision. So
far, this commission had received 184
decisions from regional commissions
for alignment. As envisioned by the
legislator and realistically expected, this
commission should contribute to equalization and higher quality of work by
the first degree commissions, as well
as faster handling and closing of administrative procedure by decreasing the
number of justifiable complaints by eliminating the reasons for canceling the
first degree decisions in the complaint
procedure.
Considering that the first degree
procedure is now under jurisdiction
of the Ministry of Finance, the provisions of the Law establish the second
degree instance – Commission for com-
plaints on restitution and remuneration
with three members, appointed by the
Government of Montenegro. This commission had, after establishing, received
by this moment a total of 540 cases, of
which 330 cases were left unfinished in
the procedure with the previous second
degree instance due to the change of
jurisdiction and additional 210 cases
arrived meanwhile. Due to the organizational changes occurred by legislating
Law on amendments and expansions to
the Law on restitution and remuneration and new solutions given by that law,
both first degree commissions and this
commission had assumed solving complaints stated against the first degree
decisions and in very short period had
resolved 249 cases, which is almost one
half of seized cases. Having in mind the
expected influx of new complaints and
the cases left unsolved, it is realistic to
expect that this commission shall, by
the end of the current year become
up-to-date, which will also contribute to
shortening the administrative procedure and enable the previous owners to
obtain the regular and legal decision on
their requests within the law-prescribed
deadline.
Finally, it is necessary to state that
the Government of Montenegro had,
according to the authorities given by the
Law on restitution and remuneration,
in the meeting held on June 19, 2008,
legislated a Decree on establishing of
annual payment for remuneration of
former owners in monetary funds for
the year 2008. According to this Decree,
as the result of previous work of commissions, on July 15, 2008, the amount of
remuneration for the year 2008 shall be
paid in favor of 4,115 accounts of former
owners from 878 final decisions by the
commissions for restitution and remuneration, delivered to the Remuneration
fund by December 31, 2007.
Zoran
Radulović
PROPOSAL OF BUDGET FINAL
ACCOUNT OF MONTENEGRO
FOR THE YEAR 2007
Budget consumption policy was
crafted in 2007 with the objective
to increase source revenues and rationalize consumption, increase the
capital disbursements for financing
infrastructure and equipment procurement, decrease of share of disbursements for gross salaries and
other personal revenues through
employment scope rationalization,
stable functioning of budget users,
decrease of state debt through premature payment of credit obligations to the international financial institutions.
The Ministry of Finance – State
Treasury has, in line with the provisions of articles 49 and 54 of the Law
on Budget (“Official Gazette RCG”,
no. 40/01 … 71/05 and “Official Gazette CG”, no. 12/07), the obligation
to by 1 June prepare and deliver to
the Government the draft of State
budget final account.
In line with stated Law provisions, the Ministry of Finance – State
Treasury had on 30 May 2008 submitted to the Government the Draft
Law on Budget final account of Montenegro for the year 2007.
The Government had, in the meeting held on 5 June 2008, established
the Draft Law on Budget final account of Montenegro for the year 2007,
which should by 1 July 2008 be delivered to the Parliament of Montenegro (Article 50 of the Law).
Proposal of Budget final account
of Montenegro for the year 2007 is
published on the Ministry of finance
website: www.ministarstvo-finansija.
vlada.cg.yu, and the following text
presents the basic contents of this
act:
Objectives of public consumption in 2007 are the continuation
Dušan Perović
Stanimirka Mijović
of reforms implementation, in line
with the requirements from process
of EU integration, are protection of
competition and upgrading competitiveness, increase of standard and
citizens’ life quality, maintaining macroeconomic stability with decrease
of public consumption share in GDP
and development of open market
economy, favorable for business
In year 2007, positive macroeconomic trends were achieved. According to latest data by Monsat, nominal GDP for year 2007 amounts 2,540
million EUR. Real GDP is achieved
with the rate of 10.3%, inflation rate
is greater than designed, amounting
7.7%, total public debt constitutes
only 29.0% of gross domestic product. Low unemployment rate of
11.8% was also achieved.
Total consolidated public consumption in 2007 amounts 1,161.77
million EUR, which represents
45.74% of GDP.
After consolidation of fees paid
by the employer, public consumption (second level consolidation)
amounts 1,119.98 million EUR, which represents 44.09% of GDP.
Current public consumption
(consolidated public consumption
minus total capital disbursement)
amounts 974.51 million EUR, which
is 38.37% of GDP.
In 2007, the capital budget was
implemented for the first time, with
the objective to clearly define the
Government activities in the area
of strategic projects implementation, which would be stated through
capital budget ad project financing
sources, more efficient control of
project implementation and activities, as well as the continuity of information per implementation phases
and years. The capital budget is implemented through the centralized
system, which includes preparation
and implementation of capital pro-
17
jects via two institutions, namely:
Public works directorate and Traffic
directorate.
In 2007, budget revenues had
been collected in the amount of
809.04 million EUR, which is 8%
more against the plan and 37.74%
more than previous year.
Current revenues with incomes
from granted credit payment in 2007
amount 796.14 million EUR, which is
39.18% more than in 2006 and 8.82%
more than planned.
Current revenue structure is as
follows:
• Tax revenues amounting 708.02
million EUR, comprising 88.93% of
current revenues are 8.32% greater
than planned and 41.78% greater
than the previous year. Greater achievement against planned had been
recorded for all types of tax except
for the profit tax, where the achievement was 96.98%.
• Tax-levies revenues of 18.38
mil. EUR represent 4.94% increase
against the planned and 32.3% against 2006.
• Fees revenues of 22.90 mil. EUR
represent 5.58% increase against the
planned and 28.13% against 2006.
• Other revenues of 40.63 mil.
EUR represent 20.26% increase against the planned and 29.83% against
previous year.
• Income from payment of granted loans of 5.88 mil. EUR, consisting
of payments of credits granted from
the State Budget as a financial support for companies from previous
period and charging of taken-over
claims in the privatization procedure of Montenegrobanka.
Total disbursements from the
Montenegro budget in 2007 are in
the amount of 776.25 mil. EUR, or
3.63% higher than planned, as a result of premature payment of debt.
Premature payment of obligations according to the consolidated
loan from IBRD had contributed to
significant budget savings (total savings amount approximately 35.00
mil. EUR by the end of amortization
period in 2031), because those are
the loans with highest interest rates
and servicing costs.
Consolidated budget expenditures for 2007 amount 623.20 mil. EUR,
which is 97.13% of planned amount,
with greatest savings in gross salaries
and work taxes paid by the employer
18
30.96% or 192.95 mil. EUR; transfers
to institutions, individuals, non-governmental and public sector 30.64%
or 128.62 mil. EUR, transfer for social security 7.18% or 44.75 mil. EUR,
capital expenditures 12.45% or 77.57
mil. EUR, expenditures for service
material 12.14% or 75.67 mil. EUR,
current maintenance 3.31% or 20.64
mil. EUR, interests 4.10% or 25.54 mil.
EUR, other personal revenues 2.77%
or 17.24 mil. EUR and expenditures
for reserves 1.77% or 10.84 mil. EUR.
Consolidated budget consumption
makes up to 24.53% of GDP.
It is of utmost importance to note
that the capital expenditure level is
in absolute amount 2.45 times bigger and their participation in consolidated expenditures almost twice as
big against the previous year, which
indicates that the budget consumption structure goes towards capital
budget.
Execution of the Montenegro
budget for 2007 had been implemented in conditions of good liquidity;
therefore all obligations of budget
users, by the level of consumption
planned by the Budget for year 2007,
were settled within deadlines.
Montenegro budget for year
2007 surplus amounts 172.94 mil.
EUR, which is 6.81% of GDP, and
comparing with surplus achieved in
2006 (85.08 mil. EUR) it is doubled.
Surplus finances payment of debts
on loans and credits amount 15.33
mil. EUR, old foreign currency savings 9.46 mil. EUR, obligations from
previous years 44.10 mil. EUR and
net debt payment for foreign loans
amount 82.15 mil. EUR. Remaining
funds with privatization revenues of
10.82 mil. EUR and donations of 0.08
mil. EUR constitute increase of state budget deposit of 32.79 mil. EUR.
That shows that part of privatization
revenues (21.90 mil. EUR) which was
in 2006 used for financing budget
expenditures covered in 2007 from
current revenues and constitute one
part of deposit at the end of year.
One should also note that the tendency of state revenue growth exists
and that on 31. December 2007 these
amounted 161.53 mil. EUR, which is
34.90% more than the same period
previous year.
Unsettled obligations of the Montenegro budgets on 31 December
2007 amount 4.14 mil. EUR, which is
10.59 mil. EUR less than the starting
situation (01.01.2007).
State debt at the end of 2007 amounts 737.2 mil. EUR or 29.0% of gross domestic product (GDP). Internal debt amounts 275.1 mil. EUR or
10.8% GDP, while the external debt
amounts 462.1 mil. EUR or 18.2%
GDP.
External state debt is decreased
during 2007 both in nominal and
percentage amount of BDP for 41.9
mil. EUR or for 4.6% GGDP. Decrease had occurred due to premature
payment of three batches of consolidated loan of the International
bank for renewal and development
(IBRD) with total amount of 59 mil.
EUR, as well as regular payments of
capital amounting 12 mil. EUR. Funds used from the existing loans had
increased debt for 27.6 mil. EUR namely with the International development agency (IDA), Credit bank
for development (KfW), Hungarian
and Polish goods loan, as well as the
first withdrawal of funds from Societe Generale bank loan for IT equipment procurement for schools.
Unlike the external debt, internal debt had increased in 2007 for
78.00 mil. EUR, primarily for increase of restitution obligation. Participation of internal debt in total debt
had increased from 28.1% in previous year to 37.3% during 2007. Remaining budget obligations were fully paid, while the state bonds were
bought-off. For old foreign currency savings, payment of fourth batch
was made and debt is decreased by
8.70 mil. EUR, and payment of foreign currency savings deposited with
authorized banks with headquarters
outside Montenegro had started and
so far 1.40 mil. EUR was paid.
DuŠan Perović
Assistant to the minister
Stanimirka Mijović
Strategy and Action
Plan for Financial
Reporting Improvement
in Montenegro
Introduction
What exactly does production
of this type of documents include
and what are the reasons for a country to embark in their production? What are the obligations and
which is the role of the Ministry of
Finance?
Production of this document is
a step forward, with the objective
to create a better legislative and institutional framework for financial
reporting, i.e. achieving the objective – correct framework for financial reporting, in line with the needs
of economy; in line wit the acquis
communautaire of the European
Union, international standards and
international best practice.
Bases for work on Strategy
and Action plan for Financial
Reporting Improvement in
Montenegro
During the year 2006, the World
Bank team had visited Montenegro,
followed by preparation of the Report on Standards and Regulations
Compliance (ROSC), regarding the
accounting and auditing (A&A) in
Montenegro.
Recommendations
Aleksandra Popović
of ROSC policy are internationally
correlated and inter-supported;
produced with the objective to
synergetic improve the financial reporting framework in Montenegro.
Recommendations, holding the
lead role in establishing of complete accounting and auditing culture
and environment, had been agreed
by the World Bank, Ministry of Finance and stakeholders in the state. Likewise, it was agreed for the
detailed Strategy and Action Plan
for the state to be developed by
the stakeholders in the state and
implemented under coordination
of the Ministry of Finance, with the
assistance of the development partners, according to these policy recommendations.
Following the A&A ROSC report, the Ministry of Finance of
Montenegro had established the
National Council for accounting
and auditing (NSC) for the purpo-
19
se of development of Strategy and
Action Plan, to work with the policy recommendations stipulated in
A&A ROSC report, with the objective to improve financial reporting
quality.
The National Council for Accounting and Auditing consists of the
multi-disciplinary group of public
sector, hosting representatives of
the Ministry of Finance, Market Court, National Bank of Montenegro,
Stocks and Bonds Committee and
Agency for Insurance Supervision.
The NSC role is to support preparation of Strategy and Action Plan,
in order to harmonize requests of
acquis communautaire regarding
the accounting and auditing, as well
as to provide advice for people creating policy, regulators and other
stakeholders; creating the landscape for upgrading accounting and
auditing legislation and practice in
Montenegro, with the final objective of upgrading financial reporting
quality.
The following institutions are
participating in production of Strategy and Action Plan for Upgrading
Financial Reporting Quality: Ministry of Finance, National Bank of
Montenegro, Stocks and Bonds Committee, Agency for Insurance Supervision, Market Court, Faculty of
Economy and Institute of certified
accountants of Montenegro.
Strategy and Action Plan
for Upgrading of Financial
Reporting Quality
Strategy and Action Plan for Upgrading of Financial Reporting Quality is a clear reform program for
improvement of legislation, institutions and accounting profession,
especially in the segment regarding
the accounting, auditing and business culture, with the objective to
achieve high-quality financial reporting.
The basic sense of financial re-
20
porting is for the reports to present
an economic essence of transactions and events in the manner as
those had actually occurred, but
also to show consequences of such
events which are in accounting sense encompassed. For those reasons,
situations reflected from achieved
transactions and other events are
consequently, by application of
standards, expressing the interest
for the issues presented in financial reports to truly and objectively
depict in which manner the transactions and events influence the
entire operation of the subject. This
manner of presenting the situation,
measuring the value of an entire
market system is of utmost importance and interest for all entities
depending on achieved economic
results of the company subject to
reporting.
Strategy and Action Plan
development objective
The Strategy and Action plan
for Upgrading of Financial Reporting Quality objective is to enhance
and harmonize financial reporting
quality, as well as to increase public
confidence in financial reports.
Likewise, the Strategy has the
objective to align the financial reporting framework with the acquis,
including preparation of consolidated financial statements, list of
auditing companies and electronic
publishing of financial statements,
as well as to define proportional
requirements for financial reporting of small and medium-sized enterprises and to enhance financial
statements’ publishing.
companies to better evaluate company perspectives and to make investment decisions and vote being
well informed;
• development of private and
financial sector;
• upgrade of political unifying
and economic integrations of Montenegro in EU.
Likewise, a correct financial reporting would:
• increase confidence in financial markets’ operation;
• strengthen corporative management, by enabling shareholders
and public the supervision over
management’s work;
• help transparent and correct
privatization process of state owned
companies.
Conclusion
Production of this document
represents a specific challenge for
our economy, especially having in
mind the fact that the International
standards for financial reporting
(MSFI) represent the most prestigious and the most respectable system
of reporting, which is adopted and
implemented by global companies.
By its conception, MSFI is primarily
focused to show the public its framework for producing and presentation of the financial reports. As
such, it is meant to serve the entire
public, which is interested in reliable market information, and it should provide the balance between
two fundamental categories constituting the reporting foundation, namely its users on one hand and the
contents of information subject to
presentation on the other.
Financial reporting enhancement would be of assistance in:
• activation of domestic savings
and attracting more foreign direct
and portfolio investments;
• facilitating availability of loans
for smaller enterprises;
• enabling investors in larger
Aleksandra Popović
Higher Advisor III
Activities of Directorate
of Customs during the
main tourism season
As each year, the Directorate of
Customs takes all necessary measures
during the main tourism season in the
sense of the best possible organization
on border crossings and customs terminals. Having in mind that the main
tasks of the Directorate of Customs are
collecting revenues, protection of the
customs area of Montenegro, repressing smuggling and corruption, customs officers are paying significant
efforts to reach listed goals.
Besides the fact that the customs
participate in the work on the international meetings and teams within the
Government regarding the main tourism season, and according to these
agreements, together with the directions of Government, performs the
activities from its jurisdiction, at the
same time intensively enforcing all
measures for assurance of stable operation of customs information system.
In connection to that, officers with the
Customs security sector, Internal control, auditing and external auditing
department, as well as the control teams on the Directorate level perform
intensified controls for the purpose of
customs area protection.
Regarding the main tourism season, Director, Mr Miodrag Radusinović
had, with the associates in local offices
held the objective-oriented meetings.
On that occasion, representatives of
Directorate of Customs of Montenegro
and Directorate of Customs of Serbia
had held meetings on local level and
Directorate level, where it was established that during the main tourism
season, all necessary measures should
be taken for the customs procedures
to flow more efficient and therefore
Directorate of Customs
contribute to facilitating easier trade
and speed-up passenger’s and goods’
transition over the border crossings.
It was noted that the border crossing
Dobrakovo, being the most frequently
used crossing towards Serbia, is being established as the Government of
Montenegro priority for reconstruction. Reconstruction is planned for the
next year. Directorate of customs gives its best for passengers, goods and
vehicles transit to be performed with
minimal delays. At this moment, transition is being permitted slower, due
to the bad infrastructure, causing certain delays.
Towards the main tourism season,
the increased workload is expected.
Having in mind that the Rulebook on
limited food carrying and the Decree
on environmental fee charging are
being implemented, significantly influencing the passenger’s transition,
during June, i.e. at the beginning of
their application, certain difficulties
had occurred. However, the border
crossings did not witness significant
delays. Border crossings are equipped
with boards with information on types
and quantity of food products to be
used during traveling, which may be
carried in the territory of Montenegro.
It is expected that the authorized Ministry of the Internal Affairs shall soon
provide for border crossings special
containers for disposing the food which does not fulfill the conditions. Information resources – electronic and
printed media had done a lot in that
regard, by informing citizens.
Directorate of Customs had also
produced and published on its website in electronic form and on information board of CIS the following brochures: “Rules on origin of goods and
preferential”, “Customs tariff applica-
21
Border crossing “Debeli brijeg”
tion”, “Establishing goods’ customs
value”, “Simplified procedures”. The
brochures “How to import and export
goods”, “How to complain to the customs” and “Citizens’ guide” were also
produced and made available for passengers and businessmen on the border crossings.
After overview of situation on border crossings, Heads of four Regional
units – Customs Podgorica, Bar, Kotor
and Bijelo Polje, from their field of
work, take organizational and other
measures with the objective to protect
customs area, achieve the planned revenue collection, timely finishing customs procedures, uninterrupted passenger and goods transit and other
task during the tourism season. That
primarily relates to intensified engagement of all officers, intensifying control function of the Heads of organizational units, redistribution of officers
to organizational units with greater
workload and others.
Head of Customs Office Podgorica, Mr Radivoje Pejović, had stressed
that the workload increases during the
tourism season, mostly in segment of
import of all sorts of goods and export
of agricultural products. In that direction, the customs officers of that Customs Office pay their maximal efforts
for the works from their domain to be
performed in line with regulations,
in a fast and efficient manner. Likewise, he had stated that reconstruction
of Border crossing Bozaj is ongoing.
Traffic over this crossing is difficult, so
the additional effort is needed from
the customs officers.
Active role during the main tourism season belongs also to the Customs
22
Border crossing “Dobrakovo”
Office Bar, headed by Mrs Nataša Zec.
Head had stated that the Customs
Office she is managing had taken all
measures for the tourism season to finish successfully. She had noted that,
according to the sail plan of line transporters “Barska plovidba” and “Azura
line”, from the beginning of July, increased number of ferryboat departures and arrivals starts, therefore it
is planned that at the season peak for
lines Bar-Bari-Bar and Bar-Ancona-Bar
ships sail 12 times a week, to return to
three departures and arrivals for Bari
in mid-September, which is usual for
the rest of the year. Head also said that
number of passengers and vehicles
is slightly rising on border crossing
Sukobin, while greater frequency is
expected from mid-July until the end
of August.
Head of Customs Office Kotor, Mr
Jovo Suđić, with his associates notes
that traffic is flowing uninterrupted
on border crossings covered by that
Customs office; therefore all crossings
are opened for the international tourist traffic, except for the Port in Bjela.
He had noted that newly constructed
part of road from Herceg Novi to border crossing Sitnica is being officially
opened on July, 1st; therefore a significantly more frequent traffic is expected on this border crossing.
Head of Customs Office Bijelo Polje, Mr Vesko Drobnjak, had stated that
in that area, the heaviest traffic is on
border crossing Dobrakovo. That is an
I category crossing, for which certain
standards were prescribed, both in
exterior appearance and in the functioning method. He had confirmed that
this crossing, due to the unfavorable
geographic location and poor infrastructure, is established as the priority
of the Government of Montenegro for
reconstruction. He had stated that the
problem of infrastructural deficiencies would be solved by construction of
additional traffic lanes, therefore separating passenger from goods traffic.
Heads had noted that frequency
of passengers and vehicles had increased on all border crossings, and such
trend is being expected to continue
during July and August. Likewise, they
had confirmed that the customs office
is ready to successfully satisfy the entire workload announced by transport
companies.
During the next period, the Directorate of Customs and Customs offices shall have the significant tasks in
revenues collection as well, since their significant increase was planned in
comparison with previous months.
Since achieving the planned collection is a permanent task, therefore
some necessary measures are being
taken on its completion.
Everything stated brings up a conclusion that, during the main tourism
season, the customs office is prepared
to, in cooperation with other state institutions on the border, in spite of the
increased workload, perform planned
activities in quality manner, both in revenue collection and in protection of
the customs area of Montenegro, with
adhering to the regulations.
Directorate of Customs
Edina Osmanagić
Independent Appointee II
ACTIVITIES OF THE
MINISTER OF FINANCE
FOR PERIOD
APRIL – JUNE 2008
June 26, 2008 - Statement by the Minister of Finance, dr Igor Lukšić, on occasion of establishing Draft law on amendments and appendixes to the Law on
Budget of Montenegro for year 2008
The Government had review, accepted and established Draft of amendments
and appendixes to the Law on Budget and
it shall be, after certain technical processing, forwarded to the Parliament, and
the amendments are, predominantly, consequence of recently adopted Law on retired persons’ remuneration, which is a
consequence or a result of the non-court
settlement recently made.
Amendments and appendixes to the
Law on Budget include granting additional funds, regarding the current segment
of Retirement fund, as well as positioning
certain funds with the objective to increase the item for debt settling, since the
bonds are due as soon as October 2008.
and shall be appropriate to the dynamics
in line with the adopted law. Likewise, the
debt settling item should include additional disbursements; regarding servicing
old foreign currency savings based on
two laws legislated in previous and current year, and is related to expanding the
group of old foreign currency investors
included in our legislation. The second
reasons for making certain amendments
and appendixes to the law is certain increase in capital budget, both in section for
individual projects needing to be finished
faster and for alignment of the things that
were included in bidding procedures and
therefore providing for those projects to
be finished by the end of this year.
A logical reason for correction of the
budget is also our decision to increase the
rates for wages in courts, as well as the
need to intensify the court institutions’
work – prosecution offices and any other
institutions of utmost importance for eliminating some delays, so in this manner
it is necessary to provide the additional
funds for their work on Saturdays. The
important item, which is also going to be
included in the budget and implemented
in following months, is a Memorandum
of Understanding, which will be signed
by the Government with the Association
of Unions, therefore implementing the
agreements on solving the issues of certain number of employees as a consequence of transitional process implementation.
This is a measure of remedying economic
and social consequence of a very difficult
process of transition from centralized planning to market economy. It is evaluated
that the revenues of budget and funds
should at the end of the year amount 1 billion 260 million euro, and disbursements
approximately 1 billion 230 million euro,
which leaves surplus of approximately
0.8%, which shows that the budget is wellbalanced and that its further implementation shall contribute to decrease of debt.
June 19, 2008 – Statement by the Minister of Finance, dr Igor Lukšić, on occasion of adopting the Information on planned activities for creating conditions for
employment incentives in Montenegro,
with special attention paid to the Northern region and underprivileged categories of citizens
This is a topic which was also present
in all activities of the Government in previous period, representing the view on the
social dimension of the transition process,
as well as creating stimulating framework
for new employment, predominantly,
for those people registered with the Employment Agency, reflecting the structural
unemployment at this moment.
We believe that we are already entering the stage when our economic reality
is such that we can announce the end of
transition process. Transition process is
transfer from centralized planning to market economy, and in our circumstances
with some 85% of privatized and restructured economy, which is in some degree
even greater than in some Western-European countries. We must start facing the
issues of post-transitional challenges, such
as the reform of social security system, strengthening the institutional rule of law,
and in this particular case, decrease of
unemployment.
This information is divided into two
sections; the first one deals with the issue
how to adequately solve the problem of
transition consequences in enterprises
which did not have a positive market fortune and manifestation. Such situation
exists in a certain number of enterprises
in Niksić municipality, while the second
issue is related to the additional proactive
measures for employment and creating
conditions for employment. For the purpose of solving transition consequences
and solving the social issues arising as
consequence to transition, based on the
fact that the union had multiple times advocated previously, in communication
with the Association of unions the agreement will be promoted on the method for
the Government to contribute certain funds in favor of the Union. This agreement
should provide certain funds up until esta-
23
blishing the institutional response to these
issues, which would be a Labor fund, to be
established after adopting the Labor Law.
This information shows that there is
a room for a certain number of enterprises and a significant number of workers
to make a decision of buy-off of security
period with approximately 2 million 200
thousand euro, which is a continuation
of the activities implemented in several
municipalities few months ago. Likewise, we had defined a certain number of
activities for which the project owners –
Employment agency, Directorate for Development of Small and Medium sized
companies, Development fund, and in the
segment of special support for the agriculture, where the Ministry of Agriculture,
Forestry and Waters shall also take participation. During the following months, we
shall start an intensive campaign, presentation of the stimulating framework of employment, which will be directed towards
the least developed municipalities in the
North of country and Cetinje. From July
1, the more active campaign and presence
of the Government in these municipalities
shall be started, in order to enable discussion on these topics. This is a whole set
of measures to be applied, depending
on the owner of mobile project, measurements taken by the Employment Agency shall be better defined or appended
in the following period when employing
trainees, intensifying public works projects, employment and a more stimulating
framework for employing the persons
registered in our agency, instead of nonresidents. The Directorate for Small and
Medium Sized Enterprises shall intensify
its projects regarding entrepreneurship,
start-up projects with somewhat wider trajectory lines, more favorable funds than
presently available, and we can also expect
establishing a special credit warranty fund
in the next year, in line with the new Law
on Banks and the appropriate by-laws, to
be adopted by the Central bank.
June 19, 2008 - Signed Contract on
purchase and investment in the military
complex Center of military-medical institutions Meljine
This is a significant investment project, where the partner is reputable con-
24
sortium, headed by the Atlas shares group,
consisting of highly reputable investors
from the United Arab Emirates. This is
an investment of great importance for
Montenegro because, besides the medical services, this project shall expand to
tourism activities, which would position
Montenegro as a prestigious destination
for such business. Expected investment is
approximately 120 million euro, while in
the following 5 approximately 100 million
regarding new medical contents in that
area – exclusive hotel, tourism contents
and other. Social component of this arrangement includes obligation of the investor
to keep all employees for several years, as
well as that their gross wage during that period shall not be lower than 860 euro. With
the support of Herceg-Novi municipality,
which had already started preparation of
an appropriate planning documentation,
a prestigious offer shall be obtained for
that area.
June 12, 2008 - Statement by the Minister of Finance, dr Igor Lukšić, on occasion of adopting the Draft Law on Property
Rights Relations
Draft Law on Property Rights Relation
was established by the Government at the
end of previous year, and the parliamentary procedure had determined that it is
necessary to perform the additional public debate, which was done and the public debate had been finished end-April.
According to the notes stated during the
public debate, Draft law on Property Rights Relations was prepared, to once again
enter the Parliament procedure. This law
had offered the solutions to provide an
additional impulse for the investments, as
well as for Montenegro to be presented as
a very attractive destination for continuation of investment in tourism, real estates
and other, and on the other had to satisfy
the primary interest of rational use of space, as a valuable resource.
For that reason, the rights of foreign
persons are under special attention and,
after comprehensive consultations made,
in that sense, the key shall be Article 415 of
the law, which stipulates that private and
juridical persons cannot hold ownership
rights in following situations – on the natural wealth and goods for common use,
agricultural land, forest, forest land, cultural monument of great and special importance, real estates located in the area which was, for the purpose of state protection
and security, prescribed by the law as such
that the foreign person cannot have property rights on it.
