According to the data of the Ministry of Finance, in the first quarter of 2023, total budget revenues were at the level of EUR 545.7 million, which is 13% more than the plan. Compared to the same period in 2022, revenues recorded a growth of 31%. Tax revenues represent the most significant item of budget revenues (63.5%) and were 6% higher than planned tax revenues. The growth of tax revenues was mostly influenced by the growth of VAT, which accounts for 64% of tax revenues and which compared to the planned amount was higher by 13.8%, while compared to the first quarter of 2022 it was higher by 29.4%. VAT growth was primarily driven by price growth, given that the inflation rate in the first quarter was 13.9%. In addition, in the first quarter, an increase in revenue from excise taxes was recorded. The termination of the Decision on reducing the amount of excise duty for the sale of unleaded gasoline and gas oils contributed to this positive trend of excise revenue, which in the observed period increased by 2.9% compared to the first quarter of 2022 and 5.2% compared to the planned excise revenue. During the previous year, the Government adopted a reduction in excise duty of 25%, but reduced the reduced percentage to 15% at the beginning of the year, which was valid until the end of February 2023. Due to greater foreign trade, where the import of goods recorded a growth of 26% in the observed period, revenues from tax on international trade and transactions in the observed period amounted to EUR 11.1 million, which represents an increase of 56.3% compared to the first quarter of 2022.
On the other hand, personal income tax was reduced by 53.2% in the comparative period, while compared to the plan, these revenues are lower by 13.3%. Also, the corporate income tax recorded a decrease compared to the planned revenues, which can be attributed to administrative reasons and deadlines for the payment of these taxes by companies. The contribution revenues were primarily affected by the decisions to increase wages in the public sector during the first quarter, as a result of which contributions for pension and disability insurance increased by 43% compared to the first quarter of 2022. The growth of budget revenues was also influenced by the growth of duties, fees and other revenues, as well as grants and transfers. Previously, Montenegro received financial support from the EU for overcoming the energy crisis in the amount of EUR 30 million, which affected the growth of budget revenues, too.
Along with the growth of budget revenue, in the first quarter of 2023, an increase in consumption compared to the first quarter of the previous year was also recorded (7.9%). However, compared to the budget plan for the first quarter, total expenditures were 11% lower and amounted to EUR 479.9 million.
Due to the growth of wages in the public sector, expenditures for the gross salaries and contributions increased for 18.3% in comparison with the same period from the previous year, while these expenditures were higher by 3% compared to the plan. Also, an important category of budget expenditures are social security transfers (in the first quarter of 2023, the share in total expenditures was at the level of 40.2%) increased by 35.1% compared to the first quarter of 2022. The increase in social benefits during the previous period, as in the number, as well as in volume, contributed to the growth of this budget category. Social security (rights in the field of social protection) more than doubled in the comparative period, while expenditures for pension and disability insurance increased by 20.2%. In contrast to the growth of wages and social transfers, capital expenditures were reduced by 58% in the observed period. Compared to the plan, only 26.2% of capital expenditures were realized (EUR 15 million out of the planned EUR 57.2 million). This can certainly affect development in the following period, given that the multiplied effects of potential investments are lost. The higher growth of income compared to the growth of expenses resulted in a surplus in the budget, which in the first quarter amounted to EUR 65.8 million.
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