Montenegro’s fuel excise revenue decreased by approximately €6.1 million during the peak tourism months of June to August compared to the previous year. This decline is attributed to temporary tax reductions implemented to alleviate rising fuel prices, which have impacted one of the government’s key consumption-related revenue sources.
According to data from the Customs Administration, excise revenue from mineral oils and derivatives totaled around €59.19 million for the summer quarter, down from about €65.28 million in the same period of 2025. The reduction in revenue occurred despite record levels of tourism and increased airport activity.
The lower revenue figures should not be interpreted as a decline in fuel consumption, as changes in excise rates have significantly influenced the tax collected per litre. June saw the most substantial year-on-year drop, with fuel excise receipts plummeting by 23.6%, equating to roughly €4.94 million, bringing total collections to €15.97 million. In July, collections reached €21.11 million, reflecting a decrease of about 2.4%, while August revenues were around €22.11 million, down approximately 2.5%.
The fiscal implications of using excise policy to manage pump prices are evident in these figures. Montenegro has made several adjustments to fuel excise duties in response to fluctuations in international oil prices, with recent cuts of 40% on diesel and 30% on petrol aimed at mitigating price shocks. Despite these reductions, pump prices for diesel rose to €1.95 per litre, while Eurosuper 95 and Eurosuper 98 reached €1.74 and €1.78, respectively.
This tax reduction has provided some relief for households and businesses by lowering prices compared to what they would otherwise be charged, but it has simultaneously reduced government revenue. The impact of prolonged or repeated tax reductions could significantly affect annual revenue streams, particularly given that the summer figures already indicate a gap exceeding €6 million.
This amount is relatively small within the context of Montenegro’s overall budget but becomes significant when considered alongside other fiscal pressures. The government is currently preparing substantial reforms concerning wages and payroll taxes slated for 2027, alongside financing for infrastructure projects, social spending, and efforts related to EU membership.
The government has so far benefited from robust overall tax collection, with Gross Tax Administration receipts reaching nearly €1.2 billion in the first eight months of 2026, an increase of around €98 million compared to the prior year. VAT revenue approached €380 million, providing some capacity to absorb the decline in fuel-excise receipts.
However, it is essential to note that VAT and excise taxes respond differently; VAT increases with rising nominal prices and consumption, whereas discretionary excise reductions intentionally forfeit revenue. The government must differentiate between lost revenue due to weakened economic activity and that lost due to changes in tax policy.
The current data suggests that the latter plays a significant role, especially given strong tourism activity throughout the summer and record airport traffic levels. Typically, these conditions would bolster fuel-excise receipts under standard tax rates; however, the observed revenue decline indicates a substantial fiscal effect from rate changes.
The cuts offer short-term relief for businesses directly affected by diesel prices, including transport companies and construction contractors, where fuel costs can quickly impact operating margins. Additionally, road-fuel prices factor into travel costs for visitors arriving by car from neighboring countries such as Serbia and Bosnia and Herzegovina.
This situation creates an inflationary channel as higher diesel prices influence food costs and other goods transported across Montenegro. Consequently, the government has a vested interest in intervening when fuel prices spike rapidly; however, determining how much revenue to sacrifice remains a challenge.
Broad excise reductions benefit all consumers but are less targeted than direct support for vulnerable groups or sectors. While simpler to administer and immediately visible at the pump, frequent adjustments complicate public finance forecasting since budget planners cannot rely on stable annual excise yields if rates fluctuate with international oil price movements.
This uncertainty is particularly relevant considering Montenegro’s heavy reliance on petroleum product imports; global oil prices directly impact domestic pump prices without much local control over commodity costs. The government’s primary tools are taxation and strategic reserves.
Montenegro is currently establishing mandatory oil-product reserves intended to cover 90 days of supply, with approximately 40% of this target already accumulated. These reserves primarily aim at ensuring supply security rather than managing retail prices.
The recent summer figures highlight the cost associated with these policies: while fuel-excise revenue remains a crucial public income source at about €59.2 million, the year-on-year decline during a peak traffic season raises significant fiscal questions regarding the sustainability of ongoing tax cuts amidst high energy prices.
The future fiscal landscape will depend on whether energy prices stabilize and full excise rates can be reinstated without major repercussions on annual revenue or if continued high prices necessitate further tax reductions that could lead to larger cumulative costs over time.
Thus far, Montenegro has managed this through robust overall tax collection; however, there is a risk that temporary measures may evolve into structural expenses amid preparations for larger wage reforms and commitments related to investment and EU accession.