In this manner, we shall keep a certain
type of individual demand in certain areas, especially mountain – Zabljak, Kolasin,
Plav etc. We had also proposed that the
foreign person can acquire property rights on agricultural land, forests and forest
land, providing that the area is not larger
than 5 thousand m2, if the subject of contract on sale, purchase, gift, exchange and
other is a dwelling located on such land.
June 10, 2008 - Statement by the Minister of Finance, dr Igor Lukšić, for Radio
Antena M: Personal opinion of an individual cannot have sway-over
The Ministry of Finance had cancelled
the decision by the Real Estate authority
Local Office in Cetinje and returned the
Mitropolija of Montenegro-seaside of the
Serbian Orthodox Church status of holder
for the church land and temples in that
municipality. The Minister of Finance, dr
Igor Lukšić, had, explaining for Antena
M such decision, noted that the issue of
ownership cannot be solved in administrative procedure; instead, it is to be solved in property procedure, in an authorized court.
In the system of institutions building,
personal opinion of an individual cannot
have sway-over; therefore, in such system
everyone does his job. The Ministry of Finance had reviewed a complaint by Serbian Orthodox Church and decided that it is
not possible to correct errors in administrative procedure in such manner, ordering to repeat procedure. In our opinion,
the only thing possible to do is to start an
appropriate property dispute in an appropriate instance and therefore finally solve
this problem, since it is not possible to mix
two different procedures. The Minister of
Finance had commented on claim of the
Real Estate Authority director, Mr. Mićo
Orlandić, that this instance had previously made a legal decision. “Opinion of the
Real Estate Authority is an opinion of first
degree instance, and opinion of the Ministry of Finance is an opinion of second
degree instance; therefore if somebody
believes that the Ministry of Finance did
wrongly, the same procedure may be started with the Administrative Court. Since
this is a property issue, it is not possible
to correct the error without consent of
the other party, which is elementary, and
therefore it was not possible to accept the
explanation by the Real estate authority”.
May 30, 2008 - Signing the Agreement
between the Government of Montenegro
and the Government of Switzerland within the Paris Club of Creditors
Agreement between the Government
of Montenegro and the Government of
Swiss Confederation takes over the existing bilateral Agreement between Governments of Swiss Confederation and
Federal Republic of Yugoslavia, signed on
October 3, 2002, where the main provisions remain in force for Montenegro.
The Agreement prescribes that debt
of Montenegro to the Swiss Confederation consists of debt of former SFRJ to Switzerland, which was used or warranted by
the users located on the territory of Montenegro. Total amount of Montenegro
debt to Swiss Confederation is 2.4 million
Swiss Franks (CHF). Of the total amount
of debt, more than 98% was allocated and
the users were companies from Montenegro (KAP, Radoje Dakić, Primorka – Bar,
Vukman Krušćić – Mojkovac), and the
non-allocated part of debt, after sign-off of
66%, had fallen onto Montenegro as a special type of non-allocated debt or exchange, according to the Law on appendixes
to the Law on Credit Relations with foreign creditors of former SFRJ (Article 49c).
The debt to Switzerland is to be paid until 2024, and the interest rate is six month
CHF LIBOR increased for 0.5% fee. Agreement with Swiss Confederation is the fifth
agreement signed within the Paris club of
creditors since Montenegro acquired its
independence.
May 19, 2008 - Final statement by the
Presiding to EBRD Board of Governors,
Minister of Finance, dr Igor Lukšić
Annual Meeting of the European Bank
for Renewal and Development, covering
participation of high representatives of
governments, states, leading financial organizations, entrepreneurs for small, medium and large enterprises from the region, as well as the representatives of civil
society, had been held in Kiev, on May 19,
2008. After presiding to the official opening ceremony, with speeches given by
President of Ukraine, Mr. Viktor Jushchenko, Prime Minister, Mr. Julija Timoshenko
and EBRD President, Mr. Jan Lemieur, dr
Igor Lukšić, Minister of Finance, had had
the final presentation, summing up the
contents of adopted resolutions, among
the others the Resolution on distribution
of bank net profit achieved in previous
years, of which 25 million euro is directed
for technical assistance in Western Balkans. Minister Lukšić with his associates
had bilateral meetings with management
of European Council Development Bank,
European Investment Bank and EBRD,
where the agreed investment projects and
current progress were discussed. It was
jointly concluded that the major advancement in project implementation was achieved, and the progress was evaluated as
very satisfactory. During the bilateral meetings held with the investors and financial
institutions, potential investment opportunities in Montenegro were discussed. The
Minister of Finance, dr Lukšić, during his
stay in Kiev for the EBRS Meeting, also had
a set of individual meetings with colleagues ministers of finance from other states
and high representatives from region and
beyond, for the purpose of exchange of
opinions and experiences in the areas of
common interest.
May 16, 2008 - Signed Contract on
warranty for the second payment for the
Project “Regional water supply in Montenegro”
Minister of Finance, dr Igor Lukšić,
and Head of European bank for renewal
and development (EBRD) office, Mr. Marek Lorinc, had signed the Contract of
warranty for the second payment for the
Project “Regional water supply in Montenegro” with the amount of 7 million euro,
for construction of water supply system
for municipalities Budva, Tivat, Kotor and
Herceg Novi.
Executive director of JP Regionalni
vodovod (public enterprise Regional water supply), Mr. Zoran Bošnjak, had also
signed the Contract on credit with Head
of EBRD office, Mr. Lorinc. The European
bank for renewal and development had
granted Montenegrin enterprise for regional water supply 15 million euro loan (in
2007 – 8 million euro, effective in 2008; in
2007 – 7 million euro, effective in 2009),
with the purpose to support rehabilitation
and construction of regional water supply
system, which would provide drinking water from Skadar lake for the municipalities
on Montenegrin seaside. The European
bank for renewal and development shall
finance rehabilitation and construction
of northern part of the system, which will
provide water supply for Budva, Tivat, Kotor and Herceg Novi, while the World Bank
shall finance extraction of water from Skadar lake, its processing and construction
of main, continental and Southern part of
the network, to provide water supply for
Bar and Ulcinj.
“Project “Regional water supply” is of
multiple importances for Montenegro and
a significant prerequisite for economic development, especially having in mind that
the tourism is leading growth sector in
our country. Providing the safe and uninterrupted water supply at the seaside is of
strategic importance for the country, and
the Government of Montenegro had given
it the highest priority”, said the Minister of
Finance, dr Igor Lukšić, when signing the
contract on warranty. Mr. Marek Lorinc,
Head of EBRD office in Podgorica said
that the project shall help implementation
of the main water supply system construction in Montenegro seaside implementation. “By this program, the Bank supports to
the main infrastructural needs in the state,
which provides good chances for continuous growth in the sector of tourism, providing therefore the high class tourism opportunity”, said Mr. Lorinc.
April 24, 2008 - Minister of Finance,
dr Igor Lukšić, met delegation of heads of
Financial Intelligence Offices (FOS)
The Minister of Finance met in Podgorica delegation of heads of financial intelligence offices (FOS) within the Second
25
regional conference, organized by the Authority for money laundering prevention
of Montenegro.
The minister had stated his satisfaction on signing joint Protocol on fighting
money laundering and terrorism financing by the heads of Financial intelligence offices (FOS) of Montenegro, Slovenia,
Croatia, Serbia, Albania, Bosnia and Herzegovina and stressed that such regional
cooperation is a positive example for all
institutions and offices, especially in the
sense of progress achieved in aligning national legislation frameworks.
Heads of financial intelligence offices
had agreed in their evaluation of a very
firm cooperation and further intensified
development of an efficient data and information exchange. They had noted that
the archive of exchanged data and actual
procedure speak the best on the exceptional cooperation and shown their belief
that all conclusions from the Second conference shall be implemented in upcoming period, regarding exchange of staff
and communication channels efficiency.
It was mutually stated that a significant
step forward was made, especially in completing the legislation and evaluated that
the future cooperation of regional offices
shall certainly aid the joint fighting against
the organized crime.
April 18, 2008 - Statement by the Minister of Finance, dr Igor Lukšić, on the
occasion of establishing Draft Law on
Management of Temporary and Permanently Confiscated Assets
Draft Law on Management on Temporary and Permanently Confiscated Assets
was adopted by the Government today;
the law which follows up the obligations
from the Action plan for enforcing fight
against the corruption and organized crime. In this area, the EU experiences were
applied. The assets, in this segment, are
money, movable items, real estates, valuables, valuable items and other real rights…
Management of these assets includes their evaluation, storage, safekeeping, return,
sale, investing the funds acquired by its
sales. The funds acquired by selling permanently confiscated assets shall be, after
covering expenses, be paid to the budget
26
and used for capacity strengthening of court and prosecution organs and internal
affairs forces.
April 14, 2008 - Meeting Lukšić –
Mayer
Minister of Finance, dr Igor Lukšić,
had received the visit from the Ambassador of Switzerland, Mr. Wilhelm Mayer. In
the meeting, they had exchanged opinions on general political and economic situation in the state, regional relations and
functioning of trade links, as well as global
trends of inflation in past period. Ambassador Mayer had noted his interest in main
trends in economy during the first quarter
and foreign investment in different areas.
Minister Lukšić had noted that the economy of Montenegro is stable and that almost all segments show positive effects,
as well as that fulfilling of obligations from
the Agreement on Association and Accession goes according to the plan and that
Montenegro, due to the numerous public
and private investments in first quarter
2008 expects even more stable opportunities and stronger economic growth.
Minister Lukšić and Ambassador
Mayer had noted their satisfaction regarding finalization of preparations for upcoming signing of the Agreement on settling
the debt between Montenegro and Switzerland within the Paris club of creditors.
April 3, 2008 – Minister of Finance of
Montenegro, dr Igor Lukšić, had received
the delegation from the European Council Development Bank
Minister of Finance, dr Igor Lukšić
with his associates, had received the delegation from the European Council Development Bank – Project Division Director, Mr. Theodor Ivanov and Regional
Manager, Mr. Vitomir Miles Raguz. It was
the first official meeting with the World
Bank representatives after accepting the
Montenegro membership on November
19, 2007.
Minister Lukšić had noted his pleasure for the first formal meeting and noted
readiness of the Government of Montenegro for an intensive cooperation, with the
objective of implementation of Project for
financing and construction of solidarity
apartments, including the activities of the
Ministry of Finance, Ministry for the Economic Development and Directorate for
Public Works. He had informed the participants on the position of the Ministry of
Finance and noted that the debt limit for
this Project was already reserved in the
Budget for year 2008, therefore there are
no obstacles to define further elements,
up to final signing which should realistically be expected by the end of current
year. Director of the project division of
the World Bank, Mr. Ivanov, had noted
the multiple significance of acceptance of
Montenegro in the World Bank membership, stating that the main objective of the
visit is to introduce the partner with plan
of further activities and procedures that
should contribute an efficient coordination ad successful implementation of the
Project. He had noted his belief that in the
upcoming period, besides financing and
construction of the solidarity apartments,
other numerous projects in other areas
shall also be defined.
PR OFFICE
Ivona Mihajlović
assistant spokesperson
INFO/OVERVIEW
OTHER LATEST NEWS FROM
THE MINISTRY OF FINANCE
FOR THE PERIOD 1 April – 31 June 2008
Ministry of Finance 07 April 2008
Published Analysis on taxation
policy implementation for year
2007
Taxation system and taxation policy
are one of the significant leverages for
establishing market economy system in
any country. With that purpose, within
total reform processes being implemented in Montenegro, great attention was
paid to the activities regarding the taxation system and taxation policy reform.
Comprehensive taxation reform was
initiated mid-2001, and the most significant results of current reform processes
are following: introduction of value added tax in our taxation system (instead
of previous retail tax in retail business);
introduction of synthetic taxation of
private persons’ income (taxation of revenues from all sources instead of previous cedular approach); significant decrease of taxation rates with expansion
of taxable base; equalization of taxation
status of domestic and foreign juridical
persons, equalization of taxation status
of imported and domestic special taxation products; introduction of mechanism for remedying double taxation of
revenue and dividend; introduction of
self-taxation principle for calculation
and payment of taxation obligation (almost all taxation obligations in regular
procedure are being calculated by tax
payer and pays them in law-prescribed deadline); introduction of taxation
identification number (PIB) for all juridical and private persons – tax payers
and legislation of modern Law on taxation administration, clearly defining the
rights and obligations of tax payers and
taxation authority. Taxation legislation
in Montenegro, especially regarding
the indirect taxes, is mostly in line with
the European Union legislation.
According to the Decision on
conditions and procedure of claims buy-off using the citizens’ foreign currency savings bonds and
former owners bonds for remuneration on confiscated property rights, on 20 March 2008, the public
call was advertised to buy-off claims of Montenegro registered with
the Ministry of Finance, therefore
enabling all juridical and private
persons to buy-off their debt under
favorable conditions
According to the CDA’s data, by 4
Appril 2008, the juridical persons had
bought of total of 2,951,846 EUR: HTP
“Korali”AD – Bar had fully bought-off
its debt of 235,481 EUR, regarding the
obligations towards the London club
of creditors and the International financing corporation, as well as HTP
“Budvanska rivijera” which had bought-off debt of 1,946,365 EUR with the
same foreign creditors. HTP “Onogošt”
AD-Nikšić had, of total debt amounting
831,391 EUR, bought-off770.000 EUR or
92.6%, and considering that the public
call is opened until 20 June 2008, it is
expected that some other debtors will
apply with a significant amount of debt.
Amongst the private persons, whose
debt is predominantly based on credits
used for self-employment via Montenegrobanka and Employment Service,
taken over by the Government on 24
December 2003, two debtors had bought-off their debts with the total amount
of 45,017 EUR, and the procedure of court disputes’ and encumbrances against
their property canceling is underway.
The stated facts indicate that the financial effects for the Government are significant, since the amount of sold bonds
shall decrease budget obligations to reserve the funds for taken legal obligations based on citizens’ foreign currency
savings and restitution. Example would
be that the budget for year 2008 had
reserved 10 million for restitution obligations, and just in ten days the Government claims sold had the amount of
almost 3 million EUR. Positive effects
for debtors are also multiply significant,
since the juridical persons release their
balance sheets from old debts, which is
of utmost importance for liquidity of
these enterprises and more successful
business activities with the possibility
of new credit arrangements. For private
persons, this activity has a special significance, since these debts are under executive court procedures and verdicts for
selling collateral property. For this category of debtors, a significant interest is
noted and we can expect major effects.
Round table held on the subject
“Draft law on property rights relations and Draft law on state property” on Friday, 11 April 2008,
from 10:00 to 14:00 in Hotel “Crna
Gora” (Green Room), organized by
the Ministry of Finance of Montenegro.
27
Spring meeting of IMF and
World Bank
On the occasion of spring meeting
of the International Monetary Fund
and the World Bank, Assistant Minister
of Finance for budget sector, MSc Nikola Vukićević had stayed in Washington
from 11 to 14 April 2008.
On that occasion, besides the Constituence meeting, Mr. Vukićević had
had the meetings with the Chief Executive Officer of Netherlands Constituence
in the World Bank Mr. Herman Wijffels,
director of IFC for Europe and Central
Asia Region Mr. Shahbaz Movaddat and
Unit Director for South-Eastern Europe
Jane Armitrage. He also met with Head
of IMF mission in Montenegro Robert
Hagemann, as well as with the Chief
Executive Officer of Netherlands Constituence in the International Monetary
Fund Age Bakker.
Presentation by Assistant Minister of Finance Mr. Krsto Racković
at round table “Draft law on property rights relations and Draft
law on state property”
I believe that, as interested parties,
you had the opportunity to acquaint
yourself with contents of two laws discussed here via the Ministry of Finance
website. Due to that fact, and especially
their volume and lack of time to interpret individual norms, I shall note some
of the aspects and parts of the Laws
which I believe are of special importance. The Ministry of Finance had, via an
appropriate Workgroup consisting of
representatives of Law school, Ministry
of Finance, and Ministry of Justice, headed by Prof. Zoran Rašović PhD, prepared the Draft law on property rights
relations.
The Government of Montenegro
had, in the meeting held on 27 December 2007, established this Draft law and
forwarded it to the Parliament to adopt.
The text of this Law was discussed in
the Parliament board and accepted.
The boards had also accepted several
amendments, which were integrated in
the Law, afterwards opening the public
debate lasting for one month.
Property rights relations in Montenegro are still not fully regulated by the
law. Property, as a totality of economic
relations in the society and a social con-
28
dition for the existence, is the foundation for the total reform of society. Complete and detailed normative regulation
of property rights relations is necessary
for implementation of changes started
in economic and legal system of the
Republic and necessary preconditions
for faster establishing of constitutional
conception of private property and liberty of entrepreneurship.
Nikola Vukićević had presented actual
results in the area of economic and fiscal policy, together with the mid-term
plans. The meeting was also an opportunity to exchange experiences with other states, both regarding the problems
they had faced during the EFP production and in the area of economic and fiscal policies creation. After this meeting,
the representatives of Directorate General for economic and financial issues
of the European Commission shall produce the final evaluation of EFP 2007,
which would be forwarded to governments of states participating in its production. The Ministry of Finance shall,
with other institutions relevant to this
area, starting from June 2008, begin the
activities on production of Economic
and fiscal program for year 2008.
Assistant Minister of Finance,
Nikola Vukićević with his associates, in Brussels on Monday, 21 April
2008, participated in the experts
meeting dedicated to discussion
and preliminary evaluation of Economic and fiscal program for 2007
Assistant Minister of Finance, Nikola Vukićević with his associates had participated today in experts meeting dedicated to discussion and preliminary
evaluation of Economic and fiscal program forwarded by Montenegro to the
European Commission in November
2007. Besides Montenegro, representatives of Albania, Bosnia and Herzegovina and Serbia had also attended the
meeting. Economic and fiscal program
2007 – 2010 is a document produced by
Montenegro for the second time, since
after 2006, the EFP had been established
as a new “instrument” with the purpose
of upgrading negotiations between the
European Commission and potential
member states. In today’s meeting, the
representatives of the European Commission had noted preliminary evaluation of delivered Economic and fiscal
programs, after which the representatives of states had commented on stated
evaluation. Significant progress was noted for Montenegro EFP in comparison
with the previous year, regarding the
form and contents, in the sense of given
projections and provided alternative
scenarios. Assistant Minister of Finance
Published Volume 11 of the Bulletin covering key indicators of
public finances and general trends
for the period 1 January – 31 March
2008, together with numerous latest topics characterizing first quarter 2008
Ministry of Finance 7 May 2008
Premature buy-off of the foreign currency savings bonds OB16
and OB17
According to provisions of the Law
on settling obligations and claims based
on foreign debt and citizens’ foreign currency savings (“Official Gazette RCG”,
no. 55/03 and 11/04), the Government
of Montenegro had in 2004 issued bonds with total amount of 137,237,341.04
EUR, with due date from 2004 to 2017,
out of which, according to law solution, 40,735,016.67 EUR was settled.
According to the amortization plan,
the bonds due in 2016 (OB16) amount
10,223,735.00 EUR, and in 2017 (OB17)
amount 11,543,193.00 EUR. According to
the Law on payment of citizens’ foreign
currency savings invested with the authorized bank with headquarters outside
Republic of Montenegro (“Official Gazette RCG”, no. 81/06), and in line with
the valid documentation, a total obligation for reimbursement of foreign currency savings invested with authorized
banks with headquarters outside Montenegro was established in the amount
of 28,075,127.70 EUR. By this moment,
the total amount of 1,420,388.01 EUR
was paid (first payment of 380 EUR per
investor), therefore from the remaining
amount of 26,654,739.69 EUR the bonds shall be issued by the 1 July 2008,
when the second payment of 530.00
EUR per account shall start. The Government of Montenegro had, under conditions of Budget high liquidity, and for
the purpose of protection of interest of
owners of the citizens’ foreign currency
savings bonds in line with mentioned
laws, as suggested by the Ministry of
Finance, legislated the Decision of buyoff of citizens’ foreign currency savings
bonds due in 2016 and 2017 (“Official
Gazette CG”, no. 22/08). Implementation of this decision shall influence decrease of domestic debt, which had, on
31 December 2007, amounted 275.10
million EUR. In line with the Article 3
of the Decision of buy-off of citizens’
foreign currency savings bonds due in
2016 and 2017, the Ministry of Finance
of Montenegro had, on 22 April 2008,
selected the authorized participant in
the stocks and bonds market by direct
collection of bids (shopping method).
According to the Journal number 061049 dated 24 April 2008, from the public opening of closed bids on costs of
implementation of premature buy-off
of bonds OB16 and OB17, the Ministry
of Finance had, from the pool of fifteen
bids delivered by stock brokers, selected the broker company Basileus broker a.d. Podgorica, offering the most
favorable conditions for buy-off of the
citizens’ foreign currency savings bonds in the name and in favor of the Government of Montenegro.
On occasion of the Draft law on
amendments and appendixes to
the Law on juridical persons’ profit tax, published on the Ministry
of Finance of Montenegro website
(www.ministarstvo-finansija.vla-
da.cg.yu), the public debate shall
last until 16 May 2008.
Public announcement by the
Assistant Minister of Finance for
treasury sector Dušan Perović on
occasion of premature payment of
foreign currency savings bonds
After evaluating the interests of foreign currency savings bonds’ owners,
interested in collecting their bonds before deadline, the Government of Montenegro had, as proposed by the Ministry of Finance, legislated the Decision
of buy-off of citizens’ foreign currency
savings bonds due in 2016 and 2017,
for the maximal price of 0.50 EUR per
bond with nominal value of 1.00 EUR.
This decision had enabled the interested owners of bonds to, under the
most favorable conditions, sell their
bonds before due date, which cannot
be cashed in the stocks and bonds market due to the lack of demand and low
prices of bonds. This decision, on one
hand, provides the owners of bonds for
the foreign currency savings invested
with the authorized banks on the territory of Montenegro, as well as with the
authorized banks with headquarters
outside Montenegro the shorter deadline of bonds due for two years, and
on the other hand its implementation
influences decrease of domestic debt.
According to the provisions of the Law
on settling obligations and claims regarding foreign debt and citizens’ foreign currency savings (“Official Gazette
RCG”, no. 55/04 and 11/04), the Government of Montenegro had, in 2004,
issued the bonds with total amount of
137,237,341.04 EUR with due date from
2004 to 2017, out of which 40,735,016.67
EUR was paid according to the lawprescribed solutions. According to
the amortization plan, bonds due in
2016 (OB16) amount 10,223,735.00
EUR and in 2017 (OB17) 11,534,193.00
EUR. Likewise, according to the Law on
payment of citizens’ foreign currency
savings invested with the authorized
banks with headquarters outside the
Republic of Montenegro (“Official Ga-
zette RCG”, no. 81/06), in line with the
valid documentation, a total amount of
invested foreign currency savings was
established, invested by the authorized
banks with headquarters outside Montenegro with former National bank of
Yugoslavia, 28,173,950.00 EUR. By this
time, total paid amount is 1,435,500.00
EUR (first payment of 380.00 EUR per
individual account), so for the remaining amount of 26,738,450.00 EUR the
bonds shall be issued from 1 July 2008,
when the second payment of 530.00
EUR per savings account starts. The Ministry of Finance had, for the purpose
of selection of participants in stocks
and bonds market – brokers, by direct
gathering of bids (shopping method)
had invited all participants in stocks
and bonds market to deliver their bids
on costs of implementation of premature buy-off of bonds OB16 and OB17.
Fifteen broker companies had delivered their bids, and three of those were
present on opening of sealed bids. The
most favorable conditions for bonds
buy-off was delivered by Basileus broker a.d. Podgorica, which was granted
a contract on citizens’ foreign currency
savings bonds buy-off by the Ministry
of Finance. It is necessary for the foreign currency savings bonds owners, interested in selling their bonds for years
2016 and 2017 before due date for the
price of 0.50 EUR per bond, go with
the proof of ownership over bonds
(extract from Central depository agency) to broker and sign a sales contract,
who will then offer them in the stocks
and bonds market. Premature buy-off
of the citizens’ foreign currency savings bonds was started mid-May, and so
far 77,980 bonds with nominal value of
1.00 EUR was bought, i.e. the amount
of 77,980.00 EUR, where 37,820 bonds
due in 2016 with nominal amount 1.00
EUR or total amount 37,820.00 EUR
and 40,160 bonds due in 2017 with nominal amount 1 EUR or total amount
40,160.00 EUR were bought.
Ministry of Finance 3 June 2008
Information on implementation of citizens’ foreign currency
savings payment, invested with
Dafiment banka AD Belgrade and
Banka privatne privrede DD Podgorica via enterprise Jugoskandik
DD Belgrade
The Parliament of Montenegro had,
on 18 March 2008, legislated the Law on
payment of citizens’ foreign currency
29
funds invested with Dafiment banka
AD Belgrade and Banka privatne privrede DD Podgorica via enterprise Jugoskandik DD Belgrade (“Official Gazette RCG”, no. 21/08), which came into
force on 4 April 2008. Payment of funds
invested with Dafiment banka AD Belgrade and Banka privatne privrede DD
Podgorica via enterprise Jugoskandik
DD Belgrade shall be performed, according to this Law, in favor of citizens – investors, who on the day of this Law coming into force – 4 April 2008, have the
residence in Montenegro, can present
the contract on investing of foreign currency funds with Dafiment banka AD
Belgrade and contracts on investing of
funds for foreign currency savings and
savings booklet with Banka privatne
privrede DD Podgorica invested via enterprise Jugoskandik DD Belgrade, and
for whom the payment was not made
in line with the laws of the state where
bank headquarters is located…
Statement by the Assistant Minister
of Finance for treasury sector Dušan Perović after the Government
of Montenegro meeting
Draft law on budget final account
for previous year was adopted today
by the Government. The gross domestic product in previous year amounted
2.54 billion EUR, which is real growth of
10.3 percent. Inflation was 7.7 percent
greater than projected, public debt 29
percent of gross domestic product or
737.2 million EUR. From that figure, internal debt is 275 and the external 462
million EUR. Budget surplus in previous year is 6.8 percent of gross domestic
product, or 172.9 million EUR. Previous
year is characterized by positive macroeconomic trends. Current public consumption amounted 974.4 million EUR
or 38.37 percent of gross domestic product. Budget incomes amounted 809
million EUR. Total taxation incomes
were increased except for the profit
tax, 96.98 percent of planned amount
was collected. Total Budget disbursements were 776.25 million EUR or 3.6
percent higher than planned. State deposits had, at the end of previous year,
amounted 161.53 million EUR and are
approximately 35 percent higher then
one year ago. Unpaid budget obligations were 4.11 million EUR, which is
almost 11 million less than in January
previous year.
30
Information on second paym
ent of bonds for converted citizens’
foreign currency savings invested
with banks with headquarters outside Montenegro
According to the Law on payment
of citizens’ foreign currency savings invested with the authorized banks with
headquarters outside the Republic of
Montenegro (“Official Gazette RCG”,
no. 81/06) and the Decree on conversion of citizens’ foreign currency savings in bonds (“Official Gazette CG”, no.
40/08), the owners of converted foreign currency savings bonds shall receive the second payment of 530.00 EUR
per savings account, due on 1 July 2008
in business units of Crnogorska komercijalna banka AD Podgorica (CKB). It
is necessary for the owner of foreign
currency savings account to go to the
CKB organizational unit where he/she
had filed a request for foreign currency savings reimbursement, where he/
she will receive the confirmation on
transformation of savings into bonds.
