Montenegro’s budget revenues for 2026 have exceeded expectations, but rising public spending is leading to a budget deficit. From January to May, the government collected €1.187 billion in revenue, marking an increase of €90 million or 8.2% compared to the same period in 2025.
The revenue surpassed the five-month budget target by €24.4 million, or 2.1%. The Ministry of Finance attributes this positive performance to heightened economic activity, increased employment and wages, as well as improved tax compliance.
However, expenditures have surged even more significantly. During the first five months, budget spending reached €1.284 billion, which is an increase of €117.7 million or 10.1% year-on-year. This rise in spending is primarily linked to greater mandatory expenditure obligations.
This discrepancy has resulted in a budget deficit of €96.8 million, equivalent to 1.13% of projected GDP. Notably, spending was also €106.4 million, or 7.7%, below plan, indicating that some obligations may be executed later in the year and could alter the fiscal landscape.
The data from early 2026 underscores a significant fiscal challenge for Montenegro. While stronger employment and economic activity are enhancing the revenue base, mandatory spending commitments are increasing at a pace that is outstripping revenue gains.
This situation shifts the focus of policy discussions; the primary issue is not weak tax collection since revenues are performing well above expectations. Instead, the challenge lies in managing the rapid growth of structural and mandatory expenditures.
If revenue growth continues robustly while spending growth slows, there may be potential for an improved fiscal position later in the year. Conversely, if expenditures keep escalating faster than income, strong economic activity alone may not suffice for fiscal consolidation.
The current budgetary situation in Montenegro illustrates a crucial point: high revenue performance does not guarantee fiscal balance if spending commitments grow more rapidly.