The bank shall first align the situation
on the account and register in the savings booklet the amount of savings
converted into bonds. The confirmation shall always contain personal information on foreign currency savings
owner, as well as the annual payments
due on every 1 July in period from 2009
to 2017. Annual payments are calculated
by multiplying the savings investment
with the rate, which contains pre-calculated interest rate until due dates, with
2% annual rate. Annual rate amount minimum is fixed to 500 EUR, having that
the last payment is made for the remaining amount…
Central depository agency AD Podgorica as owners for converted foreign currency savings may withdraw their fifth
payment at regional centers of the Central bank of Montenegro and Atlasmont
banka AD Office Pljevlja, depending on
their residence, according to the identification document (personal ID, passport). Owners of the foreign currency
savings, who did not withdraw the first
payment or are not registered with the
Central depository agency, should go
to the bank where they have foreign currency savings. Former investors with
Montenegrobanka AD Podgorica and
Jugobanka AD podgorica which are
under bankruptcy procedure should
register at an appropriate desk of the
Central bank of Montenegro. Owners
of bonds, acquiring them according to
the deed of gift, heritage or purchase
on the market, have also established
distribution of desks where they can
withdraw OB08 (fifth payment), depending on residence or place of issue
of personal ID. Juridical persons acquiring the foreign currency savings bonds by purchase in the market can withdraw OB08 payment on the desk of
PRVA BANKA CRNE GORE AD NIKŠIĆ.
Foreign currency savings bonds can be
withdrawn on each working day, from
Monday to Friday, with working hours
noted on each payment site…
Information on fifth payment
of foreign currency savings bonds
According to the Law on settling
obligations and claims regarding the foreign debt and citizens’ foreign currency savings (“Official Gazette RCG”, no.
55/03 an 11/04), the owners of bonds
of converted foreign currency savings
are to receive fifth payment due on 1
July 2008, with the amounts defined by
the confirmation (amortization plan),
to be paid in business banks, i.e. regional centers of the Central bank of Montenegro. Investors, i.e. citizens who had
after 1 July 2004 registered with their bank and therefore registered with
ASSISTANT SPOKESPERSON
Ivona Mihajlović
Information on foreign
currency savings payment
invested with the authorized
banks with headquarters
outside Montenegro
According to the Law on citizens’ foreign currency savings payment invested with the authorized banks
with headquarters outside Montenegro (“Official Gazette RCG”, no. 81/06) and the Instruction on the citizens’
foreign currency savings payment invested with the authorized banks with headquarters outside Montenegro
method (“Official Gazette RCG”, no. 20/07), the Ministry of Finance had finished the first payment of citizens’
foreign currency savings via the Commercial bank of Montenegro AD Podgorica (CKB). The owners of foreign
currency savings had the opportunity to, by 6 January 2008 submit the requests with necessary valid documentation based on which the citizens’ foreign currency savings was registered and first payment with the amount
of 380.00 EUR was made.
Based on the acquired data, invested citizens’ foreign currency savings, deposited by the authorized bank at former National bank of Yugoslavia amounts 28,200,340.97 EUR, with the number of savings accounts of 4100. 4100 savings accounts
were paid with the amount of 1,433,951.77 EUR, making the total of foreign currency saving amount 26,766,389.20 EUR.
Number of requests
received
Number of requests
paid
Deposed foreign
currency savings
Paid
New situation of foreign
currency savings
4100
4100
28.200.340,97
1.433.951,77
26.766.389,20
The citizens with residence in Montenegro had invested their foreign currency savings both with the banks with organizational units in Montenegro without the juridical person property (subsidiaries, affiliations, business units) and with the
bank and their organizational units with business outside Montenegro.
Banks with headquarters in the Republic of Serbia with organizational units in Montenegro are:
- Jugobanka AD Belgrade, with affiliations in Herceg Novi, Kotor and Tivat;
- Invest banka, with business units in Podgorica, Bar, Ulcinj, Virpazar and Golubovci;
- JIK banka Belgrade, with subsidiary in Bar; and
- Sabacka banka AD Sabac, with front desks in Budva and Kotor.
The deposit invested with these organizational parts was in the amount of 10,176,550.17 EUR, with 1904 savings accounts.
With the Beogradska banka Temeljna banka Ljubljana (bank headquarters in the Republic of Slovenia) with business
units in Podgorica and Bar, 1,378,710.26 EUR was invested with 290 savings accounts.
The majority of citizens’ foreign currency savings invested with the banks with business outside Montenegro is in the
banks with headquarters in the Republic of Serbia. Savings invested with these banks amounts 14,955.751.44 EUR with 1604
savings accounts.
In banks with headquarters in Bosnia and Herzegovina, savings were invested with the amount of 889,988.95 EUR with
142 savings accounts, while the savings invested in Croatian bank amounts 9,079.00 EUR with 7 savings accounts.
Minor amounts of foreign currency savings were invested with banks in the Republic of Macedonia with 2 savings accounts and the amount of 972.06 EUR and the Republic of Slovenia with one savings account and the amount of 75.92 EUR.
31
Citizens with residency in Montenegro had also invested their foreign savings in the organizational units of banks outside Montenegro. The majority of saving was invested with the organizational unit of Ljubljanska banka AD in the Republic
of Bosnia and Herzegovina (bank headquarters located in the Republic of Slovenia), with the savings amounting 350,937.11
EUR with 74 savings accounts. With the banks from the Republic of Serbia, having organizational units in Bosnia and Herzegovina, amount of 89,182.84 EUR was invested with 33 savings accounts.
In the Republic of Croatia, savings were invested with the organizational units of banks from the Republic of Serbia and
the Republic of Slovenia. In departments of banks from the Republic of Serbia, amount of invested savings is 224,268.89
EUR and 25 savings accounts, while in departments of banks from the Republic of Slovenia, amount invested in savings is
124,824.26 and 18 savings accounts.
Overview of citizens’ foreign currency savings per organizational units and banks’ headquarters is presented in the following tables:
I ORGANIZATIONAL UNITS OF BANKS ON TERRITORY OF MONTENEGRO
bank headquarters
number of accounts
initial situation in €
paid in €
new situation €
Slovenia
290
1.378.710,26
89.700,21
1.289.010,05
Serbia
1904
10.176.550,17
674.083,67
9.502.466,50
I TOTAL:
2194
11.555.260,43
763.783,88
10.791.476.55
II ORGANIZATIONAL UNITS OF BANKS ON TERRITORY OF BOSNIA AND HERZEGOVINA
bank headquarters
number of accounts
paid in €
new situation €
Slovenia
74
350.937,11
25.511,80
325.425,31
Serbia
33
89.182,84
10.562,88
78.619,96
II TOTAL:
107
440.119,95
36.074,68
404.045,27
III ORGANIZATIONAL UNITS OF BANKS ON TERRITORY OF CROATIA
bank headquarters
number of accounts
paid in €
new situation €
Slovenia
18
124.824,26
5.869,88
118.954,38
Serbia
25
224.268,89
8.641,64
215.627,25
III TOTAL:
43
349.093,15
14.511,52
334.581,63
IV BANK HEADQUARTERS
bank headquarters
number of accounts
paid in €
new situation €
Serbia
1604
14.955.751,44
567.178,67
14.388.572,77
Bosnia and Herzegovina
142
889.988,95
49.866,04
840.122,91
Croatia
7
9.079,08
1.944,32
7.134,76
Slovenia
1
75,92
75,92
Macedonija
2
972,06
516,74
455,32
IV TOTAL:
1756
15.855.867,45
619.581,69
15.236.285,75
TOTAL I+II+III+IV
4100
28.200.340,97
1.433.951,77
26.766.389,20
Owners of foreign currency savings were investing their savings both in the original currencies that do not belong to
Euro zone and in currencies belonging to the Euro zone.
Foreign savings conversion in Euro, for the currencies not belonging to Euro zone had been performed according to the
exchange rate on 6 January, 2007 (day of enforceability of the Law), and for the currencies belonging to Euro zone, conversion had been performed on 1 January 2002 (according to the exchange rates defined by the Central bank of Europe).
The major part of foreign currency savings, in currencies not belonging to Euro zone, was invested in US Dollars
8,285,496.78 USD, in Danish Crowns 2,128,588.07 DKK, Swiss Francs 2,714,520.52 CHF, Swedish Crowns 1,546,367.43 SEK, as
well as in Canadian Dollars, Sterling Pounds, Australian Dollars, Norwegian Crowns, and the least amount in Japanese Yen.
32
The major part of foreign currency savings, in currencies belonging to Euro zone, was invested in Deutche Mark
13,619.893.61 DEM, French Franks 2,905,122.64 FRF, Austrian Schillings 982,705.30 ATS, as well as in Belgian Francs, Finland
Marks, Italian Lira, Netherlands Guldens, while the leas amounts in Portuguese Escudo and Spanish Peseta.
Majority of foreign currency savings is already converted to Euro and amounts 7,973,311.40 €.
Overview of the foreign currency savings per currency is shown in the following table:
FOREIGN CURRENCY SAVINGS FOR CURRENCIES OUTSIDE EURO ZONE
Currency
code
Currency
mark
Capital in original
currency
Interest by 2006 in
original currency
Capital in €
Total in €
036
AUD
108.058,82
16.985,27
64.716,43
74.888,92
124
CAD
172.547,11
28.470,92
112.224,63
130.742,11
208
DKK
2.128.588,07
185.590,23
273.553,57
298.459,80
392
JPY
414,05
50,00
2,68
3,00
578
NOK
42.240,97
5363,20
5.098,47
5.745.79
752
SEK
1.546.367,43
284.410,53
170.405,81
201.747,85
756
CHF
2.714.520,52
360.850,27
1.686.246,04
1.910.556,78
826
GBP
117.379,27
18.120,05
173.963,80
200.785,24
840
USD
8.285.496,78
1.217.447,30
6.333.647,95
7.264.260,66
I TOTAL:
10.087.190,14
FOREIGN CURRENCY SAVINGS FOR CURRENCIES IN EURO ZONE
Currency code
Currency
mark
Capital in original
currency
interest in
original
currency, by
2002
Capital +
interest for
2002, in €
interest by
2006, in €
Total in €
040
ATS
982.705,30
103.401,50
81.914,72
9.105,78
91.020,50
056
BEF
432.356,56
42.177,10
11.763,21
1.180,55
12.943,76
246
FIN
425,87
7,61
72,91
7,32
80,23
250
FRF
2.905.122,64
240.951,19
479.466,69
48.262,37
280
DEM
13.619.893,61
1.402.299,44
7.696.037,80
784.059,30
527.729,06
8.480.097,10
380
ITL
189.506.826,33
10.011.537,05
102.951,46
10.341,54
113.293,00
528
NLG
337.082,87
27.312,06
165.362,41
16.598,15
181.960,56
620
PTE
2,34
0,33
0,01
-
0,01
724
ESP
260,13
5,22
1,59
0,16
1,75
II TOTAL:
978
9.407.125,97
€
7.973.311,40
732.713,45
8.706.024,85
III TOTAL:
8.706.024,85
IV GRAND TOTAL ( I+II+III ) :
28.200.340,96
Based on the previously stated, and in line with the legislation, the first payment of 380.00 EUR (per savings account) was
made with total amount of 1,433,951.77 EUR, while the remaining savings, to be converted in bonds, amounts 26,766,389.20
EUR. Converted foreign currency savings bonds, to be paid in 9 (nine) annual payments, are due on each 1 July in the period from 2009 to 2017. Annual payments are calculated by multiplying foreign currency savings investment with index which contains pre-calculated interest rate by the due payment moment, with the annual rate of 2%. Annual payment amount
cannot be lower than 500 EUR, having in mind that the last payment shall be made with remaining amount. When paying
second batch amount 530.00 EUR, the owners shall receive the Confirmation on conversion of foreign currency savings into
bonds of Montenegro, which shall be registered in the individual owner’s account with the Central deposit agency.
Dušan Perović,
Assistant to Minister
Popović Marina
33
RULES AND PROCEDURES
OF PROCUREMENT
FINANCED BY EU FUNDS
INTRODUCTION
After becoming a potential candidate for the European Union membership, Montenegro had acquired
the right to use EU pre-accession
funds (IPA). This unique financial instrument has the objective to provide
aid for the potential candidate and
candidate states in their way towards
the European Union membership. In
that manner, among the others, those
states are provided with the opportunity to get prepared for managing
future financial instruments of EU
member states. One of the criteria to
be satisfied for the potential funds
users to have money at their disposal
is a strict adherence to the pre-defined rules and procedures of procurement and negotiating. These rules
and procedures were first published
on 1 February 2006, and revised on
22 August 2007, in the form of Practical Guide to contract procedures
for EC external actions (hereinafter:
the PRAG), elaborating contracting
procedures to be applied on all aid
agreements with EU, financed by the
European Union general budget.
PRAG defines the method for public procurement procedure performing, from the initial steps to granting contracts. Besides that, annexes
of this document contain standard
forms to be used in all stages of procurement and contract implementation.
Depending on who makes the decisions regarding procurement and
granting contract (i.e. who is client
or the negotiating organ), there are
tri possible approaches for procurement procedures management for
projects financed by the programs of
European Union external aid: centralized, where the European Commission (hereinafter: the Commission) ma-
34
Aleksandra Anđelić i Bojana Kaluđerović
kes decision for and in the name of
beneficiary state; decentralized with
ex-ante control, where the client (in
our system that shall be Central unit
for financing and procurement) makes all relevant decisions submitting
them afterwards to the Commission
for verification, and decentralized
with ex-post control, where the client makes decisions without sending
them to the Commission for verification.
Considering that one of the conditions for obtaining accreditation
for Montenegro’s membership in the
European Union is, among the others,
introduction of decentralized system
with ex-ante control, the remaining
text gives a short presentation of procedures applicable in such systems.
Granting contract method is defined by numerous strict rules, with
the objective to insure selection of
an appropriate qualified contractor
without prejudice and to obtain “the
best value for money” with full transparency, which is the main prerequi-
site for use of public funds.
Before starting any tendering procedure, services, goods or works must
be verified by the financial agreement
and funds must be provided.
Rule of nationality and origin
Participation in procurement procedure is permitted for each juridical
person founded in one of the European Union member states or one of
the states defined by such program as
acceptable.
Direct participation of private
persons is defined by the specific instruments applicable on the program
according to which the contract is being financed. Participation is opened
for all international organizations.
All goods and materials to be procured within the contracts financed
by the instruments of the Union must
have the origin from the Union or a
state which satisfies the nationality
criteria (except for the states excluded
from nationality and origin rules).
The origin includes origination
from the state in which the last economically justified significant change on the product had occurred. Therefore, the state of
origin is not necessary the state from which the goods were transported. If the product had undergone economic changes in
one state only, origin is easy to establish. In the cases when more than one country is participating in the production, it is necessary to establish which of those states defines the final product origin. If the last significant transformation did not occur in the
European Union member state or some of the acceptable states, such goods cannot be offered for the project purposes.
Publicity
Service providers, equipment vendors and works performers must provide publicity of financing or co-financing by the
European Union.
For all contract grants partially or fully financed by the Union, the employer is obligated to provide for respecting the principles of protection against conflict of interest, transparency, proportionality, equal treatment of all participants and non-discrimination.
Procurement procedures
In PRAG contents, three types of procurement exist: services (e.g. technical assistance, studies, know-how and training),
delivery of goods (e.g. equipment and material) and works (e.g. infrastructural and construction works). The following table
summarizes which procurement procedure is applied for each of listed procurements.
Services
up to 5,000 €
Single offer
5,000 - 200,000 €
1.Framework agreements
2.Calls without publishing
Procurement of
goods
up to 5,000 €
Single offer
5,000 - 30,000 €
Calls without publishing
30,000 - 150,000
Local open bidding
procedure
over 150,000
International open bidding
procedure
5,000 - 300,000 €
Calls without publishing
300,000 - 5,000,000 €
Local open bidding
procedure
over 5,000,000 €
1. International open bidding
procedure
2. International restrictive bidding
procedure (exceptionally)
Radovi
up to 5,000 €
Single offer
over 200,000 €
International restrictive bidding procedure
Open procedure
Open procedure provides the opportunity for all interested participants to submit their offers. Each private and juridical
person wanting to submit the offer may, on its own request, acquire the tender file and submit an offer. After overview of submitted offers, the contract is being granted after the evaluation procedure (i.e. the check of suitability and financial, economic,
technical and professional situation of bidder) and procurement procedure (i.e. comparing offers). No negotiation is allowed
in any sense.
This procedure is given maximal publicity by publishing in the official gazette of the European Union, on the official website (EuropeAid) and in any other appropriate media.
Restrictive procedure
In this procedure, all interested economic subjects may request participation, but offers may be submitted only by the candidates satisfying the selection criteria. The employer calls limited number of candidates satisfying such conditions to deliver
their offers and, before starting bidding procedure, produces the narrow selection of candidates. Afterwards, he invites the
short-listed candidates to deliver their offers by sending them tender documents. Successful bidder shall be selected in tendering procedure, after analysis of bids. This procedure also prohibits negotiating with bidders.
Calling without publishing
In this case, the employer calls candidates of its own choice to deliver the offer within the deadline given on the call for offers, and afterwards selects the most successful bidder according to the procurement procedure performed.
Framework agreement
Framework agreement is a contract between the employer and economic participant, which defines significant conditions
to be applied on the individual contracts granted during the period of validity of the framework agreement (subject, price, conditions of execution, quantity, etc.). Those agreements are signed for the period of maximum 4 years.
Based on the framework agreement, individual contracts are being granted in such manner that the employer calls contractors from the list to deliver their offer within the boundaries of framework agreement, and afterwards selects the economically
most favorable offer.
35
Procedure with direct
negotiations
with several
candidates
In certain situation, when the employer believes that use of open procedure or framework contracts shall not
result in procurement which satisfies
the best value for money principle, the
procedure with direct negotiations with
several candidates may be applied.
Employer publishes a public call
for contracts granting, defining requirements and requests the participant
must fulfill, and afterwards invites candidates fulfilling criteria published in
the public call to negotiations. After
negotiation phase, employer informs
participants that the negotiation procedure is closed and asks the candidates
to deliver their final offers. As required
by the employer, the bidder identified
as delivering the offer which provides
the best value for money may be required to clarify some aspects of the offer
or to confirm the obligations taken by
the offer.
It should also be noted that the application of procedure with direct negotiations with several candidates requires
previous consent from the appropriate
offices of the Commission.
Procedure with direct
negotiations
Procedure with direct negotiations
is permitted only after Commission’s
approval and in the following situations:
•extreme urgency of procurement;
•when services provision is being
granted to the public sector institutions
or non-profit organizations;
•expansion of already opened activities, such as complementary services
or additional services;
•when bidding procedure was unsuccessful;
•when, due to technical reasons or
reasons of exclusive rights protection,
only one candidate providing subject
services exists, etc.
The employer is obligated to prepare the Report on negotiation, where the
method of negotiating are justified and
the bases for decision on granting contract presented.
36
Commission for bids
evaluation
(tendering commission)
Tendering commission is in charge
of bids opening and evaluation. The commission consists of president without
the right to vote, secretary without the
right to vote and odd number of members with the decision making right
(the minimum of three for contracts on
services and goods delivery and the minimum of five for contracts on works).
The commission members are appointed by the employer, with the confirmation by the Commission. The Commission may also appoint an observer. Each
member of commission and observer
must sign a statement on confidentiality and neutrality.
Validity period for offers is 90 days
from the end of deadline for bids submitting. In the exceptional situation,
before expiry of offers validity period,
the employer may ask the bidders to
extend the offer validity period for no
more than 40 days.
The commission for bids evaluation
should be formed early enough, to insure availability of the appointed members, as well as to provide for the evaluation to be finished within the offers
validity period stated in tender files.
Granting contract
The employer informs the successful bidder on tendering procedure
results. The information must be preceded by the formal verification by the
Commission. The employer shall require the successful bidder to deliver evidence required by the bidding document and after successful confirmation
of evidence; it prepares the contract for
signing.
Within the decentralized ex-ante
procedure, the employer sends the contract file to the Commission Delegation
for validation. The Commission shall:
a) validate all originals of contract
thus confirming financing by the Union
and sends them back to the employer;
b) sign and date all originals of contract;
c) send three signed originals of
contract to the successful bidder; and
d) returns two originals to the employer.
After receiving two signed originals
by the successful bidder, the employer
sends one signed copy to the Commissi-
on and informs all candidates and bidders on decisions regarding granting
the contract using the prescribed form,
as well as for delivery of that information to the Commission for publishing in
the Official Gazette, on EuropeAid website and in other appropriate media.
Canceling the procurement
procedure
The employer may decide to abandon procurement or to cancel the contract granting procedure, without the
right of candidates or bidders for reimbursement in the following situations:
- bidding procedure was unsuccessful;
- economic or technical data from
the project are significantly altered;
- exceptional circumstances or force major make the regular execution of
the contract impossible;
- all technically acceptable offers
exceed available financial resources;
- irregularities in the procedure had
occurred.
After canceling the bidding procedure the employer may, with the previous consent of the Commission, decide to start a new bidding procedure,
start negotiations with one or several
bidders fulfilling the selection criteria,
who had submitted technically acceptable offers or not no grant a contract.
Finally, it is important to note that
the procedures described within PRAG
are dedicated to ensure efficiency and
effectiveness of the public procurement
processes with satisfying the basic principles of transparency, non-discrimination of participants and equal treatment, with simultaneous maintenance
of fair competition, which is of crucial
importance for transitional markets.
Central unit for financing and
contracting
Aleksandra Anđelić
Higher Appointee I
Bojana Kaluđerović
Higher Appointee I
MINISTRY OF FINANCE
AS A SIGNIFICANT CREDITOR
IN BANKRUPTCY PROCEDURES
OF ENTERPRISES
The Ministry of Finance, as a
significant creditor in bankruptcy
procedures of enterprises, according to the Law on enterprise insolvency, had taken a role in resolving
its claims with 76 enterprises. Claims are mostly related to the credits
from the Montenegro Budget and
credits taken over from Montenegrobanka AD Podgorica during its
privatization, mostly granted for restarting production and economy
healing.
For the most enterprises the
bankruptcy procedure had been
finalized, and 20 of those are still
under procedure. 12,370.238 EUR
or 14.34% of total registered claims
were charged. The majority of claims were with the enterprises in the
area of tourism, where the good cooperation was established with authorized ministry. These were mostly
secured claims against HTP ‘’Ulcinjsksa rivijera’’, SKI Centar ‘’Bjelasica’’
Kolašin, SKI centar ‘’Durmitor’’ Žabljak and HTP “ Fjord” Kotor, which
were fully collected.
The majority of Government
claim consist of foreign debt, registered with the group of non-secured claims and most of the enterprises, final uses, did not register them
in their business records, therefore
these claims were mostly dispu-
ted. In the case when the court had
accepted claims, and considering
their legal sorting, there were rarely
enough funds for collecting, except
in the case of enterprises with significant property. The ability to
collect the foreign debt in currency
is 959,043 EUR and 3,806,326 EUR
by replacement of debt for obligation of new owner to maintain the
road infrastructure Kolašin – Jezerine. The effect of collecting these
claims shall increase by selling shares of enterprise ‘’Prvoborac’’ Herceg Novi, lended property from
‘’Velimir Jakić’’ Pljevlja, ‘’Veletrgovina komerc’’ Kolašin and Gradskog
saobraćaja (public transport) Podgorica. One part of lended property was given to solve certain needs
of municipality and governmental
institutions and is not included in
collection effects, mostly regarding
the areas in Žabljak, Kolašin, Mojkovac, Danilovgrad, i Podgorica, with
value of 2.309,626 EUR.
It is important to note that, when
solving claims in bankruptcy procedures of enterprises, the Ministry of
Finance and the Government do
not act in any sense as a standard
creditor, having the only objective
to collect the claim. All of the aspects of successful privatization are
here taken into account, weather it
is programmed or classic bankrupt-
cy procedure, as well as resolving
the social program for employees,
in such manner that the Government cancels its claims in their
favor, having the circumstantial effects on the budget of Montenegro,
therefore excluding the social and
welfare from the budget and resolving them with the debtor.
Presence of the Ministry of Finance in the bankruptcy procedures, i.e. bankruptcy management
had recognized this Ministry as a
cooperative partner in resolving
the problems of debts. The Ministry
of Finance had strived to, as the creditor in the bankruptcy procedures, privatization and other types of
collecting, have positive influence
and guide the processes in the rational direction, in order to achieve
multiple effects both for bankrupt
enterprises and other creditors.
Nataša Novaković
Dušan Zec
Appointee IV
37
Types of EU aid in
programming process
Main objectives of national, regional and horizontal programs within
the first component of the Instruments
for pre-accession aid (IPA) relate to aid
to states potential candidates for membership in the European Union in aligning their national legislation with
the legal framework of the European
Union (EU). Pre-accession aid is meant to be used in all key areas of the
acquis, which require aligning with the
priorities of the European partnership.
Since the area of the European integrations in the states with the mentioned
status, such as Montenegro itself, is
very complicated and not well researched area, use of these sources of funds shall provide for preparations for
use of the Structural funds, Coherent
funds and Funds for agricultural development after accession to the European Union. Forms of the pre-accession
aid in the process of first component
programming, Aid for transition and
institutions building, for the potential
candidate states are as follows:
- Twinning/Twinning light,
- TAIEX,
- Technical assistance (TA),
- Investments in acquis,
- Grant schemes,
- Project preparation facilitating,
- Financial favors in cooperation
with the international institutions,
- Financial contribution for participation in the Union programs, as well
as in the Union agencies,
- Aid in the form of budgetary support,
- Technical assistance favors for building of administrative capacity for
state administration and services,
- Aid with the objective to cover the
expenses of Union contribution in the
international missions, initiatives or
organizations acting on behalf of the
beneficiary state,
- Support for the economic and so-
38
Olja Šuković
cial cohesion, regional development,
as well as the development of agriculture and human resources.
Twinning/Twinning light programs– are considered to be the leading aid instruments for institutions
building in the accession process, with
the objective to develop the modern
and efficient administration for the beneficiary state. These programs have
the objective to establish structures,
human resource utilization and administrative capabilities needed for the
acquis implementation, with the same
standards as in the EU member states.
These programs represent creation of state administration and public
organizations framework, for the purpose of establishing the conditions for
the adequate cooperation with member states in the process of establishing
and implementation of project in the
area of traffic, as well as upgrading and
implementation of certain segments
of acquis. These programs include providing expertise for state officers only.
Before the project start, it is necessary
to define a detailed Twinning plan of
work with the appropriate budget, in
line with the manual on rules of financing and contracting.
Standard Twinning program includes the phase of joint contracting of
the project for the minimal duration of
12 months with permanent residence
of consultant(s) in the beneficiary state. The consultant has the objective to
both implement short-term missions
and training.
Twinning light program has the
objective to prepare the beneficiary
state for providing the mandatory, predefined results. In line with the program objective, the beneficiary state
must, as soon as in the Terms of Reference (ToR) note that is has the necessary capacity and responsibilities for
achieving the results prescribed by
ToR. Therefore, the consultant is not
obligated to spend the usual 12 months in the beneficiary state. Projects of
this type are usually determined for the
duration of eight months with prescribed budget amounting 250,000 EUR.
Twinning light is meant for the specific
areas of implementation for certain reform, and not implementation of institutionally characterized reforms in the
area of harmonization with acquis.
TAIEX– is the assistance program,
predominantly dedicated to align the
national legislation with the European legislation, its implementation and
regular application. Likewise, this program has focus on supervision and
evaluation of progress of the administrative capacity in line with the needs
of alignment. TAIEX activities include
support for the state administration,
courts, parliament, local governments,
as well as the social partners and private sector on the way towards completion of numerous requirements by the
European Union. Activities are being
implemented through a set of different
forms of assistance, such as: seminars,
workshops, expert mobility, study visits, providing assets and information
products, translation and interpretation of activities, as well as the coordination and supervision in cooperation
with member states and the European
Commission Directorates. However, it
is necessary to note that the activities
must be aligned with the national IPA
programs.
The final objective of the expert teams of the member states leading the
missions in the beneficiary states is to
provide the continuity and complementarities of the short-term advising
possibilities with the long-term initiatives. Therefore, TAIEX has the role of
catalyst and is directed towards solving
the actual problems of the beneficiary
state for all areas of acquis.
Technical Assistance (TA) – includes consultants, universities and
non-governmental organizations with
the objective to build the administrative capacity. The assistance program
activities assume the support for the
process of preparation for implementation of cohesion policies of the Union. Although the Twinning, by using
the measures of transfer of experts’
actual experience from the member
states has the predominance against
the technical assistance, TA is being
used only in the situations when the
Twinning does not include in its aid
program the objectives of certain project within the member state. As an
example for the technical assistance
use, we can present a project of beneficiary state where the member state is
often the unofficial carrier of the activities through a certain contractor from
member state on its territory, or where
the objective is not aligning the legislation, since the profile of the most of
the experts requires the experience of
private, instead of the public sector of
the society.
Investments in acquis – including the investments regarding the
regulatory framework, are related to
the significant support in the form of
equipment procurement, which is directly related with a certain institution
and its further performance of activities. Support of this type, considered
as an investment, takes only into account institutions building and production of the reform strategies, which can
be supervised in line with the acquis
areas. These areas include norms and
standards of crucial importance for
organization, projects of judiciary and
the internal affairs, food safety, public
health, veterinary control and information system for customs and taxation
directorates. Aid program is mostly
focused on upgrading the actual activities of the institution, regarding supervision of alignment between the
activities and the objectives within the
entire process.
One of the significant notes regarding this type of EU aid is that the equipment of informational technology
in the sense of software production is
considered a technical assistance, while the procurement of software packages, licenses or hardware is considered
an investment. Both case include necessary minimal participation in the investment financing by the beneficiary
state budget.
Grant schemes of civil society
– is a program of non-refundable aid
with the objective to contribute consolidation and strengthening political
reforms, alignment with the European
Union administration, as well as strengthening mutual communication and
exchange of experiences between the
member states and the beneficiary
state. Among the priorities of this program are: functioning of democratic
system, establishing of the rule of law,
human rights, social inclusion, protection of minority rights, protection of
consumers, environmental protection
and upgrading of social-economic development of the beneficiary state.
The primary end users of the grant
within these grant schemes are the
non-governmental sector, social partners, organizations representing complete social and economic interested
parties, local governments, organizations advocating citizens’ participation
on the municipality level, universities, religion communities and media.
Grant schemes do not include political parties in their funds and are not
related to financing the governmental
institutions.
Usual minimal value of the grant
schemes from the IPA fund amounts 2
million EUR, while the usual minimal
value of an individual grant is 50,000
EUR. However, it is assumed that the
end users must define a certain amount of funds in their own budget, as a
contribution to the operating costs for
complete implementation of the project.
Project preparation facilitating
(PPF) – is a flexible instrument of aid
for the state administration in the process of building its capacities, in the
sense of independent preparation of
project, for which the financing would
be granted by the European Commission or certain international financial
institution, as well as to fulfill the criteria of the European partnership. This
facilitation can be used ad-hoc, shortterm or long-term, with the objective
to provide assistance in the area of
establishing efficient strategic plan in
different sectors, support for the National IPA coordinator in planning and
programming of the component I projects, as well as the experts’ support for
drafting bidding documents or technical specifications for implementation
of projects. The PPF support also includes building of the necessary administrative and institutional capacities
for establishing decentralized implementation system (DIS).
In line with the terms of use for this
type of assistance, investments such as
goods and works are not included in
the scope of available financing. Allocated funds dedicated for financing
of short-term and long-term expertise
amount 50,000 to 200,000 EUR per individual project.
39
Financial favors in cooperation with the international institutions – are dedicated to small
and medium enterprises and households, in order to insure strengthening of the financial sector within
the financial transactions, stimulate
investments in individual sectors or
prepare for the infrastructural investments. An example of this type of
aid program may be motivating financial mediators such as banks and
leasing companies in order to extend
the duration of financial transaction
or to motivate investment companies
with the objective to provide the loans for local commercial banks and
micro-financing institutions further
directed towards small and medium
enterprises and households. This
type of cooperation with the international institutions also contributes to
stimulating investments in the sectors
which require achieving the defined
political objectives.
Technical assistance may be included in some levels of the infrastructural project cycle, with the objective
of higher quality of project preparation in the area of traffic network, environmental protection investments,
energy efficiency and use of the alternative energy sources, as well as the
participation in the feasibility studies
production for the projects from healthcare sector, education and urban development.
Financial contribution for participation in the Union programs,
as well as in the Union agencies –
must be defined within the National
IPA programs of the beneficiary state
and it is not possible to exceed the defined contribution budget.
The Government of Montenegro is,
according to the requests by the authorized ministries, interested in participating in the Union programs such as
FP7, CIP, Youth, TEMPUS and Erasmus
Mundus. The participation is based on
the Memorandum of Understanding
(MoU) signed by the beneficiary state
and the European Commission, in line
with the agreements establishing the
general principles and defined conditions for participation in the listed programs. Of course, the MoU assumes
clear definition of the amount of contribution by both contractual parties of
the Memorandum. The beneficiary state is also invited to participate in work
of different agencies of the Union on
40
the ad-hoc bases, in line with the IPA
regulations.
Aid in the form of budgetary
support – is primarily focused on
support on change of structural problems of key significance for successful accomplishing of the European
Commission (EC) aid goals and clear
defined society sector. Pension system
reform would be one of the examples
on which this type of support is based.
Payment of EC in favor of beneficiary
country treasury is being performed
in several batches, depending on achievement of defined goals and tasks
and therefore contributing to the total
national budget and public financing
management of the procedures of the
beneficiary state, which becomes transparent, reliable and efficient.
A great advantage of this type of
support is firstly a stronger potential
influence on the structural reform, as
well as the self-awareness of the beneficiary state on taking over the activities regarding the public financial management of funds.
Technical assistance favors for
building of administrative capacity for state administration and
services – are based on the significant
support for the administrative capacity
in the process of preparation for managing structural funds and agricultural development funds at all levels.
However, in line with the terms of use
for this aid program, as well as the use
of Project preparation facilitation program, investments such as goods and
works are not including in the available financing scope. The program funds consist of non-allocated amount
dedicated for financing of the shortterm technical aid and the Twinning
light programs with value of 50,000 to
200,000 EUR per single activity.
Aid with the objective to cover
the expenses of Union contribution in the international missions, initiatives or organizations
acting on behalf of beneficiary
state – relates to the contribution of
the European Union in the form of administrative costs for support of temporary civic administrations, such as
United Nations mission in Kosovo or
other regional cooperation political
structures (Stability pact for South-Eastern Europe, to become the Regional
Secretariat).
Support for the economic and
social cohesion, regional development, as well as the development
of agriculture and human resources – relates to the support investments
regarding the contracts for goods and
works, similar to the grant scheme. Program is dedicated exclusively for the
states potential candidates for the EU
membership, with the objective to support policy and investments development, in order to provide their prosperity and candidate state status in an
easier and faster manner. Special focus
of this type of support is enhancing
the infrastructure on the local and regional level, standards of environmental
protection, strengthening agricultural
development with upgrading of conceptual and strategic programming
and the capacity to implement through measures of strengthening production, processing and distribution and
strengthening the human resources
development. However, the base for
the support for creating policies and
building of administrative capacities is
a clearly and precisely defined Government strategy. Likewise, measures resulting from the European partnership
priority and clear government strategy
for programming of each individual
sector are focused on the proper use
of the limited funds.
Olja Šuković
Ministry of Finance
Central Unit for Contracting
and Financing
Resolving internal debt
registered with
the Ministry of Finance
The Government of Montenegro had,
in the meeting held on 29 May 2008, adopted the Information on resolving internal
debt according to the claims registered
with the Ministry of Finance. This information includes the amount of internal debt
of 1,084 mil. EUR and presents the method for its resolving in the period from
year 2001 until 30 May 2008.
Structure of the presented debt unified with the Ministry of Finance consists of the claims of Montenegrobanka,
Jugobanka, Bank for Development, Republic and Federal goods reserves taken
over by the Government in the procedure of transformation and privatization of
these subjects; part of old taxation debt
and credits granted from the budget of
Montenegro during the period from year
1992 until the April 2008.
Bases for debt occurrence
The major amount of registered claims of 618.4 mil. EUR consists of the credits taken over from Montenegrobanka
in 2002 and 2003, for the purpose of
establishing conditions for its privatization. Regarding the structure of claims, the
major amount goes to the obligations on
credits the companies with headquarters
in Montenegro had been using by 1992
– so called pre-sanction credits from the
states from Paris and London club of creditors, International bank for renewal
and development, European investment
bank and the International financing
company (IFC). The minor share of 42.8
mil. EUR of claims is related to the credits
granted from the credit potential of this
bank and credits granted by this bank for
the private persons for self-employment
in the area of agriculture.
Also, the claims taken over from Jugobanka Podgorica with the amount of
61.9 mil. EUR consisting of pre-sanction
foreign credits and warranties given to
some enterprises, while the credits taken
for the Bank for development (132,000
EUR) are related to forwarding to smaller
private entrepreneurs.
Claims taken over from the Federal
and Republic direction for goods reserves are related to the credits based on
Ljiljana Krgović i Milodarka Novosel
issued goods and are all under the court
procedure. Claims exceed the amount of
3 mil. EUR.
After the sanctions were forced by
UN, the Government of Montenegro had
established a Coordinating body making
decisions on granting the financial support for the economy from Montenegro
budget, which was later implemented
through economy restructuring program. Based on that, registered claims
of Government amount 141.5 mil. EUR.
Funds were granted mostly for creating
conditions for maintaining the production process, import of raw materials and
reproduction material and other minor
capital investment.
The major users of these credits are
“Obod” Cetinje, KAP, Power supply of
Montenegro, Steelworks, companies
in the area of forestry and wood processing, mining, individual smaller enterprises in the area of industry, etc.
Since 1995, for the known reason, the
significant support was necessary for the
enterprises in the area of tourism, continuously given until the year 2002.
Special problems were also two naval companies, where the state had been
giving significant funds for maintaining
naval fleet, payments for sailors, etc.
For the same reasons and mostly with
the same procedure, Montenegrobanka
had been granting financial funds, therefore in the registry with the Ministry of
Finance, within so called Special Balance
Sheet, the register of all claims of end-user
– debtor was established. On that base,
the register contains as shown in previously noted Information, more than 400
juridical and 100 private persons.
Presented amount of claim and number of users of those credits notes the
fact that the Government was certainly a
significant creditor in Montenegro, which had in the transition and enterprises
restructuring process represented a special burden, both for creditor and for debtors.
The period of sanctions, lasting for
exceptionally long time and burdening
economic activities in Montenegro with
the heritage of socialistic models of economy management in which ever-present state was managing the economic
processes, therefore influencing the business policy of the banks when making
decisions on granting credit funds, had
left unsolved debtor-creditor relations,
which significantly burden the transition
process and economy restructuring and
its healing. The old debts with the majori-
41
ty of societies had “blocked” the property given as the collateral for credits and
therefore disabled starting new economic activities. Besides that, granted credits were, in the majority of situation, not
purposely used, i.e. they were not directed to start the production, instead, the
conditions the Montenegro was in, had
pushed forwards solving of social problems as a priority. For the listed reasons,
the need had occurred for the debtorcreditor relations created during this period to be solved as soon as possible, in
an appropriate manner.
Method for debt resolving
Unifying of the internal debt and
appointing of the Ministry of Finance
to manage it, we consider very important, as shown by the analysis of the achieved results and evaluations by the government on adopting this Information.
The Ministry had, as the participant in
all processes of transition, in cooperation with other organs, by proposing and
making adequate decisions, contributed
for this state property to be managed in
rational manner and contributing to resolving the debtor-creditor relations in a
legal manner, with respecting interest of
all participants in the process. Here, it is
important to notice that the Ministry and
the Government did not take the stance
of regular creditor, with sole objective to
collect the claim and profit, instead, the
social and development component of
debtor was predominant, including creation of conditions for healing and continuation of economic activities.
Resolving debtor-creditor relations
was performed through all possible methods of collection, starting from the possibilities and interests of the state and
debtors, with the exception of cases being resolved in the court procedures.
Analysis and effects of all procedures
are comprehensively presented in the
Information on resolving internal debt
according to claims of the Government
of Montenegro registered with Ministry
of Finance, adopted by the Government
of Montenegro on 29 May 2008. This text
presents a short review of all types of collection of claims applied in the period
from year 2001 until 30 May 2008.
1. Restructuring processes had included 76 enterprises with the total amount
of registered claims of 102.9 mil. EUR or
9.49% of total claims registered with Ministry of Finance.
2. Resolving claims through agreement between debtor and creditor by
signing the contract on debt reprogramming to deadline of one to three years,
suing the debtor in front of the authorized courts, selling the collateral property, etc., had included 45 debtors, whose
debt had the total amount of 37.9 mil.
42
EUR or 3.5% of total registered debt.
3.With 22 debtors, the mutual interest was stated and appropriate decisions were made to resolve the relations
and claims by settling. In this manner, the
amount of 30.5 mil. EUR or 2.8% of debt
was resolved.
4. In the procedure of resolving debtor-creditor relations, also starting from
the interests of participants in this process, for 25 enterprises the claims were
exchanged for the state shares in these
enterprises, therefore increasing the state capital for 169.6 mil. EUR or 15.6% of
registered debt.
5. For 24 enterprises, the debt was
fully or partially transferred to the state
property, mostly for the needs of state institutions in the municipality where the
property is located. Value of replaced
property is 135.9 mil. EUR or 12.5% of registered claims.
6. The great significance for the budget of Montenegro and debtors’ has the
option of claim buy-off with the citizens’
foreign currency savings bonds, which
will be elaborated further in this text.
7. In the privatization procedure of
individual enterprises, the decision was
made regarding claims amounting 332.5
mil. EUR or 30.6% of registered amount.
These are 7 enterprises holding great debts towards state, mostly regarding the
foreign debts (KAP, Steelworks, Bauxite
mines, etc.).
8. Due to the lack of possibility to
collect claims from 49 enterprises and
institutions with the total debt amounting 94.2 mil. EUR or 8.7% of registered
claims, it was proposed that the Government makes a decision on abolishment,
in line with the law. These are mostly the
enterprises deleted from the register of
Business court or merging obligations.
9. For all of those processes, it is significantly to note that through the listed
procedures, 89.8% of registered claims
were resolved, i.e. the remaining amount
of 110.9 mil. EUR of registered claims was
left unresolved for 39 enterprises, which
can be considered a significant effect for
such a short period.
All previously listed models for debt
resolving and their effects individually
deserve detailed elaboration. However,
in this text we had chosen to provide
special overview of the model applied
recently, namely
Buy-off of claims using the
citizens’ foreign currency
savings bonds and former
owners bonds for
remuneration of canceled
property rights with the
achieved effects
Based on the Decision on conditions
and procedure for buy-off of claims of
Montenegro using the citizens’ foreign currency savings bonds and former owners
bonds for remuneration of canceled property rights (“Official Gazette CG”, no.
17/2008), the Ministry of Finance had published a Public call (in the daily journal
Pobjeda no 20 March 2008, closed on 20
May 2008), informing all juridical and private persons whose debt was registered
with the Ministry of Finance and due by
31 December 2008 about the possibilities
and methods for debt settling using the
citizens’ foreign currency savings bonds
and former owners bonds for remuneration of canceled property rights.
The call had covered 96 juridical and
95 private persons, whose total debt
amounted 55.0 mil. EUR or 5.1% of total
registered claim.
During the period of three months
while the call was opened, 14 juridical
persons had answered and fully boughtoff their claims registered with the Ministry of Finance. Among these enterprises,
it is important to note HTP “Budvanska
rivijera”, which had bought-off 1.946.365
EUR, DOO “Merkur” – 1.952.839 EUR,
HTP “Onogošt” – 831.391 EUR etc.
Regarding the private persons, 12 of
them had answered the public call and
bought-off 155,498 EUR of debt, which
in total with juridical persons amounts
6.755.897 EUR.
Effects of previously named Decision
and Public call are very significant for the
budget of Montenegro. If we start from
the fact that the budged for the year 2008
includes 8.0 mil. EUR for restitution and
that only this activity of the Ministry of
Finance had released 6.7 mil. EUR gives
the scope of the effects and importance
of the listed activities.
Except for the importance for the
budget, this activity has other circumstantial effects, manifesting in settling debtors’ balance sheet, lightening workload
in courts for a significant number of court disputes for claims collection, as well
as returning to function the property given as collateral for debt securing, etc.
Regarding that, the Ministry of Finance considers that it is realistic and logical
that the credits granted during the previous period are put in the function of
inherited problems of state, which significantly contributes to departure from
the transition problems and creation of
conditions for adopting realistic budget
of Montenegro, without the burden of
past, and the economy and banks to be
released from protectionism an work under market bases.
Milodarka Novosel
Associate
Ljiljana Krgović,
Independent Advisor
Amendments and
appendixes to the Law on
budget of Montenegro
for the year 2008
Estimation of budget and public consumption in Montenegro by the end of 2008 is based on estimated data on GDP
trend and other macroeconomic aggregates, as well as the achievement of budget consumption for the first six months of
2008. Public consumption policy in 2008 is based on main objectives of the economic program of the Government of Montenegro, evaluation of Montenegro fiscal potentials, and evaluated macroeconomic trends for the current period. Likewise,
it is aligned with the strategic documents prepared by Montenegro within the European Union accession process – National
program for integration from 2008 to 2012 and Economic and fiscal program for Montenegro 2008 – 2010. According to data
for first five months in 2008, the budget revenues are collected in a much greater amount than planned. Positive trends of collection of current revenues shall continue throughout 2008, and the estimated result is increase of current budget revenues
of 4.49% of GDP. Amendments and appendixes to the Law on budget for the year 2008 determines total income of budget
and state funds with the amount of 1,351.03 million EUR, which is 130.07 million EUR more than planned in the Law on budget for the year 2008. The following table shows overview of total income planned by the Amendments and appendixes to
the Law on budget for the year 2008.
Classification
DESCRIPTION
Planned 2008
Rebalanced 2008
Discrepancy
7
71
711
7111
7112
7113
7114
7115
INCOME
Current income
Taxes
Private persons’ revenue tax
Juridical persons’ profit tax
Property tax
Value added tax
Fixed amount taxes
Tax on international trade and
transactions
Other republic taxes
Contributions
Contributions for retirement and
disability security
Contributions for health
insurance
Contributions for social security
Tax fees
Administrative fees
Court fees
Residence fees
Other fees
Fees – remunerations
Fees for use of common interest
goods
Fees for use of natural goods
Environmental fees
Fees for organizing fortune
games
Road fees
Other fees
Other income
1,220,965,361.24
1,139,681,361.24
755,564,841.32
83,784,984.22
47,402,228.10
11,980,308.74
432,519,428.96
99,516,451.66
1,351,031,985.81
1,273,705,934.15
846,916,558.55
99,425,899.47
53,595,611.56
14,450,764.83
470,072,328.79
118,164,357.72
130,066,624.57
134,024,572.91
91,351,717.23
15,640,915.25
6,193,383.46
2,470,456.09
37,552,899.83
18,647,906.06
72,893,300.83
82,650,481.09
9,757,180.26
7,468,138.81
296,953,288.89
8,557,115.10
324,314,411.19
1,088,976.29
27,361,122.30
172,000,000.00
194,167,684.10
22,167,684.10
7116
7118
712
7121
7122
7123
713
7131
7132
7133
7136
714
7141
7142
7143
7144
7148
7149
715
117,468,888.89
122,538,648.52
5,069,759.63
7,484,400.00
28,859,739.20
14,964,159.73
8,925,633.56
947,545.91
4,022,400.00
26,562,351.42
7,608,078.57
26,740,713.55
13,538,910.30
8,335,936.27
842,125.91
4,023,741.06
43,240,628.59
123,678.57
-2,119,025.65
-1,425,249.43
-589,697.29
-105,419.99
1,341.06
16,678,277.17
5,746,368.34
5,357,161.12
-389,207.21
3,697,774.10
2,769,488.07
3,825,794.73
17,985,951.80
128,020.63
15,216,463.72
4,830,000.00
5,277,693.44
447,693.44
6,637,061.26
2,881,659.64
31,741,140.40
7,450,293.15
3,343,734.35
32,493,622.26
813,231.89
462,074.71
752,481.86
43
7151
7152
7153
7155
72
73
731
7311
74
741
7411
75
751
7512
7513
Capital income
Fines and confiscated property
benefits
Incomes achieved by institutions’
activities
Other income
Property sales income
Credit payment income
Donations and transfers
Donations and transfers
Current donations
Loans and credits
Loans and credits
Loans and credits from foreign
sources
Project loans
4,102,000.00
6,477,140.00
2,375,140.00
11,717,212.48
11,032,526.21
-684,686.26
6,572,940.00
6,476,017.16
-96,922.84
9,348,987.93
35,000,000.00
15,784,000.00
15,784,000.00
15,784,000.00
800,000.00
800,000.00
800,000.00
29,700,000.00
29,700,000.00
8,507,938.89
35,000,000.00
11,826,051.66
11,826,051.66
11,826,051.66
800,000.00
800,000.00
800,000.00
29,700,000.00
29,700,000.00
-841,049.04
0.00
-3,957,948.34
-3,957,948.34
-3,957,948.34
0.00
0.00
0.00
0.00
0.00
21,700,000.00
21,700,000.00
0.00
8,000,000.00
8,000,000.00
0.00
SOURCE REVENUES OF BUDGET AND STATE FUNDS
Source budget revenues, according to rebalance, are planned on the level of 1,258.53 million EUR which is 130.07 million EUR more than the funds planned in the Law on budget of Montenegro for the year 2008. Increase of the source budget
revenue is a result of much better collection of source budget revenues for the period January-May 2008 against the plan for
the same period, together with the estimation of the Ministry of finance on collection of source revenues of the budget of
Montenegro until the end of 2008. Better collection of source revenues in 2008 in comparison with the planned one is a result of intensified economic activity in the area of civil engineering, traffic, tourism, trade and high level of net foreign direct
investments, which had resulted in increase of import and total economic activity. It is estimated that the positive trends of
collection of current revenues of the budget of Montenegro shall continue until the end of 2008, therefore the current revenues shall reach 43.40% of GDP, which is 4.49% GDP more than planned for the year 2008. Amendments and appendixes
to the Law on budget had planned increase in consolidated expenditures for 3.80% GDP. Instead of planned 0.22% of GDP,
the budget surplus is estimated to 0.91% of GDP, which shall, with planned regular servicing of obligations and expected
incomes from privatization and sales of property produce an increase of deposit in the amount of 1.01% of GDP.
The following tables show Current revenues of the budget and state funds, as planned by the amendments and appendixes to the Law on budget for the year 2008, as well as the consolidated balance sheet of budget and state funds after budget
rebalance:
Consolidated balance sheet of budget and state funds – Rebalance 2008
Description
CURRENT INCOME
Taxes
Contributions
Tax fees
Fees – remunerations
Other income
Income from credit payment
EXPENDITURES - I level consolidation
EXPENDITURES – II level consolidation
CURRENT BUDGET CONSUMPTION
Current expenditures
Gross wages and contributions paid by
employer
Other personal income
Expenditures for material and
services
Current maintenance
Interests
Rent
Subventions
Other expenditures
Transfers for social security
44
mil. €
1128.47
755.56
269.95
28.86
26.56
31.74
15.78
1121.97
1086.81
984.55
471.51
% GDP
38.91
26.05
9.31
1.00
0.92
1.09
0.54
38.69
37.48
33.95
16.26
mil. €
1258.53
846.92
297.31
26.74
43.24
32.49
11.83
1232.19
1190.61
1064.96
502.27
% GDP
43.40
29.20
10.25
0.92
1.49
1.12
0.41
42.49
41.06
36.72
17.32
Discrepancy
Rebalance/Plan
mil. €
%
130.07
11.53
91.35
12.09
27.36
10.14
-2.12
-7.34
16.68
62.79
0.75
2.37
-3.96
-25.08
110.23
9.82
103.80
9.55
80.42
8.17
30.77
6.53
263.30
9.08
279.46
9.64
16.15
6.13
21.85
0.75
23.25
0.80
1.40
6.40
112.22
3.87
125.05
4.31
12.83
11.43
22.50
19.76
9.65
16.02
6.21
284.60
0.78
0.68
0.33
0.55
0.21
9.81
22.50
19.76
9.65
16.38
6.23
327.97
0.78
0.68
0.33
0.56
0.21
11.31
0.00
0.00
0.00
0.36
0.02
43.37
0.01
0.00
0.02
2.25
0.35
15.24
Planned 2008
Rebalance 2008
Transfers to individual NGO and public sector
Total capital expenditures
Capital expenditures
Capital budget of Montenegro
Loans and credits
Warranties payment
Reserves
SLACK / SURPLUS
FINANCING
Domestic financing
Payment of debts to residents
Payment of previous years obligations
Foreign financing
Credits and stocks and bonds
Loans and credits from foreign sources
Payment of debts to non-residents
Donations
Project loans
Income from privatization and sales of
property
DEPOSIT INCREASE/DECREASE
196.59
137.42
69.99
67.43
21.84
0.60
9.41
6.50
-6.50
-24.34
3.74
20.60
17.83
9.03
21.70
12.67
0.80
8.00
6.78
4.74
2.41
2.33
0.75
0.02
0.32
0.22
-0.22
-0.84
0.13
0.71
0.61
0.31
0.75
0.44
0.03
0.28
198.12
167.23
81.56
85.67
21.84
0.60
14.16
26.34
-26.34
-49.83
3.73
46.10
17.83
9.03
21.70
12.67
0.80
8.00
6.83
5.77
2.81
2.95
0.75
0.02
0.49
0.91
-0.91
-1.72
0.13
1.59
0.61
0.31
0.75
0.44
0.03
0.28
1.53
29.81
11.57
18.23
0.00
0.00
4.75
19.84
-19.84
-25.49
-0.01
25.50
0.00
0.00
0.00
0.00
0.00
0.00
0.78
21.69
16.54
27.04
0.00
0.00
50.49
305.24
305.24
104.72
-0.32
123.79
0.00
0.00
0.00
0.00
0.00
0.00
35.00
1.21
35.00
1.21
0.00
0.00
34.99
1.21
29.34
1.01
-5.65
-16.14
CURRENT BUDGET
Structure of the Current expenditures participating in total Current budget with 64.1% per individual type of expenditure.
Distribution of excessive funds in the Current budget with the amount of 89.61 million EUR is shown on the following chart:
Amendments and appendixes to the Law on budget of Montenegro for the year 2008, as well as distribution of excessive
funds per type of expenditures are shown in the following table:
Classification
Description
4
Expenditures
Gross wages and contributions paid by
employer
Net wages
Wage tax
Contributions paid by employee
Contribution paid by employer
Municipal fee
Other personal income
Meal remuneration
Vacation remuneration
Dwelling and separate living remuneration
Transport remuneration
Annual prizes
Settlement
Remunerations for Parliament members
Other remunerations
Expenditures for material and services
Expenditures for material
Expenditures for official travels
Expenditures for presentation
Expenditures for energy
Expenditures for telephone services
Expenditures for postal services
Banking serv. and negative exch. rate
differences
Transport services
41
411
4111
4112
4113
4114
4115
4121
4122
4124
4125
4126
4127
4128
4129
4131
4132
4133
4134
4135
4136
412
413
4137
4138
4139
414
4141
Contracted services
Current maintenance
Current maintenance of public infrastructure
662,976,208.00
453,231,111.30
Budget
amendments
and appendixes
for 2008
752,584,876.20
482,678,976.49
254,920,429.56
269,881,949.41
14,961,519.85
146,200,580.73
29,163,102.81
41,399,076.77
34,078,465.82
4,079,203.43
20,450,257.88
8,659,406.00
5,047,118.00
1,888,229.60
223,600.00
1,355.00
851,560.00
450,000.00
3,328,989.28
105,371,295.56
19,115,588.52
6,596,769.54
721,416.00
17,142,996.59
5,040,816.41
1,429,532.89
153,814,758.96
29,511,902.84
42,085,406.93
40,345,083.82
4,124,796.86
21,804,448.72
8,673,614.10
5,054,550.77
1,909,229.57
223,600.00
1,355.00
851,560.00
450,000.00
4,640,539.28
118,141,050.06
19,889,488.57
6,985,769.63
732,915.89
17,850,996.66
4,941,816.49
1,434,832.89
7,614,178.23
348,800.03
686,330.16
6,266,618.00
45,593.43
1,354,190.84
14,208.10
7,432.77
20,999.97
0.00
0.00
0.00
0.00
1,311,550.00
12,769,754.50
773,900.05
389,000.09
11,499.89
708,000.07
-98,999.92
5,300.00
364,006.00
364,006.00
0.00
1,088,654.00
1,088,654.00
0.00
53,871,515.61
22,100,620.00
16,337,200.00
64,852,569.93
22,100,620.00
16,337,200.00
10,981,054.32
0.00
0.00
Current budget
for 2008
Difference
89,608,668.20
29,447,865.19
45
4142
4143
415
4151
4152
416
4161
4162
4163
417
4171
418
4181
4182
4183
4184
42
421
4211
4212
4213
4214
4215
4216
4217
4218
422
4222
43
431
4311
4312
4313
4317
4319
44
441
4411
4412
4413
4414
4415
4416
4417
45
451
4511
4513
4515
46
461
4611
4612
462
4622
463
4630
47
471
4710
472
4720
46
Current maintenance of buildings
Current maintenance of equipment
Interests
Interests paid to residents
Interests paid to non-residents
Rent
Building lease
Equipment lease
Land lease
Subventions
Subventions for production and service providing
Other expenditures
Communal fees
Fines
Tax fees
Other
Rights in social security
Child care
War-disability security
Family material security
Maternity leaves
Other persons’ care and assistance
Children meals in pre-school facilities
Support for protégées’ in homes
Other rights in social security
Funds for technological surplus workforce
Settlement for technological surplus
Transfers for institutions, individuals, nongovernmental and public sector
Transfers for institutions, individuals, nongovernmental and public sector
Transfers for public institutions
Transfers for non-governmental organizations,
political parties and associations
Transfers for individuals
Transfers for municipalities
Transfers for public enterprises
Expenditures for infrastructure of common sign.
Expenditures for local infrastructure
Expenditures for buildings
Expenditures for land arrangement
Expenditures for equipment
Expenditures for investment maintenance
Expenditures for reserves
Loans and credits
Loans and credits
Loans and credits to non-financial institutions
Loans and credits to individuals
Other loans and credits
Debt payment
Debt payment
Payment of bonds and credits to residents
Payment of bonds and credits to non-residents
Warranties payment
Foreign warranties payment
Reserves
Current budget reserve
Current budget reserve
Permanent budget reserve
Permanent budget reserve
2,843,492.00
2,919,928.00
18,888,600.00
508,600.00
18,380,000.00
9,559,116.08
9,137,120.08
400,220.00
21,776.00
16,015,000.00
16,015,000.00
5,925,792.22
4,434,820.26
2,600.00
62,920.00
1,425,451.96
45,973,400.00
41,323,400.00
4,020,000.00
8,900,000.00
13,323,040.00
6,850,000.00
4,884,960.00
345,400.00
2,800,000.00
200,000.00
4,650,000.00
4,650,000.00
2,843,492.00
2,919,928.00
18,888,600.00
508,600.00
18,380,000.00
9,561,516.08
9,139,520.08
400,220.00
21,776.00
16,375,000.00
16,375,000.00
5,925,792.22
4,434,820.26
2,600.00
62,920.00
1,425,451.96
64,553,400.00
43,153,400.00
3,990,000.00
9,050,000.00
13,346,080.00
7,850,000.00
5,491,920.00
525,400.00
2,700,000.00
200,000.00
21,400,000.00
21,400,000.00
0.00
0.00
0.00
0.00
2,400.00
2,400.00
0.00
0.00
360,000.00
360,000.00
0.00
0.00
0.00
0.00
0.00
18,580,000.00
1,830,000.00
-30,000.00
150,000.00
23,040.00
1,000,000.00
606,960.00
180,000.00
-100,000.00
0.00
16,750,000.00
16,750,000.00
54,463,357.18
55,974,917.10
1,511,559.92
54,463,357.18
55,974,917.10
1,511,559.92
34,949,796.06
35,879,796.06
930,000.00
7,679,852.72
8,111,412.64
431,559.92
8,813,708.40
2,735,000.00
285,000.00
67,175,387.96
67,175,387.96
2,137,600.00
11,148,000.00
12,034,537.62
921,500.00
26,381,190.34
14,297,560.00
255,000.00
3,985,003.28
3,985,003.28
5,003.28
1,830,000.00
2,150,000.00
28,790,000.00
15,690,000.00
3,020,000.00
12,670,000.00
600,000.00
600,000.00
12,500,000.00
12,500,000.00
9,357,948.28
7,857,948.28
7,857,948.28
1,500,000.00
1,500,000.00
8,963,708.40
2,735,000.00
285,000.00
77,144,631.05
77,144,631.05
2,287,600.00
13,388,999.95
13,334,537.62
921,500.00
31,462,834.08
15,494,159.40
255,000.00
3,985,003.28
3,985,003.28
5,003.28
1,830,000.00
2,150,000.00
54,290,000.00
15,690,000.00
3,020,000.00
12,670,000.00
600,000.00
600,000.00
38,000,000.00
38,000,000.00
13,957,948.28
12,457,948.28
12,457,948.28
1,500,000.00
1,500,000.00
150,000.00
0.00
0.00
9,969,243.09
9,969,243.09
150,000.00
2,240,999.95
1,300,000.00
0.00
5,081,643.74
1,196,599.40
0.00
0.00
0.00
0.00
0.00
0.00
25,500,000.00
0.00
0.00
0.00
0.00
0.00
25,500,000.00
25,500,000.00
4,600,000.00
4,600,000.00
4,600,000.00
0.00
0.00
GROSS WAGES OF EMPLOYEES AND OTHER PERSONAL INCOME AND
REIMBURSEMENTS FOR EMPLOYEES
Funds for gross wages of employees had been increased for 14.96 million EUR by the Amendments and appendixes to
the Law on budget of Montenegro for the year 2008. Greater reserving of funds for gross wages is a consequence of application of new legislation regulating this area, namely:
Decision on establishing the value of rate for calculation of fixed wage segment for the holders of judicial and constitutional-judicial functions (“Official Gazette of Montenegro”, no. 33/08), where the value of rate for calculation of fixed wage
segment is established to the amount of 75.00 EUR, according to the Article 6 Paragraph 1 of the Law on wages and other income of judicial and constitutional-judicial functions (“Official Gazette of the Republic of Montenegro”, no. 36/07, 53/07),
Application of the Law on wages and other income of state and public officers (“Official Gazette of Montenegro”, no.
33/08), which regulates in a different manner than previous the right on wage, wage reimbursement and other remunerations for state and public officers, according to their function performing, as well as the retirement settlements for state officers.
Application of the Decision on establishing of rate value for calculation of fixed wage segment of officials (“Official Gazette of Montenegro”, no. 15/08) where the value of rate for calculation of fixed wage segment is established to the amount
of 75.00 EUR, according to the Article 59 of the Rulebook of the Montenegro Parliament (“Official Gazette of the Republic of
Montenegro”, no. 51/06 and 66/06).
EXPENDITURES FOR MATERIAL AND SERVICES
Expenditures for material and services had been increased for 12.77 million EUR. A significant increase of 10.98 million
EUR relates to contracted services (implementation of projects in the area of environmental protection, cost of helicopter
lease for fire extinguishing, for support of IPA (Instrument for Pre-Accession Assistance) programs implementation, for
implementation of Central citizens’ register project and other). Expenditures for procurement of office supplies, spare parts
and consumables were increased for 0.77 million EUR. Remaining funds are related to increase of expenditures for energy
0.71 million EUR, caused by increase of electric power and fuel price increase, expenditures for official travels 0.39 million
EUR, etc.
SUBVENTIONS
Funds for subventions in agriculture are increased for 0.36 million EUR, for the purpose of intervention measures for
milk industry support, according to the program of intervention measures for remedying consequences of 2007 dry period.
This Program defines additional support for milk producers and participation in procurement of concentrated cattle food,
and are paid from the funds of Agro budget for 2008.
TRANSFERS FOR SOCIAL SECURITY
Transfers for social security had been increased for 18.58 million EUR by the Law on amendments and appendixes to
the law on budget of Montenegro. The reason for increasing these funds is increase of rights and users for payment of wardisability protection, maternity leave, other persons’ care and nutrition of children in pre-school facilities.
For the item Settlement for technological surplus the additional funds of 16.50 million EUR dedicated to solving unpaid
obligations according to the Enterprises restructuring programs and for the enterprises in the privatization procedure or
which had been privatized.
Significant funds of 1.00 million EUR had been increased for the expenditures for maternity leaves, due to the tendency
of growth and increase of wages which represent the base for remuneration, increase of number of users, as well as great
influx of documents for maternity leave payment from enterprises, banks and mobile network providers. Regarding the expenditures for other persons’ care and assistance, the funds were increased for 0.61 million EUR, since increase of number
of users is expected due to the reason that medical boards establish this right twice a year.
TRANSFERS FOR INSTITUTIONS, INDIVIDUALS, NON-GOVERNMENTAL AND PUBLIC SECTOR
Transfers for institutions, individuals, non-governmental and public sector had been increased for 1.51 million EUR, and
are related to increase of funds for 0.43 million EUR for Funds for parliamentary parties operation, work of Court committee
with planned amount of 0.23 million EUR, due to the obligation to establish the Court committee given by the Constitution
of Montenegro. Remaining funds are reserved for the purposes of financing of the clubs achieving top sports results, as well
as for the implementation of National plan for youth and work of Council for youth, while the amount of 0.10 million EUR is
planned for reconstruction and construction of premises of the Public health institute.
47
CAPITAL EXPENDITURES
Capital expenditures had been increased for 9.97 million EUR. Expenditures for equipment had been increased for 5.08
million EUR, increase of 2.24 million EUR is related to the expenditures for local infrastructure, and additional 1.20 million
EUR for expenditures for investment maintenance.
The major amount of 2.75 million EUR is dedicated for the needs of Police authority, for the purpose of unifying the vehicle fleet. Remaining funds are planned for purchase of furniture, auxiliary power, mobile platform for disabled persons,
equipment for acquisition of biometric data for diplomatic-consular offices, for procurement of mobile scanner for Bar port
and similar.
Part of the funds are dedicated for the investment maintenance, and are related to: finishing of border crossing Božaj
reconstruction, production of designs for border crossings towards Serbia, production of design for the Ministry of internal
affairs office building, as well as other affairs of the investment maintenance.
DEBT PAYMENT
The Law on amendments and appendixes of the law on budget of Montenegro for the year 2008 significantly increases
the funds for payment of previous years’ obligations, to the amount of 25.50 million EUR. The major segment of these funds
of 14.50 million EUR covers paying second additional retirement payment for the retirement and disability security users.
The decision on buy-off of the citizens’ foreign currency savings bonds due in 2016 and 2017 defines increase of 10.0 million
EUR, while the remaining funds are reserved for obligations prescribed by the Law on payment of citizens’ foreign currency
funds invested via the enterprise Jugoskandik dd Belgrade.
CURRENT BUDGET RESERVE
Funds of current budget reserve had been increased for 4.60 million EUR by the Law on amendments and appendixes
of the law on budget of Montenegro for the year 2008. These funds shall be used for non-predicted expenditures by the end
of 2008.
BUDGET OF STATE FUNDS
Amendments and appendixes to the expenditures per economic classification of state funds, according to the Law on
amendments and appendixes of the law on budget of Montenegro for the year 2008 are shown in the following table:
CONSUMPTION UNIT
Funds’ budget for
2008
1
6
60101
60201
60301
60401
60501
TOTAL;
2
455,566,192.41
250,000,000.00
144,554,999.99
30,169,300.00
22,312,301.42
8,529,591.00
455,566,192.41
STATE FUNDS
RETIREMENT AND DISABILITY SECURITY FUND
HEALTH INSURANCE FUND
EMPLOYMENT AGENCY
DEVELOPMENT FUND
REMUNERATION FUND
Amendments and
appendixes of
budget for 2008
(rebalance)
3
483,437,605.41
272,000,000.00
144,554,999.99
36,040,713.00
22,312,301.42
8,529,591.00
483,437,605.41
Difference
4(3-2)
27,871,413.00
22,000,000.00
0.00
5,871,413.00
0.00
0.00
27,871,413.00
EVALUATION OF CONSOLIDATED PUBLIC CONSUMPTION FOR 2008
According to the estimations by Ministry of Finance, positive trends of current income collection shall continue until the
end of 2008 and as a result, increase of current income for 5.49% of GDP had been estimated. The greatest increase is expected in collection of taxes and contributions, while collection of other income shall mostly be in line with the plan for 2008. At
the same time, it is estimated that consolidated expenditures shall increase for 3.85% of GDP, due to increase for pension expenditures for PIO fund, increase of expenditures for gross salaries, increase of capital expenditures, as well as the increase
of transfers for social security with the budget of Montenegro, including the funds for technological surplus workers.
Public sector surplus is estimated to 1.65% of GDP. Better collection of public income and public consumption surplus
shall enable settling debts and unpaid obligations with the amounts higher then planned for 2008, with increase of deposit
for 1.69% of GDP.
48
Fiscal
indicators
Macroeconomic
indicators
Macroeconomic and fiscal framework
(% GDP)
2008 Projection
Nominal GDP increase
Real GDP increase
Inflation
Import
Export
Current account slack
Net foreign direct investment
Domestic credits
Bank deposits
Public revenue
Consolidated public consumption
Slack/Surplus
Interests
Primary slack/surplus
Public debt level
Increase of deposit
DESCRIPTION
CURRENT INCOME
Taxes
Contributions
Tax fees
Fees – remuneration
Other income
Income from credit payments
CONSOLIDATED EXPENDITURES
CURRENT PUBLIC CONSUMPTION
Transfers for instit., individuals, NGO’s and public sector
Loans and credits
Warranties payment
Reserves
SLACK/SURPLUS
FINANCING
Domestic financing
Foreign financing
Revenues from privatization and deposits
DEPOSIT INCREASE/DECREASE
Projection 2008
million €
1533.11
944.77
297.31
35.51
192.09
51.60
11.83
1485.35
1178.18
586.52
328.42
220.71
307.16
22.09
0.60
19.84
47.76
-47.76
-108.01
27.56
81.78
49.09
14,6 %
7.0%
7,1%
88.0%
55.0%
36.4%
28.9%
105.6%
76.7%
52.87
51.22
1.65
0.72
2.37
32.31
1.69
% of GDP
52.87
32.58
10.25
1.22
6.62
1.78
0.41
51.22
40.63
20.22
11.32
7.61
10.59
0.76
0.02
0.68
1.65
-1.65
-3.72
0.95
2.82
1.69
Prepared by:
Slobodanka – Mila Popović
coordinator of the sector for budget operations
Radovan Živković
Independent adviser I
Tamara Gačević
Vladislav Karadžić
49
IMPLEMENTATION OF PUBLIC
CONSUMPTION ON LOCAL
LEVEL FOR THE PERIOD
JANUARY-MARCH 2008
I - INCOME COLLECTED
Total budget income collected by municipalities (21) for the period January-March 2008 are 116.0 million EUR (average
38.7 million EUR monthly) and in comparison with the same period previous year (60.8 million EUR) had increased for
90.8%. In the structure of collected income, the local income (taxes, tax fees and other local income) participate with 28.31%,
forwarded state income (private persons’ income tax, real estate transfer tax, concession and other fees for natural resources
use and annual fee on motor vehicle registration) 7.57%, Equalization fund 3.45% and other income (income of property
sales, funds transferred from previous year, donations, subventions of budget users and other transfers from central level,
loans and credits) with 60.67%.
The following table shows overview of collected budget incomes in municipalities for the period January-March 2008,
per sources: in €
50
No
Municipality
Local income
Forwarded
income
Equalization
fund
Other
income
Total
(3 to 6)
%
1
2
3
4
5
6
7
8
1.
Andrijevica
50.312
6.779
143.853
150.274
351.218
0,30
2.
Bar
3.547.701
713.993
28.790
33.599.104
37.889.588
32,66
3.
Berane
225.803
114.797
777.608
610.820
1.729.028
1,49
4.
Bijelo Polje
752.247
121.707
578.015
172.288
1.624.257
1,40
5.
Budva
3.237.469
1.678.241
25.720
5.854.501
10.795.931
9,31
6.
Danilovgrad
241.149
141.738
315.487
2.181.448
2.879.822
2,48
7.
Žabljak
169.887
127.498
99.005
1.409.772
1.806.162
1,56
8.
Kolašin
497.063
101.901
129.599
93.929
822.492
0,71
9.
Kotor
977.651
567.615
18.200
8.830.340
10.393.806
8,96
10.
Mojkovac
143.728
20.623
341.156
95.509
601.016
0,52
11.
Nikšić
1.732.826
557.541
329.447
516.861
3.136.675
2,70
12.
Plav
92.062
19.458
254.356
219.084
584.960
0,50
13.
Plužine
74.100
168.439
9.350
61.166
313.055
0,27
14.
Pljevlja
1.312.926
289.490
145.339
324.065
2.071.820
1,79
15.
Podgorica
11.734.260
2.900.944
22.880
12.705.802
27.363.886
23,59
16.
Rožaje
279.593
6.415
308.785
47.683
642.476
0,55
17.
Tivat
967.749
269.974
3.840
2.894.371
4.135.934
3,57
18.
Ulcinj
521.244
213.073
156.287
14.740
905.344
0,78
19.
Herceg Novi
5.251.410
626.580
8.950
39.068
5.926.008
5,11
20.
Cetinje
816.469
134.896
186.375
85.258
1.222.998
1,05
21.
Šavnik
210.384
6.063
115.314
475.011
806.772
0,70
TOTAL
32.836.033
8.787.765
3.998.356
70.381.094
116.003.248
100,00
%
28,31
7,57
3,45
60,67
100,00
1. Local revenues of municipal budgets
Total collected local budget revenues of municipalities for the period January-March 2008 amount 32.8 million EUR,
where fiscal revenues (taxes, tax fees and fees – remunerations) cover 80.99%, while the other local revenues (cash penalties
and interests, concession fees for communal goods use, revenues achieved by local institutions and offices in their work and
other income) cover 19.01%.
Collected local fiscal income of the municipalities for reporting period amount 26.6 million EUR (average 8.9 million EUR
monthly). In the structure of income on this base, the greatest share is related to the fee for urban land arrangement (54.33%),
share of private persons’ income tax (12.80%) and fee for urban construction land use (10.13%), adding up to total of 77.26%
of local income with fiscal character. Municipalities had, for the reporting period, collected 6.2 million EUR (average 2.1 million EUR monthly) for remaining local income.
Following table shows an overview of collected local income of the municipal budgets for the period January-March
2008, per sources:
in €
No.
Municipality
Fiscal income
Other local income
Total
(2+3)
%
1
1
2
3
4
5
1
Andrijevica
46.546
3.766
50.312
0,15
2
Bar
2.966.635
581.066
3.547.701
10,80
3
Berane
183.860
41.943
225.803
0,69
4
Bijelo Polje
695.456
56.791
752.247
2,29
5
Budva
3.119.444
118.025
3.237.469
9,86
6
Danilovgrad
181.798
59.351
241.149
0,73
7
Žabljak
149.677
20.210
169.887
0,52
8
Kolašin
487.816
9.247
497.063
1,51
9
Kotor
705.389
272.262
977.651
2,98
10
Mojkovac
137.128
6.600
143.728
0,44
11
Nikšić
1699.412
33.414
1.732.826
5,28
12
Plav
85.207
6.855
92.062
0,28
13
Plužine
62.353
11.747
74.100
0,22
14
Pljevlja
1.228.618
84.308
1.312.926
4,00
15
Podgorica
10.328.415
1.405.845
11.734.260
35,74
16
Rožaje
212.827
66.766
279.593
0,85
17
Tivat
886.350
81.399
967.749
2,95
18
Ulcinj
505.207
16.037
521.244
1,59
19
Herceg Novi
2.425.719
2.825.691
5.251.410
15,99
20
Cetinje
285718
530.751
816.469
2,49
21
Šavnik
200.454
9.930
210.384
0,64
TOTAL
26.594.029
6.242.004
32.836.033
100,00
%
80,99
19,01
100,00
2. Income forwarded to municipal budgets from central level
Municipal budgets (21) had been forwarded 8.8 million EUR (average 2.9 million EUR monthly) from joint income for
the period January-March 2008, which is in comparison with the same period previous year (6.1 million EUR) an increase
of 44.3%. In the structure of forwarded income, private persons’ income tax has 30.78% share, real estate transfer tax 58.73%
share, concession and other remunerations for natural goods use 6.97% and annual fee for registration of road motor vehicles, tractors and trailors with 3.52% share.
51
The following table shows an overview of forwarded republic income to the municipal budgets for the period JanuaryMarch 2008, per type of income:
in €
No
Municipality
PP’s income
tax
RE
transfer
tax
Concession
fee
Annual m.
vehicle reg.
fee
Total
(3 to 6)
%
1
2
3
4
5
6
7
8
1
Andrijevica
5.049
80
251
1.399
6.779
0,08
2
Bar
144.975
513.075
23.415
32.528
713.993
8,13
3
Berane
52.106
37.048
7.807
17.836
114.797
1,31
4
Bijelo Polje
67.863
19.806
6.505
27.533
121.707
1,39
5
Budva
150.992
1.517.554
9.695
1.678.241
19,10
6
Danilovgrad
34.251
70.204
28.420
141.738
1,61
7
Žabljak
6.837
111.088
9.573
127.498
1,45
8
Kolašin
48.580
44.283
4.990
101.901
1,16
9
Kotor
134.602
414.774
18.239
567.615
6,46
10
Mojkovac
16.182
476
1.278
2.687
20.623
0,23
101.027
118.992
34.096
11
Nikšić
303.426
12
Plav
19.458
13
Plužine
104.949
14
Pljevlja
125.390
15
Podgorica
1.178.682
16
Rožaje
6.415
17
Tivat
53.369
215.199
1.406
18
Ulcinj
36.553
161.366
5.511
19
Herceg Novi
144.456
460.416
20
Cetinje
64.559
48.477
21
Šavnik
6.013
8.863
4.048
557.541
6,35
19.458
0,22
62.059
1.431
168.439
1,92
28.594
117.277
18.229
289.490
3,29
1.417.913
186.111
118.238
2.900.944
33,01
6.415
0,07
269.974
3,07
9.643
213.073
2,42
1.793
19.915
626.580
7,13
9.293
12.567
134.896
1,53
50
6.063
0,07
100,00
TOTAL
2.704.707
5.161.380
612.615
309.063
8.787.765
%
30,78
58,73
6,97
3,52
100,00
3. Equalization fund
From the Equalization fund, the municipalities were forwarded 4.0 million EUR (average 1.3 million EUR monthly) for
the period January-March 2008. The greatest share in distributed funds is related to the municipalities: Berane, Bijelo Polje,
Mojkovac, Nikšić, Danilovgrad and Rožaje.
4. Other income of municipalities’ budgets
The municipalities had, for other income (sold property income, funds transferred from previous year, donations, subventions and other transfers, loans and credits), for the period January-March 2008, achieved 70.4 million EUR. In the structure of income per this item, forwarded funds participate with 93.58%, sold property income 3.97%, loans and credits 1.38%,
subventions and other transfers 0.85% and donations 0.22% share.
The following table shows overview of collected other income of the municipalities’ budgets for the period January-March 2008.
52
in €
No.
Municipality
1
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
TOTAL
%
2
Andrijevica
Bar
Berane
Bijelo Polje
Budva
Danilovgrad
Žabljak
Kolašin
Kotor
Mojkovac
Nikšić
Plav
Plužine
Pljevlja
Podgorica
Rožaje
Tivat
Ulcinj
Herceg Novi
Cetinje
Šavnik
Sold
property
income
3
77.407
Donations
Loans
4
5.000
5
5.386
13.415
265.300
371.422
5.622
73
3.046
44.942
250.000
20.000
30.000
224.065
387.658
13.010
1.385.600
500.000
150.000
100.000
30.000
39.068
1.100
2.792.172
3,97
155.000
0,22
974.942
1,38
F. transf. from
prev. years
Subven
tions
6
67.867
33.599.104
218.481
113.931
5.339.201
1.810.026
1.409.772
88.307
8.715.282
72.463
16.861
31.340
61.166
7
386.953
114.985
7.744
12.318.144
4.673
1.508.771
11.421
3.319
33.937
442.011
65.862.758
93,58
50.221
33.000
596.222
0,85
Total
%
8
150.274
33.599.104
610.820
172.288
5.854.501
2.181.448
1.409.772
93.929
8.830.340
95.509
516.861
219.084
61.166
324.065
12.705.802
47.683
2.894.371
14.740
39.068
85.258
475.011
70.381.094
100,00
9
0,21
47,74
0,87
0,24
8,32
3,10
2,00
0,13
12,55
0,14
0,74
0,31
0,09
0,46
18,05
0,07
4,11
0,02
0,06
0,12
0,67
100,00
II - DISBURSEMENT
Total disbursement of municipal budgets for the period January-March 2008 is 44.88 million EUR, which is 11.40% of
planned for year 2008.
The greatest disbursement is in municipality Danilovgrad – 31.33%, Plužina – 25.14%, Berane – 24.26% and Bijelo Polje –
19.01% in comparison with planed for year 2008. The lowest disbursement is in municipality Žabljak – 3.40%.
Expenditures of municipalities January-March 2008
Municipality
Andrijevica
Bar
Berane
Bijelo Polje
Budva
Danilovgrad
Herceg Novi
Kolašin
Kotor
Mojkovac
Nikšić
Plav
Plužine
Pljevlja
Podgorica
Rožaje
Tivat
Ulcinj
Cetinje
Šavnik
Žabljak
TOTAL
Plan 2008
Execution
Jan-Mar 2008
% execution
1,10
45,38
6,10
8,36
78,17
6,10
26,29
5,20
28,34
2,95
37,06
3,05
1,79
13,05
92,08
3,58
10,48
11,04
8,02
1,20
5,30
394,62
0,16
2,30
1,48
1,59
10,77
1,91
2,99
0,78
2,85
0,34
3,09
0,42
0,45
1,82
10,14
0,58
1,10
0,88
0,98
0,17
0,18
44,98
14,55
5,06
24,26
19,01
13,77
31,33
11,39
15,00
10,06
11,66
8,33
13,70
25,14
13,93
11,01
16,22
10,54
7,93
12,24
14,33
3,40
11,40
53
Consolidated expenditures of municipalities for period January-March 2008 were 36.98 million EUR, which is 1.28% of
estimated GDP for 2008. In the structure of expenditures, the greatest participation is shown for capital expenditures – 16.58
million EUR or 36.86% of total expenditures, followed by current expenditures (gross wages, other income, expenditures
for material and services, interest, rent, subventions and current maintenance) of 12.16 million EUR or 27.03% of total expenditures. Transfers (transfer for social security and transfers for institutions, individuals, NGO’s and public sector) were 5.97
million EUR or 13.27% of total expenditures; debt payment with 7.94 million EUR or 17.66% of total expenditures, while other
expenditures were 2.27 million EUR or 5.05% of total expenditures
The following table shows overview of consolidated and total expenditures for the period January-March 2008 (in million
EUR) per municipalities and types of expenditures:
Municipality
Consolidated expenditures for January-March 2008
Current exp
Andrijevica
Bar
Berane
Bijelo Polje
Budva
Danilovgrad
Herceg Novi
Kolašin
Kotor
Mojkovac
Nikšić
Plav
Plužine
Pljevlja
Podgorica
Rožaje
Tivat
Ulcinj
Cetinje
Šavnik
Žabljak
TOTAL
%
0,08
0,64
0,38
0,17
1,46
0,41
1,27
0,29
0,95
0,22
0,97
0,16
0,15
1,10
2,36
0,16
0,54
0,38
0,22
0,08
0,14
12,16
27,03
Capital
exp
0,02
1,03
0,44
0,59
4,92
0,22
0,94
0,09
1,34
0,05
0,15
0,01
0,05
0,24
5,85
0,19
0,27
0,13
0,02
0,01
0,00
16,58
36,86
Transfers
0,06
0,42
0,25
0,33
0,58
0,26
0,34
0,08
0,18
0,03
0,66
0,29
0,04
0,20
1,46
0,19
0,28
0,12
0,13
0,03
0,03
5,97
13,27
Other
exp
0,00
0,03
0,02
0,27
0,00
1,00
0,14
0,00
0,13
0,02
0,28
0,00
0,00
0,02
0,33
0,01
0,01
0,00
0,00
0,00
0,00
2,27
5,05
Cons.
exp.
% GDP
Debt
payment
Total expendi
tures
0,16
2,13
1,09
1,37
6,97
1,89
2,69
0,46
2,61
0,33
2,06
0,46
0,24
1,57
10,00
0,55
1,10
0,64
0,38
0,12
0,17
36,98
82,21
0,01
0,07
0,04
0,05
0,24
0,07
0,09
0,02
0,09
0,01
0,07
0,02
0,01
0,05
0,34
0,02
0,04
0,02
0,01
0,00
0,01
1,28
0,00
0,17
0,31
0,47
3,53
0,02
0,31
0,31
0,24
0,02
1,03
0,19
0,02
0,25
0,14
0,03
0,00
0,24
0,61
0,04
0,00
7,94
17.66
0,18
2,30
1,40
1,84
10,49
1,90
3,00
0,78
2,85
0,35
3,09
0,67
0,26
1,82
10,14
0,58
1,10
0,88
0,98
0,16
0,20
44,98
100,00
III - BUDGET DEBT
Total budget debt of the local government for the period January-March 2008 was 20.86 million EUR, which is 0,72% of
estimated GDP for 2008. In the debt structure, domestic debt amounts 13.17 million EUR, which is 63.13% of total debt, while
foreign debt amounts 7.69 million EUR, which is 36.86% of total debt.
54
No.
Type of debt
I
1
a
b
2
3
II
1
a
Domestic debt
Credits
Short-term
Capital
Interest
Long-term
Capital
Interest
Bonds
Warranties
Foreign debt
Credits
Short-term
Capital
TOTAL in
mil €
13,17
11,23
4,01
3,44
0,57
6,89
6,20
0,69
2,92
0,01
7,69
7,69
0,00
0,00
% GDP
0,45
0,39
0,14
0,12
0,02
0,24
0,21
0,02
0,10
0,00
0,27
0,27
0,00
0,00
b
2
3
I+II
Interest
Long-term
Capital
Interest
Bonds
Warranties
BUDGET DEBT
0,00
7,69
6,65
1,04
0,00
0,00
20,86
0,00
0,27
0,23
0,04
0,00
0,00
0,72
IV - UNSETTLED OBLIGATIONS
Total unsettled obligations of local government for the period January-March 2008 are 20.53 million EUR. In the structure of unsettled obligations, the biggest item, are unsettled obligations for capital expenditures – 6.39 million EUR, which is
approximately one-third of total unsettled obligations. Obligations for current expenditures were 6.23 million EUR, while for
debt payment the amount was 3.42 million EUR and loans and credits 2.78 million EUR.
No.
Type of unsettled obligations
TOTAL
mil. €
% of GDP
I
Obligations for current disbursements
6,23
0,21
Obligations for gross wages and contributions paid by employer
3,36
0,12
Obligations for other personal income
0,26
0,01
Obligations for other current disbursements
2,61
0,09
II
Obligations for transfers for social security
0,02
0,00
III
Obligations for transfers for institutions, individual, NGO
1,58
0,05
IV
Obligations for capital disbursements
6,39
0,22
V
Obligations for loans and credits
2,78
0,10
VI
Obligations for debt payment
3,42
0,12
VII
Obligations from reserves
0,11
0,00
20,53
0,71
TOTAL UNSETTLED OBLIGATIONS ( I+II III+IV+V+VI+VII )
Gordana Radović
Slobodanka Burić
Prepared by:
Gordana Radović
Independent advisor I
Slobodanka Burić
Independent advisor I
55
CAPITAL BUDGET
The Law on capital budget of Montenegro for the year 2008 plans the funds for capital budget in total amount of
67,432,973.00 EUR. Draft law on amendments and appendixes to the law on capital budget of Montenegro for the year 2008
increases the funds for capital budget for 18,233,800.00 EUR.
Capital budget summary table
Economic classification
Description
Plan 2008
Difference
Rebalance
4
Expenditures
67.432.973,00
18.233.800,00
85.666.773,00
41
Current expend.
10.434.925,00
130.000,00
10.564.925,00
44
Capital expend.
56.998.048,00
18.103.800,00
75.101.848,00
For the Directorate for public works, the funds for capital projects within the capital budget for the year 2008 are planned
in the amount of 35,642,973.00 EUR. Amendments and appendixes of the law on capital budget for the year 2008 increase
the funds for capital projects for 15,133,800.00 EUR.
Directorate for public works
Functional
classification
Economic
classification
40902
Description
Plan 2008
Difference
Rebalance
Directorate for public works
35.642.973,00
15.133.800,00
50.776.773,00
New building of Government of Montenegro – Podgorica
Functional
classification
Economic
classification
Description
New building of Government of
Montenegro - Podgorica
Construction phase
700
7002
0111
0111
0111
0111
4
41
413
4131
4134
4135
4139
44
441
0111
4413
Expenditures
Disbursement for material and services
Disbursement for material
Disbursement for energy
Disbursement for telephone services
Contracted services
Expenditures for construction
buildings
Plan 2008
Difference
Rebalance
2.000.000,00
3.000.000,00
5.000.000,00
2.000.000,00
3.000.000,00
5.000.000,00
2.000.000,00
44.700,00
44.700,00
480,00
360,00
360,00
43.500,00
1.955.300,00
1.955.300,00
3.000.000,00
0,00
0,00
0,00
0,00
0,00
0,00
3.000.000,00
3.000.000,00
5.000.000,00
44.700,00
44.700,00
480,00
360,00
360,00
43.500,00
4.955.300,00
4.955.300,00
1.955.300,00
3.000.000,00
4.955.300,00
For the capital project New building of Government of Montenegro – Podgorica, funds were planned in capital budget
for the year 2008 in the amount of 2,000,000.00 EUR for the construction phase.
Considering that the funds for implementation of this project planned in 2008 are not sufficient, the amendments and
appendixes to the law on capital budget of Montenegro for the year 2008 increases the funds in the construction phase –
Expenditures for construction buildings with the amount of 3,000,000.00 EUR. These funds are necessary for accelerated
dynamics of works, in order for the project to be finished in the first quarter next year.
56
Rector office building in Podgorica
Functional
classification
Economic
classification
703
7032
4
41
413
0942
0942
0942
0942
4131
4134
4135
4139
44
441
0942
4413
Description
Plan 2008
Difference
Rebalance
Rector office building in Podgorica
Construction phase
Expenditures
Disbursement for material and
services
Contracted services
buildings
2.365.687,00
2.365.687,00
2.365.687,00
29.170,00
200.000,00
200.000,00
200.000,00
0,00
2.565.687,00
2.565.687,00
2.565.687,00
29.170,00
29.170,00
0,00
29.170,00
360,00
360,00
450,00
28.000,00
2.336.517,00
2.336.517,00
0,00
0,00
0,00
0,00
200.000,00
200.000,00
360,00
360,00
450,00
28.000,00
2.536.517,00
2.536.517,00
2.336.517,00
200.000,00
2.536.517,00
For the capital project Rector office building in Podgorica, funds were planned in capital budget for the year 2008 in the
amount of 2,365,687.00 EUR.
During execution of works, some surpluses and additional works had occurred, requiring to be performed in order to start
functional use of building. Amendments and appendixes to the law on capital budget of Montenegro for the year 2008 increases the funds in the construction phase – Expenditures for construction buildings with the amount of 200,000.00 EUR.
Institute for public health in Podgorica
Functional
classification
705
7052
0740
0740
0740
0740
0740
Economic
classification
4
41
413
4131
4134
4135
4139
44
441
4413
Description
Plan 2008
Difference
Rebalance
Institute for public health in Podgorica
Construction phase
Expenditures
Contracted services
Expenditures for construction buildings
1.748.000,00
1.748.000,00
1.748.000,00
25.000,00
25.000,00
600,00
400,00
500,00
23.500,00
1.723.000,00
1.723.000,00
1.723.000,00
140.000,00
140.000,00
140.000,00
0,00
0,00
0,00
0,00
0,00
0,00
140.000,00
140.000,00
140.000,00
1.888.000,00
1.888.000,00
1.888.000,00
25.000,00
25.000,00
600,00
400,00
500,00
23.500,00
1.863.000,00
1.863.000,00
1.863.000,00
For the capital project Institute for public health Podgorica, funds were planned in capital budget for the year 2008 in the
amount of 1,748,000.00 EUR for the construction phase.
Funds for implementation of this project planned in year 2008 are not sufficient, since during the works implementation
some surpluses and additional works had occurred, requiring to be performed in order to start functional use of building.
Amendments and appendixes to the law on capital budget of Montenegro for the year 2008 increase the funds in the construction phase – Expenditures for construction buildings with the amount of 140,000.00 EUR.
Building of state agencies in Podgorica
Functional
classification
Economic
classification
707
7071
4
41
418
Description
Building of state agencies in
Podgorica
Preparation phase
Expenditures
Other expenditures
Plan 2008
Difference
Rebalance
2.603.286,00
0,00
2.603.286,00
0,00
0,00
0,00
0,00
300.000,00
300.000,00
300.000,00
300.000,00
300.000,00
300.000,00
300.000,00
300.000,00
57
0560
7072
4181
413
0560
0560
0560
0560
4131
4134
4135
4139
44
441
0560
4413
4
41
Communal fees
Construction phase
Expenditures
services
Contracted services
buildings
0,00
2.603.286,00
2.603.286,00
27.500,00
300.000,00
-300.000,00
-300.000,00
0,00
300.000,00
2.303.286,00
2.303.286,00
27.500,00
27.500,00
0,00
27.500,00
360,00
360,00
360,00
26.420,00
2.575.786,00
2.575.786,00
0,00
0,00
0,00
0,00
-300.000,00
-300.000,00
360,00
360,00
360,00
26.420,00
2.275.786,00
2.275.786,00
2.575.786,00
-300.000,00
2.275.786,00
For the capital project Building of state agencies Podgorica, funds were planned in capital budget for the year 2008 in the
amount of 2,603,286.00 EUR for the construction phase.
The capital budget for the year 2008 does not include funds for covering communal fee for the urban construction land,
which is necessary to be settled in order to obtain the construction permit. Therefore, it is necessary to perform rerouting
of the funds from construction phase, expenditure 4413 – Expenditures for construction buildings with the amount of
300,000.00 EUR to the preparation phase, expenditure 4181 – Communal fees with the amount of 300,000.00 EUR.
Customs office headquarters in Podgorica
Functional
classification
Economic
classification
710
7101
4
41
413
0112
0112
0112
4131
4135
4139
Description
Customs office headquarters in
Podgorica
Preparation phase
Expenditures
services
Contracted services
Plan 2008
Difference
Rebalance
90.000,00
30.000,00
120.000,00
90.000,00
90.000,00
90.000,00
30.000,00
30.000,00
30.000,00
120.000,00
120.000,00
120.000,00
90.000,00
30.000,00
120.000,00
80,00
80,00
89.840,00
0,00
0,00
30.000,00
80,00
80,00
119.840,00
For the capital project Customs office headquarters Podgorica, funds were planned in capital budget for the year 2008 in
the amount of 90,000.00 EUR for the preparation phase.
Amendments and appendixes to the law on capital budget of Montenegro for the year 2008 increase the funds in the
preparation phase – Contracted services for the amount of 30,000.00 EUR. Noted funds are necessary due to the increased
user requirements for necessary area against the initially planned area.
Home for palliative care for elderly “Grabovac” – Risan
Functional
classification
Economic
classification
714
7142
1091
4
44
441
4413
Description
Home for palliative care for elderly
“Grabovac” – Risan
Construction phase
Expenditures
Plan 2008
Difference
Rebalance
1.140.000,00
193.800,00
1.333.800,00
1.140.000,00
1.140.000,00
1.140.000,00
1.140.000,00
1.140.000,00
193.800,00
193.800,00
193.800,00
193.800,00
193.800,00
1.333.800,00
1.333.800,00
1.333.800,00
1.333.800,00
1.333.800,00
For the capital project Home for palliative care for elderly “Grabovac” – Risan, funds were planned in capital budget for
the year 2008 in the amount of 1,140,000.00 EUR for the construction phase.
construction phase – Expenditures for construction buildings for the amount of 193,800.00 EUR. Noted funds are necessary
58
for payment of the value added tax on the amount of 1,140,000.00 EUR, which is participation of the Government of Montenegro in this project.
Musical center – Reconstruction and adaptation of the Army home building in Podgorica
Functional
classification
Economic
classification
721
7211
4
41
413
0820
7212
4139
4
41
413
0820
0820
0820
0820
4131
4135
4139
44
441
4413
Description
Musical center – Reconstruction and
adaptation of the Army home building
in Podgorica
Preparation phase
Expenditures
services
Contracted services
Construction phase
Expenditures
services
Contracted services
Plan 2008
Difference
Rebalance
1.500.000,00
0,00
1.500.000,00
0,00
0,00
0,00
84.240,00
84.240,00
84.240,00
84.240,00
84.240,00
84.240,00
0,00
84.240,00
84.240,00
0,00
1.500.000,00
1.500.000,00
22.500,00
84.240,00
-84.240,00
-84.240,00
0,00
84.240,00
1.415.760,00
1.415.760,00
22.500,00
22.500,00
0,00
22.500,00
360,00
360,00
21.780,00
1.477.500,00
1.477.500,00
1.477.500,00
0,00
0,00
0,00
-84.240,00
-84.240,00
-84.240,00
360,00
360,00
21.780,00
1.393.260,00
1.393.260,00
1.393.260,00
For the capital project Musical center – Reconstruction and adaptation of the Army home building in Podgorica, funds
were planned in capital budget for the year 2008 in the amount of 1,500,000.00 EUR for the construction phase.
Amendments and appendixes to the law on capital budget of Montenegro for the year 2008 perform rerouting of the
funds from construction phase, expenditure 4413 – Expenditures for construction buildings with the amount of 84,240.00
EUR to the preparation phase, expenditure 4139 – Contracted services with the amount of 84,240.00 EUR. These funds are
required for settling obligations regarding the project documentation production.
Reconstruction of educational center “Tvrtko Bijelić” building in Nikšić
Functional
classification
Economic
classification
723
7232
0922
0922
0922
0922
0922
4
41
413
4131
4132
4134
4135
4139
44
441
0922
4413
Description
Plan 2008
Difference
Rebalance
Reconstruction of educational center
“Tvrtko Bijelić” building in Nikšić
1.250.000,00
100.000,00
1.350.000,00
1.250.000,00
1.250.000,00
15.000,00
15.000,00
160,00
480,00
160,00
160,00
14.040,00
1.235.000,00
1.235.000,00
100.000,00
100.000,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
100.000,00
100.000,00
1.350.000,00
1.350.000,00
15.000,00
15.000,00
160,00
480,00
160,00
160,00
14.040,00
1.335.000,00
1.335.000,00
1.235.000,00
100.000,00
1.335.000,00
Construction phase
Expenditures
Contracted services
buildings
For the capital project Building Reconstruction of educational center “Tvrtko Bijelić” building in Nikšić, funds were planned in capital budget for the year 2008 in the amount of 1,250,000.00 EUR for the construction phase.
During execution of works, some surpluses and additional works had occurred, requiring to be performed in order to start
59
functional use of building. Amendments and appendixes to the law on capital budget of Montenegro for the year 2008 increases the funds in the construction phase – Expenditures for construction buildings with the amount of 100,000.00 EUR.
Building of administrative affairs of the Ministry of Internal Affairs and Public
administration in Pljevlja
Functional
classification
Economic
classification
725
7252
4
41
413
0360
0360
0360
0360
0360
4131
4132
4134
4135
4139
44
441
0360
4413
Description
Building of administrative affairs of
the Ministry of Internal Affairs and
Public administration in Pljevlja
Construction phase
Expenditures
services
Contracted services
buildings
Plan 2008
Difference
Rebalance
406.000,00
70.000,00
476.000,00
406.000,00
406.000,00
14.000,00
70.000,00
70.000,00
0,00
476.000,00
476.000,00
14.000,00
14.000,00
0,00
14.000,00
180,00
490,00
360,00
180,00
12.790,00
392.000,00
392.000,00
0,00
0,00
0,00
0,00
70.000,00
70.000,00
180,00
490,00
360,00
180,00
12.790,00
462.000,00
462.000,00
392.000,00
70.000,00
462.000,00
For the capital project Building of administrative affairs of the Ministry of Internal Affairs and Public administration in
Pljevlja, funds were planned in capital budget for the year 2008 in the amount of 406,000.00 EUR in the construction phase.
After production of project documentation, the increase of workload had occurred against the planned. Therefore, amendments and appendixes of the law on budget of Montenegro for the year 2008 increase the funds for the construction phase
– Expenditures for construction buildings for the amount of 70,000.00 EUR.
Primary school “Risto Manojlović” and Primary music school in Kolašin
Functional
classification
Economic
classification
727
7271
0912
0912
0912
0912
7272
0912
0912
0912
0912
0912
0912
60
4
41
413
4131
4134
4135
4139
4
41
413
4131
4132
4134
4135
4139
44
441
4413
Description
Primary school “Risto Manojlović” and
Primary music school in Kolašin
Preparation phase
Expenditures
Contracted services
Construction phase
Expenditures
Contracted services
Plan 2008
Difference
Rebalance
500.000,00
600.000,00
1.100.000,00
100.000,00
100.000,00
100.000,00
100.000,00
80,00
120,00
80,00
99.720,00
400.000,00
400.000,00
4.500,00
4.500,00
100,00
300,00
200,00
100,00
3.800,00
395.500,00
395.500,00
395.500,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
600.000,00
600.000,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
600.000,00
600.000,00
600.000,00
100.000,00
100.000,00
100.000,00
100.000,00
80,00
120,00
80,00
99.720,00
1.000.000,00
1.000.000,00
4.500,00
4.500,00
100,00
300,00
200,00
100,00
3.800,00
995.500,00
995.500,00
995.500,00
For the capital project Primary school “Risto Manojlović” and Primary music school in Kolašin, funds were planned in
capital budget for the year 2008 in the amount of 100,000.00 EUR for the preparation phase and 400,000.00 EUR for the construction phase.
construction phase – Expenditures for construction buildings for the amount of 600,000.00 EUR. Noted funds are necessary
since in this year, the conditions will be provided for accelerated dynamics of works.
Administrative building of the Criminal sanctions execution authority
Functional
classification
Economic
classification
735
7352
0360
0360
0360
0360
0360
4
41
413
4131
4134
4135
4139
44
441
4413
Description
Administrative building of the Criminal
sanctions execution authority
Construction phase
Expenditures
Contracted services
Plan 2008
Difference
Rebalance
295.000,00
100.000,00
395.000,00
295.000,00
295.000,00
5.000,00
5.000,00
120,00
120,00
120,00
4.640,00
290.000,00
290.000,00
290.000,00
100.000,00
100.000,00
0,00
0,00
0,00
0,00
0,00
0,00
100.000,00
100.000,00
100.000,00
395.000,00
395.000,00
5.000,00
5.000,00
120,00
120,00
120,00
4.640,00
390.000,00
390.000,00
390.000,00
For the capital project Administrative building of the Criminal sanctions execution authority, funds were planned in capital budget for the year 2008 in the amount of 295,000.00 EUR for the construction phase.
After production of project documentation, the increase of workload had occurred against the planned. Therefore, amendments and appendixes of the law on budget of Montenegro for the year 2008 increase the funds for the construction phase
– Expenditures for construction buildings for the amount of 100,000.00 EUR.
Office building for the regional police office in Podgorica
Functional
classification
Economic
classification
742
7422
0310
4
44
441
4413
Description
Office building for the regional police
office in Podgorica
Construction phase
Expenditures
Plan 2008
Difference
Rebalance
3.000.000,00
3.300.000,00
6.300.000,00
3.000.000,00
3.000.000,00
3.000.000,00
3.000.000,00
3.000.000,00
3.300.000,00
3.300.000,00
3.300.000,00
3.300.000,00
3.300.000,00
6.300.000,00
6.300.000,00
6.300.000,00
6.300.000,00
6.300.000,00
For the capital project Office building for the regional police office in Podgorica, funds were planned in capital budget
for the year 2008 in the amount of 3,000,000.00 EUR for the construction phase.
Considering that the funds for implementation of this project planned in 2008 are not sufficient, the amendments and
appendixes to the law on capital budget of Montenegro for the year 2008 increase the funds in the construction phase – Expenditures for construction buildings with the amount of 3,300,000.00 EUR, for settling the obligations to the contractor for
the works to be performed during this year.
Regional water supply
Functional
classification
752
7522
0720
Economic
classification
4
44
441
4413
Description
Plan 2008
Regional water supply
Construction phase
Expenditures
0,00
0,00
0,00
0,00
0,00
Difference
7.400.000,00
7.400.000,00
7.400.000,00
7.400.000,00
7.400.000,00
0.00 7.400.000,00
Rebalance
7.400.000,00
7.400.000,00
7.400.000,00
7.400.000,00
7.400.000,00
7.400.000,00
61
For the capital project Regional water supply, no funds were planned in capital budget for the year 2008. Amendments
and appendixes to the law on capital budget of Montenegro for the year 2008 plan the funds in the amount of 7,400,000.00
EUR. Necessary funds are dedicated for participation of the Government of Montenegro.
For the Directorate of traffic, funds for capital projects were planned in the capital budget for the year 2008 in the amount
of 31,790,000.00 EUR. Amendments and appendixes to the law on capital budget of Montenegro for the year 2008 increase
amount for capital projects for 3,100,000.00 EUR.
Directorate of traffic
Functional
classification
41003
Economic
classification
Description
Plan 2008
Difference
Rebalance
Directorate of traffic
31.790.000,00
3.100.000,00
34.890.000,00
Road Risan – Grahovo - Žabljak
Functional
classification
715
7152
Economic
classification
Description
Plan 2008
Difference
Rebalance
4
44
441
7.000.000,00
7.000.000,00
7.000.000,00
7.000.000,00
7.000.000,00
3.000.000,00
3.000.000,00
3.000.000,00
3.000.000,00
3.000.000,00
10.000.000,00
10.000.000,00
10.000.000,00
10.000.000,00
10.000.000,00
0451
4411
Road Risan - Grahovo - Žabljak
Construction phase
Expenditures
Expenditures for infrastructure of common
importance
7.000.000,00
3.000.000,00
10.000.000,00
For the capital project Road Risan - Grahovo - Žabljak, funds were planned in capital budget for the year 2008 in the amount of 7,000,000.00 EUR.
Construction plan for the road Risan–Grahovo–Žabljak determine finishing the segment to Nikšić by mid-2009, and an
entire road by the year 2010. Works are being performed or shall start by the end of this year, on total 5 segments, where the
majority of land is private owned. Estimated value of the land to be expropriated is approximately 8,000,000.00 EUR. Part of
the funds is provided within the Budget of Montenegro for the year 2008, part is planned in the Projection of capital budget
for the year 2009, and missing funds in the amount of 3,000,000.00 EUR are to be provided by the amendments and appendixes to the law on capital budget of Montenegro for the year 2008.
Amendments and appendixes to the law on capital budget of Montenegro for the year 2008 increase the funds for construction phase – Expenditures for infrastructure of common importance for the amount of 3,000,000.00 EUR, in order to
provide the missing funds for land expropriation.
Designing highway segment from Smokovac to Veruša
Functional
classification
Economic
classification
Description
Designing highway segment from Smokovac
to Veruša
Preparation phase
724
7241
Plan 2008
Difference
Rebalance
1.300.000,00
100.000,00
1.400.000,00
1.300.000,00
100.000,00
1.400.000,00
4
Expenditures
1.300.000,00
100.000,00
1.400.000,00
41
1.300.000,00
100.000,00
1.400.000,00
413
1.300.000,00
100.000,00
1.400.000,00
0451
4139
Contracted services
1.300.000,00
100.000,00
1.400.000,00
For the capital project Designing highway segment from Smokovac to Veruša, funds were planned in capital budget for
the year 2008 in the amount of 1,300,000.00 EUR.
The Government of Montenegro had accepted the proposal by the Directorate of traffic to hire an international financial corporation as a part of World Bank group for advisory services for finding a partner for private-public partnership for
financing and construction of highway from Bar to Boljare. Obligation of the Directorate of traffic, as concluded by the
Government of Montenegro amounts 100,000.00 EUR in 2008.
Amendments and appendixes to the law on capital budget of Montenegro for the year 2008 increase the funds for preparation phase – Contracted services for the amount of 100,000.00 EUR.
Section for public investment planning
Ljiljana Crnčević, Independent Advisor I
Snežana Mugoša, Independent Advisor II
62
MID-TERM MACROECONOMIC
AND FISCAL FRAME FOR
MONTENEGRO, 2009-2001
Economic growth and development in Montenegro, during the last couple of years has been caused by extremely high
levels of direct foreign investments and rapid loan development within domestic banking systems, facilitated by deposit
growth and also by loans received from foreign banks. As a result, domestic aggregate demand quickly increased. It is estimated that household expenditures and investments contributed to economic growth of 20% and 15% respectively in 2007,
causing current account deficit to rise to 46% of GDP in 2007, from 25% in 2006. Domestic production vigorously satisfied
demand increase and it is estimated it increased for approx. 10% in 2007. All of the above mentioned factors lead to a more
significant raise of inflation – 7.7% in 2007, as compared to 2% in 2006.
During the production of a mid-term macroeconomic scenario, Montenegro should plan for a swift development connected with large capital influx (which will disappear once the gap in potential is closed), and with temporary current account
deficits (which will also vanish if capital influx is reduced and domestic production increased).
Creation of mid-term macroeconomic and fiscal frame for 2009-2011 period must be done extremely carefully, bearing
in mind the following:
• Non-sustainability of high current account deficit for longer periods of time
• Non-sustainability of high levels of direct foreign investments for longer periods of time
• Temporary character of fiscal income’s rapid growth
• Risk of expenditure increase based on expectations of rapid income increase
• Susceptibility of Montenegro’s economy to external shocks
• Inflation tendencies in the situation of overheated economy
• Experiences of other transitional countries
BASIC MACROECONOMIC AND FISCAL INDICATORS IN 2009-2001
During the 2009-2011 period, an average nominal growth of 11% of GDP is expected, with average realistic growth of
6.3% per annum. Expected level of inflation will be, on average, 4% per annum. Public expenditure surplus will gradually decrease, from 1.59% of GDP in 2009, to 0.69% of GDP in 2001. The extent of public expenditure in GDP during the 2009-2011
period will gradually decrease to approx. 4^6% of GDP in 2011. Further decrease of public debt in GPD has been estimated,
together with trade deficit decrease.
Macroeconomic
indicators
Macroeconomic and fiscal frame
of GDP)
Nominal growth of GDP
Realistic growth of GDP
Inflation
Import
Export
Current account deficit
Net direct foreign investments
Domestic loans
Banking deposits
(%
2009. Projection
2010. Projection
2011. Projection
12.50%
7.0%
4.5%
84.0%
56.0%
31.8%
26.4%
110.2%
74.1%
11,0 %
6.5%
4.0%
82.0%
58.0%
27.3%
26.1%
109.9%
73.5%
9,5 %
5.5%
3.5%
80.0%
60.0%
22.7%
21.6%
110.8%
72.7%
63
Fiscal indicators
Public revenues
Consolidated public expenditure
Deficit / surplus
Interests
Primary deficit / surplus
Public debt level
Deposit increase
52.43
50.84
1.59
0.67
2.26
28.99
5.31
49.61
48.23
1.39
0.62
2.01
25.61
4.18
47.09
46.40
0.69
0.59
1.28
23.41
2.89
Fiscal projections are based on macroeconomic scenario, entailing moderate growth of economic activities and stable
and low inflation levels. It is expected that levels of foreign investments will slowly decline, in comparison to record levels in
2007. During the 2009-2011 period, a gradual decline of banking investments is expected. This will lead to a moderate decline
of household expenditures and stabilization of investment activities. Private expenditure decrease, combined with the planned reductions of current public expenditure will secure an improvement of payment balance sheet and also cause reduction of current account deficits. It is expected that import of goods will also be reduced, together with an increase of revenues
generated from exporting goods and services, which should result in significant improvements of the trade balance.
INITIAL PRESUMPTIONS FOR PRODUCING A MID-TERM PUBLIC EXPENDITURE FRAME FOR 2009-2011 PERIOD
Fiscal and structural reforms of the public expenditure system, during the 2009-2011 period are aimed towards creating a
stimulating economic environment, continuing to reduce tax expenditures, facilitating competitiveness of the economy and
an additional attraction of direct foreign investments. By integrating non-budget funds into a national budget, sustainable
functioning of healthcare and pension systems has been secured – since 2008, revenues and expenditures of 3 non-budget
funds have been consolidated into a Treasury account, while planning for pension and disability fund and healthcare fund
is conducted as part of the State fund. In this manner, budget transparency and control of budget resource expenditure has
been improved, simultaneously improving its liquidity.
Bearing in mind that we are an eurised economy, special attention must be given to fiscal policy measures, as basic economic policy instruments. Main mid-term goals of the fiscal policy are as follows:
• Improving transparency and public resource expenditure control
• Reducing fiscal burdens upon the economy and households
• Continuing to reduce the existence of the „gray“ economy
• Attracting foreign investors
• Functionality of a sustainable public finance system.
For the mid-term public expenditure frame, initial presumptions are as follows:
• Continuous reduction of taxation burden – reducing taxation rate for physical persons’ income, from 15% in 2008, to
12% in 2009 and 9% in 2010. This measure will be of particular influence for creating a more stimulating frame for developing private businesses and competitiveness increase.
• Continuous reduction of contribution rate – decreasing the rate for health insurance, from 12% in 2008 to 10,5% in 2009
and 9% in 2010.
• Continuous reduction of contribution rate – decreasing the rate for pension insurance, from 21% in 2008, to 20.5% in
2009 and 20% in 2010.
• Limiting public expenditure levels has been designated by reducing its part in GDP, from approx. 40% in 2008 to 36.50%
in 2011. The end goal is to reduce the involvement of the state in country’s economic life, enabling greater competitiveness of
the private sector, with an increase of the total number of the persons employed, also causing higher realistic wages.
• Reduction of the levels of public and budgetary expenditure, during the mid-term 2009-2011, providing the resources
for the continuation of the implementation of Montenegro’s capital budget, amounting to 3,5% of GDP. Additional resources
planned for these purposes, through investments in infrastructure will enable creation of conditions for faster economic
growth and development.
• Continuation of settling obligations based on old foreign currency savings and restitution, where settlement repayment
is limited to 0.5% of GDP per annum, in order to secure fiscal sustainability of Montenegro’s budget.
• Use of pre-accession EU – IPA funds, during the period 2008 – 2013, where Montenegro, as a potential candidate, may
use resources from the first two components – Supporting transition and strengthening institutions and Regional and international cooperation. During the 2009-2011 period, fund of around 33 mil. € will be used annually.
• Realization of budgetary surplus of around 1% of GDP per annum, during the period 2009-2011. Deposit increase will
enable accumulation of reserves for capital investments, remedying the consequences of potential external shocks, and early
repayment of loan obligations towards international financial institutions. Accumulated deposits will not be used to increase
current budgetary expenditure.
MID-TERM BUDGETARY POLICIES
During the mid-term frame 2009-2011, the following budgetary policies will be implemented:
64
Mid-term budgetary frame implementation
Presumption for conceiving and application of a mid-term budgetary frame is a reform of the budgetary preparation
and planning processes, and implementation of financial limits for budget users during periods of several years. Budgetary
appropriations for the periods of several years would be based on strategic documentation of the Government and certain
resource ministries, in accordance with the fiscal frame of the overall public expenditure. In this manner, the method „from
up to below“ would be implemented during budget preparation and planning process (differing from the current method,
„upwards from below“). Implementation entails establishment of a limit within a mid-term period in a cumulative amount,
according to economic classification, and in accordance to budgetary users, while a detailed expense overview would be
specified in accordance to the annual budgetary laws.
Continuing the implementation of Montenegro’s capital budget
Continuing the implementation of Montenegro’s capital budget, amounting to 3,5% of GDP per annum, during the 20092011 period. Establishment of a database with information on all projects connected to the budget is planned. This would
enable adequate analysis of financial risks, while also improving the process of decision making when selecting priorities.
Adoption of a new Law on concessions and private and public partnerships will represent a significant regulatory frame for
managing part of investments.
Continuing program budget implementation
With program budget implementation in Montenegro, a budgetary program model is present representing main activity
(program) or a group of activities (sub-programs) that are realized through consumer units. Two levels for applying program
budget have been implemented, enacted through programs and sub-programs. Reforms of a budgetary program plan implementation of a logical program classification for the overall budget, together with preparing an IT system for monitoring and
budget execution according to the program structure. Gradual transfer from a line to a program budget is being implemented from 2005. Complete budgetary program implementation, including indicators and a total application of „upwards from
below“ method, during budget preparation and planning process is envisaged during mid-term. Montenegro’s Government
adopted a Decision on production methods and contents of a budgetary program, prepared by consumer units, in order to
be able to plan the annual Law on budgets and the manner in which the Reports on budgetary program will be delivered.
Public debt management strategy
Montenegro’s public debt has been, thanks to successful reprogramming of the inherited debt, significantly faster growth
of GDP than that of a national debt, and thanks to privatization revenues, significantly reduced during the recent years. At the
end of 2007, public debt has been reduced to 753.4 mil. € or 29.7% of GDP, with high national deposits with banks and with
the Central Bank of Montenegro. In the environment of favorable liquidity, Government reduced national bond emissions
to a minimum. New debts are mainly achieved in order to finance projects originating from international financial institutions, mostly European ones. Non-settled obligations have been largely buffered, until new obligations are accumulated. It is
important to mention that interest and monetary structure of Montenegro’s debt appears favorable. Complete internal debt
is in EUR, with an interest rate of 2% regarding restitution and old foreign currency savings. Of a total amount of foreign debt
only one part is obligation to the Paris Club (26% of the debt is USD, with remaining 3% in other currencies), debt towards
the Anglo-Yugoslav Bank (in USD) and IDA loans (in SDR) are not being serviced in Euros. To summarize, 89% of the international debt is in Euros. According to the fiscal interest rate, 77% of the international debt is being serviced, with an interest
rate between 2% and 5,8%. Bilateral goods loans have interest rates even less than 2%. Apart from a favorable monetary and
interest structure of the loans, credits that compose Montenegro’s public debt have long repayment deadlines and grace periods. For instance, with IBRD, repayment should be made until 2031, and until 2041 with creditors from the Paris Club, while
»new« debts have grace periods from 2 to ten years, and a repayment period ranging from 10 to 20 years.
MIDTERM PUBLIC EXPENDITURE FRAME, 2009-2011
During the 2009-2011 period, gradual decrease of current public revenues has been designated, from 52,43% of GDP in
2009, to 47% of GDP in 2011. This decrease is a direct consequence of taxation reduction – lower tax rates to physical persons’ revenues. Also, this decrease is also influenced by the gradual decrease of contribution rates for pension and health
insurance. Slower tax growth for international trade and transactions is influenced by synchronization of customs and duties
with the World trade organization and the European Union. For other revenues, projected growth is in accordance with the
nominal GDP growth.
Total expenditures for gross incomes of the employees will be reduced from 10,02 of GDP in 2009 to 9.38% of GDP in
2010 and to 8.88% of GDP in 2011. Also, other incomes made by the employees will be reduced from 0.93% of GDP in 2009
to 0.84% of GDP in 2011. Reasons for this are reduction is rationalization of the number of employees and greater growth
of GDP than the growth of expenditures for gross incomes. Gross income growth will depend on the possibilities of the
budget.
Public revenue surplus over expenditures in 2009 is projected at 51.72 mil. € which makes 1,59% of GDP. In 2010, surplus
of public revenues over expenditures is projected at 50.15 mil. € or 1,39% of GDP for that year, while in 2011 public revenue
65
surplus surpasses expenditures for 27,37 mil. € which is 0,69% of GDP. Generated surplus will be used to finance debt repayments, capital projects and deposit increase. Deposit resources will not be used for current expenditure financing.
The following table details the mid-term public expenditure frame for the 2009-2011 period:
DESCRIPTION
TEKUĆI PRIHODI
Taxes
Physical persons income tax
Judicial persons income tax
Property tax
Value added tax (VAT)
Customs and duties
International trade and transaction tax
Local taxes
Other republic revenues
Contributions
Contributions for retirement and disability insurance
Contributions for health insurance
Unemployment insurance contributions
Fees
Compensations
Other incomes
Revenues from tax repayments
EXPENDITURES- I consolidation level
EXPENDITURES- II consolidation level
CURRENT PUBLIC EXPENDITURES
Gross incomes and contributions paid by employers
Other personal incomes
Expenditures for materials and services
Expenditures for materials and services - IPA fund1
Current maintenance
Interests
Rent
Subventions
Other expenditures
Social protection transfers
Transfers to institutions, individuals, NGOs and public
sector
Montenegro’s capital budget
Loans and credit
Guarantee repayment
Reserves
DEFICIT/SURPLUS
FINANCING
Domestic financing
Loans and credits from domestic sources
Debt repayments to residents
Capital repayment
Previous period obligation repayments
Old foreign currency savings repayment
Restitution repayments
Previous period obligation repayment
International financing
Loans and credit from international sources
Debt repayment to non-residents
Donations
Incomes from privatization or deposits
DEPOSIT INCREASE/REDUCTION
66
Projection 2009.
Projection 2010.
Projection 2011.
mil. €
% of GDP
mil. €
% of GDP mil. €
% of GDP
1709.20
1063.00
133.91
58.54
54.50
538.41
132.83
92.91
39.40
12.50
335.13
215.05
110.66
9.41
38.22
203.30
56.27
13.29
1657.48
1613.74
1319.01
629.74
326.65
30.36
141.61
33.30
30.90
21.68
10.85
22.67
11.70
405.60
52.43
32.61
4.11
1.80
1.67
16.52
4.07
2.85
1.21
0.38
10.28
6.60
3.39
0.29
1.17
6.24
1.73
0.41
50.84
49.50
40.46
19.32
10.02
0.93
4.34
1.02
0.95
0.67
0.33
0.70
0.36
12.44
1795.95
1128.69
137.40
63.92
56.68
569.94
143.14
100.62
43.98
13.00
341.74
221.30
110.65
9.79
39.75
211.43
58.52
15.83
1745.80
1700.31
1380.76
657.29
339.72
31.58
150.28
34.00
32.14
22.55
11.28
23.58
12.17
428.44
49.61
31.18
3.80
1.77
1.57
15.74
3.95
2.78
1.21
0.36
9.44
6.11
3.06
0.27
1.10
5.84
1.62
0.44
48.23
46.97
38.14
18.16
9.38
0.87
4.15
0.94
0.89
0.62
0.31
0.65
0.34
11.84
1864.81
1170.20
142.21
66.16
58.66
589.89
148.15
104.15
47.52
13.46
357.70
231.05
116.52
10.13
41.14
218.83
60.57
16.38
1837.44
1790.36
1448.16
685.11
351.61
33.18
158.54
34.00
34.76
23.34
11.68
24.41
13.59
452.20
47.09
29.55
3.59
1.67
1.48
14.90
3.74
2.63
1.20
0.34
9.03
5.83
2.94
0.26
1.04
5.53
1.53
0.41
46.40
45.21
36.57
17.30
8.88
0.84
4.00
0.86
0.88
0.59
0.29
0.62
0.34
11.42
229.57
7.04
238.75
6.60
251.10
6.34
338.47
224.37
114.10
23.08
0.63
30.40
51.72
-51.72
-7.09
13.09
7.12
7.12
76.74
13.06
16.30
47.38
55.99
36.04
15.76
35.70
72.44
173.07
10.38
6.88
3.50
0.71
0.02
0.93
1.59
-1.59
-0.22
0.40
0.22
0.22
2.35
0.40
0.50
1.45
1.72
1.11
0.48
1.10
2.22
5.31
365.04
238.34
126.70
24.01
0.65
31.62
50.15
-50.15
-7.61
13.09
7.12
7.12
77.67
13.59
18.10
45.99
47.04
27.25
15.88
35.67
61.58
151.17
10.08
6.58
3.50
0.66
0.02
0.87
1.39
-1.39
-0.21
0.36
0.20
0.20
2.15
0.38
0.50
1.27
1.30
0.75
0.44
0.99
1.70
4.18
389.28
250.68
138.60
24.85
0.67
34.22
27.37
-27.37
-8.81
12.44
7.12
7.12
45.18
14.13
19.80
11.25
40.68
21.37
16.15
35.46
55.21
114.46
9.83
6.33
3.50
0.63
0.02
0.86
0.69
-0.69
-0.22
0.31
0.18
0.18
1.14
0.36
0.50
0.28
1.03
0.54
0.41
0.90
1.39
2.89
FINANCIAL LIMITATIONS AND MID-TERM BUDGETARY FRAMEWORK 2009-2011
Mid-term budgetary framework covers planning and budgeting related to the period of three to five years, and it serves
as the base for the annual budget preparation process. The key component of the mid-term budgetary framework relates to
the precise estimation of expenditures resulting from the mid-term strategic policies. Total available fiscal funds in mid-term
timeframe are determined according to the macroeconomic projections. According to that, the budgetary disbursement plan
for a certain fiscal year must be aligned with the macroeconomic framework.
The Government of Montenegro had decided to, since the year 2009; introduce the Mid-term budgetary framework because of advantages of this planning model, reflected in:
• Aligning budget planning with the international standards;
• Establishing macro-fiscal discipline and stability;
• Possibility of public consumption control and management;
• Establishing and implementation of Government’s priorities in long term;
• Avoiding public finance crises; and
• Supporting the economic growth and stability.
The mid-term budgetary framework is being prepared using the “top-down” principle and it introduces financial limits
(ceiling) for budget users in multi-annual period.
Implementation presumes establishing limits in the mid-term period in cumulative amount, per economic classification
and per budget users, while the detailed overview of costs would be defined in the annual laws on budget.
The key advantage of introducing a mid-term budgetary framework is also reflected in enhanced possibility for the Government to allocate funds within the programs and organizational units, in line with its policy and priorities.
MID-TERM FRAMEWORK FOR THE PERIOD 2009-2011
According to the macro-fiscal indicators for the period 2009 – 2011, the mid term framework of the State was produced,
containing Current budget, Capital budget, and Funds budget. Share of State budget (Current budget, Capital budget, and
Funds budget) in GDP for the year 2009 is 45.06%, for the year 2010 42.52%, and for the year 2011 40.59%, showing that the
share of the State budget in GDP is decreasing, which is in line with the Economic policy of the Government. The noted data
are related to the total non-consolidated expenditures of the State budget and therefore are not compatible with data shown
in consolidated tables in Part One.
During the period 2009 – 2011, significant decrease of the State budget growth rate is predicted; from 16.4% in 2009,
to 4.8% in 2010 and 4.4% in 2011. The Current budget also shows tendency of a slower growth in this period, therefore the
growth rate in 2009 in comparison with 2008 is 9.1%, in 2010 3.8%, and in 2011 3.3%.
Reserving for the Capital budget in this period are more significant, with 15.2% for 2009 against 2008, for 2010 11.0%, and
for 2011 9.4%. Funds budget, in this period, shows the growth tendency, therefore the rate of growth in 2009 against 2008 is
21.6%, in 2010 4.8%, and in 2011 4.7%.
Structure of the State budget funds for the period 2009 – 2011 and reservations for Current budget, Capital budget and
Funds budget is given in the following table and chart:
BUDGET
TOTAL ( I+II+III)
I
CURRENT BUDGET
II
CAPITAL BUDGET
III
FUNDS
Projection 2009
1,469,162,446.02
774,402,637.36
114,107,931.28
580,651,877.38
Projection 2010
1,539,285,451.36
804,058,742.86
126,708,756.03
608,517,952.47
Projection 2011
1,607,238,587.89
831,045,798.86
138,606,708.22
637,586,080.81
2. BUDGET OF MONTENEGRO FOR THE YEAR 2009
Budget of Montenegro for the year 2009 amounts 1,469.1 million EUR and is greater than projected budget for the year
2008 for 16.4%.
CURENT BUDGET, within the Budget of Montenegro, has the great share of 52.71% and the amount of 774.4 million EUR
and is greater than projected Current budget for the year 2008 for 9.1%.
67
I
4
CURRENT BUDGET
Expenditures
41
Current expenditures (wages, mat&serv, curr.maint.,subv. Etc.)
42
43
Transfers for institutions, individuals, NGO and public sector
44
45
Loans and credits
46
Debt payment
47
Reserves
774,402,637.36
774,402,637.36
520,291,531.14
51,177,203.00
57,447,158.25
70,264,559.54
4,164,328.43
46,805,550.00
24,252,307.00
CAPITAL BUDGET, participates in the Budget of Montenegro with 7.7% and the amount 114.1 million EUR.
Funds of the capital budget in 2009 had increased for 52.3% noting the greatest increase in the structure of total State
budget.
FUNDS BUDGET participates with 39.5% and the amount 580.6 million EUR.
Funds budget in 2009 is 21.6% greater than the projected Funds budget in 2008.
2009 for 9.1%.
I
4
CURRENT BUDGET FOR YEAR 2010
Expenditures
41
42
43
44
45
Loans and credits
46
Debt payment
47
Reserves
804,058,742.86
804,058,742.86
539,783,192.39
53,224,291.12
59,745,044.58
73,075,141.92
4,330,901.56
48,677,772.00
25,222,399.28
CAPITAL BUDGET, participates in the Budget of Montenegro with 8.2% and the amount 126.7 million EUR.
Funds of the capital budget in 2010 had increased for 11% noting the increase in the structure of total State budget.
FUNDS BUDGET participates with 39.5% and the amount 608.5 million EUR.
Funds budget in 2010 is 4.8% greater than the projected Funds budget in 2009.
2010 for 4.4%.
I
4
CURRENT BUDGET FOR YEAR 2010
Expenditures
41
42
43
44
45
Loans and credits
46
Debt payment
47
Reserves
831,045,798.86
831,045,798.86
557,520,604.12
55,087,141.31
61,836,121.14
75,632,771.89
4,482,483.12
50,381,494.02
26,105,183.25
CAPITAL BUDGET, participates in the Budget of Montenegro with 8.6% and the amount 138.6 million EUR. Funds of the
capital budget in 2011 had increased for 9.4% noting the increase in the structure of total State budget. Funds budget participates with 39.7% and the amount 637.6 million EUR. Funds budget in 2011 is 4.8% greater than the projected Funds budget
in 2010.
68
2. MID-TERM FRAMEWORK PER ORGANIZATIONAL CLASSIFICATION
Aligning of the budget planning process with the international standards also includes and introduction of the mid-term
planning framework. Implementation of the mid-term budgetary framework presumes establishing of limits in mid-term
timeframe in cumulative amount, per economic classification and authorized ministries and “first level” institutions. Detailed plan of funds consumption per consumption units shall be defined by the annual laws on budget. The mid-term fiscal
framework for the period 2009 – 2011 determines a total limit of state expenditures, whereas the sum of individual expenditures per consumption units must not exceed the set limit.
CURRENT BUDGET for the year 2009 amounts 774.4 million EUR and greatest reservations of 94.7% are for executive
organs’ financing, followed by 3.4% for judicial organs’ financing, while the remaining 1.9% is dedicated for financing expenditures of operation of President, legislative and special organs.
No.
1
2
3
4
5
NAME
PRESIDENT
LEGISLATIVE ORGANS
JUDICIAL ORGANS
EXECUTIVE ORGANS
SPECIAL ORGANS
CURRENT BUDGET (1 to 5):
Projection 2009
626,508.74
8,930,333.72
26,102,318.36
733,807,858.37
4,935,618.18
774,402,637.36
No.
1
2
3
4
5
NAME
PRESIDENT
LEGISLATIVE ORGANS
JUDICIAL ORGANS
EXECUTIVE ORGANS
SPECIAL ORGANS
Projection 2010
651,569.08
9,287,547.06
27,146,411.09
761,840,172.71
5,133,042.91
804,058,742.86
No.
1
2
3
4
5
NAME
PRESIDENT
LEGISLATIVE ORGANS
JUDICIAL ORGANS
EXECUTIVE ORGANS
SPECIAL ORGANS
Projection 2011
674,374.00
9,612,611.21
28,096,535.48
787,349,578.75
5,312,699.41
831,045,798.86
BUDGET for the year 2009 amounts 580.6 million EUR and the greatest reservations of 63% are for financing of expenditures of the Retirement and disability security fund, followed by Health insurance fund 26.0%, Employment agency 5.4%,
Development fund 4.0% and Remuneration fund 1.5%.
No.
1
2
3
4
5
NAME
EMPLOYMENT AGENCY
DEVELOPMENT FUND
REMUNERATION FUND
FUNDS (1 to 5):
Projection 2009
365,835,206.33
151,059,975.00
31,526,918.50
23,316,354.95
8,913,422.60
580,651,877.38
Funds budget for the year 2010 amounts 608.5 million EUR and the greatest reservations of 63.3% are for financing of
expenditures of the Retirement and disability security fund, followed by Health insurance fund 25.8%, Employment agency
5.4%, Development fund 4.0% and Remuneration fund 1.5%.
69
No.
1
2
3
4
5
NAME
EMPLOYMENT AGENCY
DEVELOPMENT FUND
REMUNERATION FUND
FUNDS (1 to 5):
Projection 2010
385,108,614.58
157,102,374.00
32,787,995.24
24,249,009.15
9,269,959.50
608,517,952.47
Funds budget for the year 2011 amounts 637.6 million EUR and the greatest reservations of 63.7% are for financing of
expenditures of the Retirement and disability security fund, followed by Health insurance fund 25.5%, Employment agency
5.3%, Development fund 3.9% and Remuneration fund 1.5%.
No.
1
2
3
4
5
NAME
EMPLOYMENT AGENCY
DEVELOPMENT FUND
REMUNERATION FUND
FUNDS (1 to 5):
Projection 2011
406,357,416.09
162,600,957.09
33,935,575.07
25,097,724.47
9,594,408.08
637,586,080.81
Mid-term fiscal framework for the period 2009 – 2011 prescribes the total limit of state expenditures, where the sum of
individual expenditures per consumption units must not exceed the prescribed limit. This mid-term framework shall be shifted one year ahead each year to come.
The following table shows limits per authorized ministries and “first level” organs, which will be used as a base for annual
budget production.
NAME
I
1
2
3
4
70
CURRENT BUDGET
PRESIDENT
PRESIDENT OF MONTENEGRO
LEGISLATIVE ORGANS
PARLIAMENT OF MONTENEGRO
PARLIAMENT OF MONTENEGRO
REPUBLIC ELLECTION COMMISSION
FUDS FOR OPERATION OF PARLIAMENTAR PARTIES
NON-GOVERNMENTAL ORGANZATION
COUNSIL FOOR CITIZENS’ CONTROL OF POLICE WORK
JUDICIAL ORGANS
COURTS
SUPREME COURT
COURTS
PROSECUTION
EXECUTIVE ORGANS
GOVERNMENT OF MONTENEGRO
GOVERNMENT OF MONTENEGRO
ECONOMIC AND SOCIAL COUNSIL
PRIVATIZATION COUNSIL
SECRETARIAT FOR DEVELOPMENT
SECRETARIAT FOR LEGISLATION
SECRETARIAT FOR EUROPEAN INTEGRATIONS
STATE PROTOCOL
MONTENEGRO AGENCY FOR PROMOTING FOREIGN
INVESTMENT
ADMINISTRATION FOR COMMON AFFAIRS OF STATE ORGANS
FUNDS FOR SOLVING DWELLING NEEDS
AGENCY FOR ECONOMY RESTRUCTURING AND FOREIGN
INVESTMENTS
OFFICE FOR SEX EQUALITY
NATIONAL COORDINATOR FOR FIGHTING AGAINST
TRAFFICKING
Projection 2009.
Projection 2010.
Projection 2011.
774,402,637.36
626,508.74
626,508.74
8,930,333.72
8,930,333.72
26,102,318.36
26,102,318.36
733,807,858.37
26,492,972.47
804,058,742.86
651,569.08
651,569.08
9,287,547.06
9,287,547.06
27,146,411.09
27,146,411.09
761,840,172.71
27,552,691.38
831,045,798.86
674,374.00
674,374.00
9,612,611.21
9,612,611.21
28,096,535.48
28,096,535.48
787,349,578.75
28,517,035.58
OFFICE FOR SUSTAINABLE DEVELOPMENT
COMMISSION FOR PUBLIC PROCUREMENT PROCEDURES
CONTROL
CONCESSION COMMISSION
441
MINISTRY OF JUSTICE
MINISTRY OF JUSTICE
CRIMINAL SANCTIONS EXECUTION AUTHORITY
PENALTY ORGANS
MINISTRY OF INTERNAL AFFAIRS AND PUBLIC ADMINISTRATION
MINISTRY OF INTERNAL AFFAIRS AND PUBLIC
ADMINISTRATION
POLICE ACADEMY
POLICE ADMINISTRATION
NATIONAL SECURITY AGENCY
REGIONAL CENTER FOR DIVERS TRAINING
STAFFING DIRECTORATE
MINISTRY OF DEFENCE
MINISTRY OF DEFENCE
MINISTRY OF FINANCE
MINISTRY OF FINANCE
RESERVES
TAXATION AUTHORITY
CUSTOMS DIRECTORATE
REAL ESTATE AUTHORITY
ANTI-CORRUPTION AUTHORITY
MONEY LAUNDRING PREVENTION AUTHORITY
STATE PROPERTY AUTHORITY
PUBLIC PROCUREMENT DIRECTORATE
STATISTICS AUTHORITY
COMMISSION FOR DISTRIBUTION OF FORTUNE GAMES
REVENUES
COMMISSION FOR STATE AID CONTROL
PROJECT OF RETIREMENT SYSTEM UPGRADING
MINISTRY OF FOREIGN AFFAIRS
MINISTRY OF FOREIGN AFFAIRS
REPRESENTATIVE OFFICES ABBROAD
EMIGRATION CENTER
MINISTRY OF EDUCATION AND SCIENCE
MINISTRY OF EDUCATION AND SCIENCE
UNIVERSITY OF MONTENEGRO
INSTITUTION FOR INTERNATIONAL SCIENCE, EDUCATIONCULTURAL AND TECHNICAL COOPERATION
SCHOOLS AUTHORITY
MINISTRY OF CULTURE, SPORTS AND MEDIA
MINISTRY OF CULTURE, SPORTS AND MEDIA
STATE ARCHIVE
NATIONAL THEATER OF MONTENEGRO
ROYAL THEATER ZETSKI DOM
OLYMPIC COMMITTEE OF MONTENEGRO
MINISTRY OF ECONOMIC DEVELOPMENT
MINISTRY OF ECONOMIC DEVELOPMENT
PUBLIC WORKS DIRECTORATE
DIRECTORATE FOR SMALL AND MEDIUM-SIZED ENTERPRISES
DEVELOPMENT
METROLOGY AUTHORITY
SEIZMOLOGY AUTHORITY
INSTITUTE FOR STANDARDIZATION
QUALITY BOARD
ENERGY EFFICIENCY FUND
REPUBLIC MARKET INSPECTION
INTELECTUAL PROPERTY AUTHORITY
7,262,750.00
12,906,918.60
107,974,845.90
7,553,260.00
13,423,195.35
112,293,839.74
7,817,624.10
13,893,007.18
116,224,124.13
50,819,107.63
165,319,227.32
52,851,871.93
170,611,996.41
54,701,687.45
175,428,416.28
15,438,972.42
150,053,560.92
16,056,531.32
156,055,703.36
16,618,509.92
161,517,652.98
21,835,215.70
37,644,587.27
22,708,624.32
39,150,370.76
23,503,426.18
40,520,633.74
71
5
DIRECTORATE FOR COMPETITION PROTECTION
MONTENEGRO ACREDITATION BODY
MINISTRY OF TRAFFIC, NAVY AND TELECOMMUNICATIONS
MINISTRY OF TRAFFIC, NAVY AND TELECOMMUNICATIONS
DIRECTORATE FOR MARITIME SECURITY
TRAFFIC DIRECTORATE
CIVIL AIRFORCE DIRECTORATE
MINISTRY OF AGRICULTURE, FORESTRY AND WATERS
MINISTRY OF AGRICULTURE, FORESTRY AND WATERS
VETERINARIAN AUTHORITY
FOREST AUTHORITY
WATERS AUTHORITY
TOBACCO AGENCY
MINISTRY OF TOURISM AND ENVIRONMENTAL PROTECTION
MINISTRY OF TOURISM AND ENVIRONMENTAL PROTECTION
NATIONAL TOURISM ORGANIZATION OF MONTENEGRO
WEATHER FORCASTING AUTHORITY
CENTER FOR ENVIRONMENTAL TOXICOLOGY RESEARCH
PUBLIC ENTERPRISE FOR NATIONAL PARKS OF MONTENEGRO
INTEGRAL MANAGEMENT OF SKADARSKO LAKE EKOSYSTEM
MINISTRY OF HEALTH, LABOR AND SOCIAL CARE
MINISTRY OF HEALTH, LABOR AND SOCIAL CASE
CENTERS FOR SOCIAL SERVICES
AUTHORITY FOR MEDICATIONS AND MEDICAL ACCESSORIES
AUTHORITY FOR REFUGIES
PROJECT OF HEALTH SYSTEM IMPROVEMENT
RED CROSS
MINISTRY OF HUMAN AND MINORITY RIGHTS PROTECTION
MINISTRY OF HUMAN AND MINORITY RIGHTS PROTECTION
SPECIAL ORGANS
COMMISSION FOR ESTABLISHING CONFLICT OF INTEREST
34,889,110.89
28,976,149.03
10,310,543.63
70,140,351.53
1,006,295.04
4,935,618.18
247,846.06
36,284,675.33
30,135,194.99
10,722,965.38
72,945,965.59
1,046,546.84
5,133,042.91
257,759.90
37,554,638.97
31,189,926.82
11,098,269.17
75,499,074.39
1,083,175.98
5,312,699.41
266,781.50
II
1
2
3
4
5
PROTECTOR OF HUMAN RIGHTS AND FREEDOMS
STATE AUDITING INSTITUTION
ACADEMY OF SCIENCES AND ARTS OF MONTENEGRO
TRANSFERS FOR MUNICIPALITIES
NOR FIGHTERS UNION
STATE FUNDS
EMPLOYMENT AGENCY
DEVELOPMENT FUND
REMUNERATION FUND
383,760.85
1,056,138.74
1,262,372.54
1,901,900.00
83,600.00
580,651,877.38
365,835,206.33
151,059,975.00
31,526,918.50
23,316,354.95
8,913,422.60
399,111.28
1,098,384.29
1,312,867.44
1,977,976.00
86,944.00
608,517,952.47
385,108,614.58
157,102,374.00
32,787,995.24
24,249,009.15
9,269,959.50
413,080.18
1,136,827.74
1,358,817.80
2,047,205.16
89,987.04
637,586,080.81
406,357,416.09
162,600,957.09
33,935,575.07
25,097,724.47
9,594,408.08
Prepared by:
Slobodanka - Mila Popović, Coordinator of section for budgetary operations
Radovan Živković - Independent Advisor I
Tamara Gačević - Independent Advisor I
Vladislav Karadžić - Independent Advisor I
72
CONSOLIDATED PUBLIC
EXPENDITURE IN
MONTENEGRO, DURING
JANUARY – JUNE 2008 PERIOD
Consolidated public expenditure during the period January – June 2008 has been estimated at 610,98 mil. €. The estimated level of public expenditure has been financed from taxes, amounting to 431,89 mil. €, fees - 21,83 mil. €, contributions
- 147,21 mil. €, compensations - 57,49 mil. € and other current revenues - 33,95 mil. €. Ministry of Finance estimated implementation of local governments’ budgets for the first six months of 2008, based on municipal plans for 2008, budgets during
previous years and during the 1st quarter of 2008. Further more, transfers between PIO (retirement and disability security)
Fund and Healthcare insurance Fund, amounting to 11,66 mil. € have been excluded, relating to contributions aimed at health insurance of retired persons.
Current public revenues have been estimated at 692,37 mil. € or 23,87% of the estimated GDP for 2008 (2.900,00 mil. €).
With regards to public revenue structure, taxes play the most prominent role – accounting for 14,89 % of GDP, followed by
contributions - 5,08 % of GDP.
The following table details current public revenue generation, for the first six months in 2008, according to millions of
Euros and GDP:
DESCRIPTION
I-VI 2008
mil. €
% of GDP
CURRENT REVENUES
692.37
23.87
Taxes
Real estate transfer tax
Local taxes
Customs and duties
Contributions
Retirement and disability security contribution
Healthcare insurance contribution
Unemployment security contribution
Fees
Administrative fees
Court fees
Residential fees
Local utility fees
Other fees
Compensations
Compensation for using common interest goods
Compensation for using natural wealth
Construction land use compensation
Compensations for ecology
Compensation for gambling
Public road use compensation
431.89
62.35
38.04
20.33
199.62
18.05
53.55
35.91
4.03
147.21
91.69
51.43
4.10
21.83
8.24
4.52
0.19
6.29
2.59
57.49
4.59
1.25
8.86
1.68
2.59
2.12
14.89
2.15
1.31
0.70
6.88
0.62
1.85
1.24
0.14
5.08
3.16
1.77
0.14
0.75
0.28
0.16
0.01
0.22
0.09
1.98
0.16
0.04
0.31
0.06
0.09
0.07
73
Road use compensation
Other compensations
Other revenues
Capital revenues
Revenues generated by authorities’ activities
Other revenues
Loan repayment revenues
3.33
33.07
27.14
3.63
4.73
10.36
8.41
6.81
0.11
1.14
0.94
0.13
0.16
0.36
0.29
0.23
Consolidated public expenditure for the first six months in 2008 have been estimated at 21,07% of GDP, while after the
second consolidation level (when contributions paid by employers are excluded), this figure amounts to 20,29% of GDP. Current public expenditure (consolidated expenditures reduced for capital expenditures of the current budget, Montenegro’s
capital budget, state funds and funds of the local governments) during the first six months amounted to 525,04 mil. € or
18,10% of GDP.
The following table displays implementation of consolidated public expenditures for the first six months of 2008, according to millions of € and GDP.
DESCRIPTION
EXPENDITURES - I consolidation level
EXPENDITURES- II consolidation level
CURRENT PUBLIC EXPENDITURES
Gross incomes and contributions paid by the employers
Net incomes
Income tax
Contributions paid by employees
Contributions paid by employers
Taxation fee
Current maintenance
Interests
Rent
Subventions
Other expenditures
Social insurance transfers
Social protection rights
Surplus staff funds
Retirement and disability insurance funds
Other health protection rights
Other health insurance rights
Transfers to institutions, individuals, NGOs and public sector
Transfers to public institutions
Transfers to non-governmental organizations
Transfers to individuals
Transfers to municipalities
Loans and credits
Guarantee repayments
Reserves
MONTENEGRO’S BUDGET
I-VI 2008
mil. €
% of GDP
610.98
588.55
525.04
306.27
172.90
101.47
19.43
26.93
22.42
2.64
13.07
81.12
11.89
10.53
3.30
8.60
4.85
154.17
20.83
4.98
116.95
7.66
3.75
50.80
33.52
3.31
8.69
0.00
5.28
69.26
16.67
6.97
0.02
6.81
21.07
20.29
18.10
10.56
5.96
3.50
0.67
0.93
0.77
0.09
0.45
2.80
0.41
0.36
0.11
0.30
0.17
5.32
0.72
0.17
4.03
0.26
0.13
1.75
1.16
0.11
0.30
0.00
0.18
2.39
0.57
0.24
0.00
0.23
Budgetary source incomes for the period January – June 2008. amount to 583,61 mil. € or 20,12% of the GDP.
Montenegro’s source income structure during this period is as follows:
74
Montenegro’s and state funds’ consolidated budgetary balance
DESCRIPTION
CURRENT REVENUS
Taxes
Customs and duties
Contributions
Retirement and disability insurance contribution
Health insurance contribution
Unemployment insurance contribution
Fees
Administrative fees
Court fees
Residential fees
Other fees
Compensations
Compensation for using natural wealth
Compensation for ecology
Compensation for organizing gambling games
Road use compensation
Other compensations
Other revenues
Capital revenues
Other revenues
Revenues from load repayments
I-VI 2008
mil €
% of GDP
583.61
386.51
49.26
38.04
6.10
199.62
53.55
35.91
4.03
147.21
91.69
51.43
4.10
13.94
6.77
4.52
0.06
2.59
13.25
2.30
1.25
1.68
2.59
3.33
2.09
20.65
3.63
4.30
7.65
5.06
2.05
20.12
13.33
1.70
1.31
0.21
6.88
1.85
1.24
0.14
5.08
3.16
1.77
0.14
0.48
0.23
0.16
0.00
0.09
0.46
0.08
0.04
0.06
0.09
0.11
0.07
0.71
0.13
0.15
0.26
0.17
0.07
Incomes generated from taxation amount to 386,51 mil. € or 13,33% of GDP. Incomes generated from fees amount to
13,94 mil. €, compensation incomes are 13,25 €. Incomes from various contributions account for 147,21 mil. € or 5,08% of
GDP. Other current budgetary revenues amount to 22,70 mil. €.
Consolidated budgetary and state funds’ expenditures for the first six months of the current year amount to 505,49 mil.
€ or 17,43% of GDP.
Montenegro’s and state funds’ consolidated budgetary balance
DESCRIPTION
EXPENDITURES - II consolidation level
TEKUĆA BUDŽETSKA POTROŠNJA
Gross incomes and contributions paid by employers
Net incomes
Income tax
Taxation fee
I-VI 2008
mil. €
% of GDP
505.49
485.23
474.62
270.83
156.86
92.33
17.68
24.20
20.26
2.40
10.68
17.43
16.73
16.37
9.34
5.41
3.18
0.61
0.83
0.70
0.08
0.37
75
Current maintenance
Interests
Rent
Subventions
Other expenditures
Surplus staff funds
Retirement and disability insurance rights
Health protection rights
Other rights relating to health insurance
Transfers to non-governmental institutions
Loans and credits
Guarantee repayment
Reserves
69.47
9.56
10.21
3.06
8.01
2.96
154.01
20.74
4.92
116.95
7.66
3.75
38.94
29.68
1.88
7.39
14.19
16.67
6.19
0.02
4.63
2.40
0.33
0.35
0.11
0.28
0.10
5.31
0.72
0.17
4.03
0.26
0.13
1.34
1.02
0.06
0.25
0.49
0.57
0.21
0.00
0.16
LOCAL GOVERNMENTS
Estimated consolidated expenditures of local governments for the first six months of 2008 amount to 105,49 mil. or 3,64%
of GDP. Expenditures has been financed from taxes, accounting for 5,38 mil. €, fees – 7,89 mil. €, compensations – 44,24 mil
€ and other current revenues – 11,25 mil. €. The total current revenues during the first two quarters in 2008 have been estimated at 108,76 mil. € or 3,75% of GDP.
Local governments’ consolidated balance
DESCRIPTION
CURRENT REVENUES
Taxes
Local taxes
Fees
Administrative fees
Residential fees
Local utility fees
Compensations
Compensation for construction land use
Local road use compensation
Other compensations
Other incomes
Other incomes
Revenues from loan repayments
EXPENDITURES - II consolidation level
LOCAL GOVERNMENTS’ CURRENT EXPENDITURES
Gross incomes and compensations paid by employers
76
I-VI 2008
mil. €
108.76
45.38
13.10
14.23
18.05
7.89
1.47
0.14
6.29
44.24
2.28
8.86
2.12
30.98
6.49
0.43
2.71
3.35
4.76
105.49
103.32
50.42
35.44
16.03
% of GDP
3.75
1.56
0.45
0.49
0.62
0.27
0.05
0.00
0.22
1.53
0.08
0.31
0.07
1.07
0.22
0.01
0.09
0.12
0.16
3.64
3.56
1.74
1.22
0.55
Net incomes
Income tax
Taxation fee
Current maintenance
Interest
Rent
Subventions
Other expenditures
Surplus staff funds
Transfers to non-governmental organizations
Transfers to public companies
Loans and credits
Reserves
Stanko Jeknić
Radovan Živković
9.14
1.75
2.73
2.17
0.24
2.39
11.65
2.33
0.32
0.24
0.59
1.89
0.16
0.09
0.07
11.86
3.85
1.43
1.30
5.28
55.07
0.78
2.18
0.32
0.06
0.09
0.07
0.01
0.08
0.40
0.08
0.01
0.01
0.02
0.07
0.01
0.00
0.00
0.41
0.13
0.05
0.04
0.18
1.90
0.03
0.08
Vladislav Karadžić
Prepared by:
Dr. Stanko Jeknić – Independent adviser I
Radovan Živković – Independent adviser I
Vladislav Karadžić – Independent adviser I
77
LEASING MARKET
- REPORT FOR FIRST QUARTER 2008 1. Leasing – specific features in comparison with other financing forms
Both theory and practice list numerous advantages of leasing over the other financing forms, embodied in the fact that the
leasing enables procurement of necessary equipment without employing current assets, which opens the possibility for the subject to use the cash for procurement of supplies, salaries, advertising and other business costs, as well as for the new business
opportunities. At the same time, this financing form is appropriate for newly founded small and medium-sized companies and
entrepreneurs and any other users with weak credit capacity, i.e. the users without disposal of assets to be offered as the collateral for the credit. The leaser makes the decision on granting financing not only according to the leaseholder’s credit capacity
(which is a dominant factor when deciding upon granting bank loan and securing the funds required by the banks), but also
according to the evaluated degree of marketability of the leasing subject, i.e. the possibility for the item to be sold in the market, for the real price and without difficulties. At the same time, leasing provides for payment of the product as it produces – in
time. Namely, cash payment of the equipment to be used by the subject in its business is similar to payment for the employee
in advance, for the time he/she would be working for the company. In that sense, leasing enables payment of monthly rate for
the equipment to be used in business activities. The previously stated facts can be characterized as the financial reasons, determining the leasing against other financing forms.
Procedure of financing granting is in the case of financial leasing usually shorter than the one for the traditional financing
forms. One of the reasons for this is that the additional loan securing (e.g. mortgage) are usually not required, and leasers often
have the established business cooperation with the vendors for leasing subjects. Everything listed brings up total decrease in
transaction costs.
Additional advantage of the financial leasing, especially in the case of newly founded enterprises, is the option that the leaser can procure the leasing subject under favorable conditions, based on cooperation with leasing subject vendor and turnover
the vendor achieves over it. Besides that, both leaser and leasing user may, within their arrangement, agree for the services of
maintenance, servicing, parts replacing, technical and technological upgrading, and training for the leasing user’s staff to use
the leasing subject.
2. Market participants
There are four leasing companies in the leasing market of Montenegro: Hypo Alpe Adria Leasing, S-Lesing, Porsche Leasing
and NLB Leasing. Simultaneously, two banks, within their business activities, through special departments established within
their systems, offer the services of leasing: Prva banka Crne Gore and Opportunity banka.
Private and juridical persons in Montenegro are being offered the financial and operative leasing. Services of financial and
operative leasing are being offered by Hypo Alpe Adria leasing, S- leasing and NLB leasing, while other leasers are dealing with
the financial leasing. Here it should be noted that three leasing companies also offer real estate leasing - Hypo Alpe Adria Leasing, NLB leasing and Opportunity banka, while remaining three leasing companies offer only movable assets leasing.
Ownership structure of the leasers in Montenegro is such that all leasing companies are, directly or indirectly, in foreign
ownership, except for the Prva banka Crne Gore, which is predominantly locally owned.
3.1. Leasing users
Leasing users in Montenegro can be private persons, juridical persons and entrepreneurs. Chart 1 shows the number of signed contracts for the period from 2006 to first quarter 2008, per leasing users.
78
3. Placement structure
3.1. Leasing users
Leasing users in Montenegro can be private
juridical
persons
and entrepreneurs.
Bulletinpersons,
of the Ministry
of Finance
of Montenegro/April
- June 2008
Chart 1 shows the number of signed contracts for the period from 2006 to first quarter
2008, per leasing users.
Grafik
1: Primaoci
lizinga
Chart
1: Leasing
users
750
Broj ugovora
Number
of
contracts 500
527
288
250
0
129
45
1
115
0
I Q 2006
I Q 2007
Juridical
Pravna lica
Private
Fiziþka lica
173
1
I Q 2008
Preduzetnici
Entrepreneurs
persons a total of 4339 leasing contracts were
During the period from 2006 topersons
first quarter 2008,
signed in Montenegro.
At the end of first quarter 2008, the total of 701 contracts on leasing were signed, with 75% going to the contracts signed
with the juridical persons, and 24.6% going to the contracts signed with the private persons. Minor percentage of the contracts
was signed wit the entrepreneurs. In comparison with the first quarter 2007, the number of signed contracts notes an increase
3.2.
Value
number
of leasing
contracts
type
At the
endand
of first
quarter
2008, the
total ofper
701leasing
contracts
on leasing were signed, with
of 74%.
75% going to the contracts signed with the juridical persons, and 24.6% going to the
The
latest data
on with
number
value
of contracts
to of
leasing
type, i.e.was
operative
contracts
signed
the and
private
persons.
Minoraccording
percentage
the contracts
signed
or
financial
leasing
are
still
noting
the
trend
that
the
financial
leasing
is
much
more
wit number
the entrepreneurs.
In comparison
with thetype
first quarter 2007, the number of signed
3.2. Value and
of leasing contracts
per leasing
present
in notes
Montenegro.
These
contracts
an increase
of data
74%.are also influenced by the fact that of six providers of
The latest data
on number
and value
according
to leasing of
type,
i.e. operative
or financial
leasing
are still the
noting
leasing
services,
onlyof contracts
three offer
the services
operative
leasing.
Chart
2 shows
the trend that the financial leasing is much more present in Montenegro. These data are also influenced by the fact that of six
overview of number and value of signed contracts per leasing type for the period from
providers of leasing services, only three offer the services of operative leasing. Chart 2 shows the overview of number and value
2006
toleasing
first quarter
of signed contracts
per
type for 2008.
the period from 2006 to first quarter 2008.
During the period from 2006 to first quarter 2008, a total of 4339 leasing contracts were signed in Montenegro.
Chart
2: Leasing
types
Grafik
2: Tip lizinga
Milioni
600
Broj ugovora
Number
of
500
contracts
400
300
200
100
0
I Q 2006
Operative leasing
Operativni
lizing
I Q 2007
Financial
leasing
Finansijski
lizing
Vrijednost ugovora
45Million
40
35
30Contract
25value
20
15
10
5
0
700
I Q 2008
Contract
valueugovora
Vrijednost
At the end of first quarter 2008, 90% of total number of contracts signed were the contracts on financial leasing, while the
remaining 10% At
werethe
the end
contracts
on operative
of first
quarterleasing.
2008, 90% of total number of contracts signed were the
contracts on financial leasing, while the remaining 10% were the contracts on operative
Regarding the number of contracts, the operative leasing had in the first quarter 2008 noted an increase of 20% in regard to
leasing.
the first quarter 2007. Increase of number of contracts on financial leasing had in the first quarter 2008 registered an increase
rate of 82%.
Regarding the number of contracts, the operative leasing had in the first quarter 2008
noted an increase of 20% in regard to the first quarter 2007. Increase of number of
contracts on financial leasing had in the first quarter 2008 registered an increase rate of 79
82%.
Value of the contracts on financial leasing had, at the end of first quarter 2008, exceeded the value of 38 million EUR, which
is in comparison with the same period in 2007, an increase of 209%, while value the contracts of operative leasing amounted 4
million EUR, which is an increase of 96% in comparison with the same period previous year.
3.3. Leasing
subject
Total value of contracts
on leasing
for the period 2006 to first quarter 2008 amounts 223.8 million EUR, or 7.72% of projected
GDP for year 2008.
The Law on financial leasing in Montenegro defines the subjects of the financial leasing
contract the movable non-consumable items and real estates. Chart 3 shows overview of
number
of contracts
in financial
leasing
subject
for the the
period
from
2006 to
The Law on financial
leasing
in Montenegro
defines theleasing
subjectsper
of the
financial
leasing contract
movable
non-consumable items and realfirst
estates.
Chart
3
shows
overview
of
number
of
contracts
in
financial
leasing
per
leasing
subject
for
the period
quarter 2008.
3.3. Leasing subject
from 2006 to first quarter 2008.
Grafik
Predmet
lizinga
Chart
3: 3:
Leasing
subject
300
Broj ugovora
Number
of
contracts
250
200
150
100
50
0
I Q 2006
Putniþki automobili
Cars
Graÿevinske mašine
i oprema
Construction
equipment
Nekretnine
Real
estates
I Q 2007
I Q 2008
Privredna vozila
(kamioni,(trucks,
autobusibusses
i dostavna
Commercial
vehicles
andvozila)
delivery)
Brodovi
Ships
Structure of placement
subjectper
at the
end ofsubject
first quarter
2008
shows
that the
leasing2008
of cars
was the
most
doStructureper
ofleasing
placement
leasing
at the
end
of first
quarter
shows
that
the
minant in the previous period with 66.5% share in the total number of placements, while the leasing of commercial vehicles
leasing of cars
the most
dominant
inReal
the estate
previous
period
66.5% share
shareinintotal
thenumber
total
had a share of approximately
20%, was
construction
equipment
11%.
leasing
showswith
the smallest
number
of
placements,
while
the
leasing
of
commercial
vehicles
had
a
share
of
of placements with as little as 2.71%.
However, if weapproximately
analyze the value20%,
of signed
contracts perequipment
leasing subject,
than
the real
estate
leasing shows
shows the
share
construction
11%.
Real
estate
leasing
thegreatest
smallest
with approximately
44%in
in total
the first
quarterof
2008,
followed by
the car
leasingaswith
share of 22% of total structure, commercial
share
number
placements
with
as little
2.71%.
vehicles with share of 17.5%, and the construction equipment leasing share 15.8%.
Regarding the significant conditions from the leasing contract, predominantly interest rate and average leasing duration –
However,
if we the
analyze
offirst
signed
contracts
leasing
subject,8 and
than9%,the
realthe
the average interest
rates had, during
periodthe
fromvalue
2006 to
quarter
2008 beenper
on the
level between
while
average leasing duration
was
between
50
and
60
months
for
movables
and
130
and
more
months
for
the
real
estates.
estate leasing shows the greatest share with approximately 44% in the first quarter 2008,
followed by the car leasing with share of 22% of total structure, commercial vehicles with
4. Instead of conclusion
share of 17.5%, and the construction equipment leasing share 15.8%.
Presented data indicate that the leasing is becoming very common financing form, both for juridical and private persons
Regarding the significant conditions from the leasing contract, predominantly interest rate
in Montenegro. Financial leasing is one of the ways to finance investment in assets; therefore it appears to be an alternative to
average
thebonds.
average
rates had,
during
thecompared
period from
2006
company’s funds,and
banking
loans leasing
and debtsduration
by issuing–the
Thisinterest
form of financing
is often
being
with banking
loans, since thoseto
have
some
similar characteristics
(payment
per predefined
interest
However,
significant
characfirst
quarter
2008 been on
the level
between rates,
8 and
9%,…).while
the the
average
leasing
teristics, essentially
separating
leasing
from
other
types
of
financing
are:
financing
is
always
granted
for
the
specific
item,
produration was between 50 and 60 months for movables and 130 and more months for the
curement of the item is being performed by the leaser instead of leasing user; leaser is the owner of the item during the entire
real estates.
period of the contract on leasing duration; leasing subject can simultaneously be a collateral, therefore the leasers usually do
not require any other forms of security.
Analyzed data for the leasing market in Montenegro indicate that the cars and real estates are the most common leasing subjects – first by the4.number
of contracts,
and later by the value of contracts signed. Users of leasing are still the juridical persons,
Instead
of conclusion
indicating that the leasing is still a very favorable form of financing for the newly founded small and medium-sized companies
and entrepreneurs, as well as that the economy of Montenegro, with the growth based in fact on SME sector, it is beyond doPresented
indicate
thatbethe
leasing
becoming
very common
financing
form,
both
ubt that the leasing
shall in thedata
upcoming
period
very
popularissource
for providing
funds for business.
At the
same
time,
for juridical
andmarket
private
persons insoMontenegro.
Financial
leasing
the ways
to
the legislative framework
for leasing
is established,
the leasing providers
have the
libertyisofone
theirof
business
activities,
in the sense of lack
of introducing
measures
for mandatory
reserving
funds to
and
limiting the
growth of placements.
finance
investment
in assets;
therefore
it appears
bemeasures
an alternative
to company’s
funds,
Therefore, in suchbanking
situation, loans
leasing and
companies
to offerthe
theirbonds.
servicesThis
for lower
prices,
more efficient
or expand
debtsare
byable
issuing
form
of be
financing
is often
beingthe
offer. In that sense, we can here conclude that the favorable business environment exists in Montenegro for further growth and
compared
development of this
market. with banking loans, since those have some similar characteristics (payment per
predefined rates, interest …). However, the significant characteristics, essentially
Bojana Bošković,
Senior Advisor
80

Bulletin of the Ministry of Finance

Transcription

Similar documents

Untitled

Ministry of Sound and its worldwide evolution to the present

international conference places on the edge creating a sense of

An exclusive new development at the entrance to the Bay of Kotor

introduction to acacia hill apartments

Registration Form COFRET ` 10

Donzi 27 ZR - Azimut Yachts in Montenegro

Invest in SANSKI MOST 503 22 13 3,8 75