Montenegro’s state budget recorded a deficit of €33.2 million in January, which is approximately 0.4% of the nation’s projected GDP, according to data released by the Ministry of Finance. This early-year fiscal imbalance is typical as government expenditures usually surpass revenues due to the timing of tax payments and the initiation of annual budget execution.
Despite the deficit, total revenues collected in January showed a moderate increase compared to the same month last year. The total budget revenue reached €162.6 million, accounting for about 1.9% of estimated GDP, which marks a €5.9 million rise or a 3.8% increase in revenue collection year-on-year.
The primary contributor to revenue growth was value-added tax (VAT), which generated €103.6 million, an increase of €7 million compared to January 2025, reflecting ongoing consumer spending and activity in the service sector. Excise duties also saw notable growth, with revenues amounting to €25.9 million, up by €2.2 million or 9.3% from the previous year. Notably, excise taxes on mineral oils and petroleum derivatives contributed €14.9 million, marking an 11.5% increase.
Additionally, excise taxes on tobacco products yielded €8.3 million, showing an 8.6% rise year-on-year. Personal income tax revenues grew slightly to €3.1 million compared to January 2025; however, corporate income tax revenues fell to €2.1 million, down by €2.7 million from the same month last year due to seasonal payment dynamics.
Social security contributions also experienced a slight decline, totaling €15 million, which is €1.6 million lower than in January of the previous year. The Ministry of Finance indicated that the full potential for revenue collection has yet to be realized as the Tax Administration is implementing a new Integrated Revenue Management System (IRMS), aimed at modernizing tax administration processes.
The transition to this new system required temporary extensions for filing tax returns, impacting budget inflows during January. Authorities anticipate that once fully operational, this system will enhance efficiency and transparency within tax processing.
In terms of expenditures, January saw a total of €195.9 million spent, which corresponds to roughly 2.3% of estimated GDP. While expenditures exceeded revenues for the month, they were reported to be €80.2 million lower than initially planned due to slower realization of certain spending items early in the fiscal period.
Compared to January of the previous year, expenditures rose significantly by €41.5 million or 26.9%, partly due to last year’s reliance on temporary financing while awaiting budget law adoption.
Current expenditures for January stood at €70.8 million, remaining below planned levels across various categories such as operational costs and administrative expenses. Gross wages and employer contributions for public sector employees totaled €59.1 million, reaching 96.3% of the planned amount for the month.
Social protection transfers were significant at €88.5 million, representing an increase of €6.3 million from January of the previous year. Transfers to institutions and individuals amounted to €15.9 million but fell short of monthly plans due to timing issues related to payments and administrative procedures.
Montenegro’s public finances have faced scrutiny due to rising public debt and structural fiscal pressures in recent years; the budget deficit in 2025 reached €321.6 million or about 3.96% of GDP as a result of increased expenditures and social transfers.
However, ongoing fiscal consolidation efforts alongside steady economic growth have contributed to stabilizing debt levels, with international rating agencies recently improving Montenegro’s economic outlook based on stronger macroeconomic fundamentals.
The deficit recorded in January aligns with typical patterns observed at the start of the fiscal year when revenue flows are expected to accelerate as tax payments rise and tourism-related activities increase during spring and summer months.
Key indicators for Montenegro’s fiscal trajectory in 2026 will include revenue growth rates, sustainability of social spending, and the government’s capacity to manage budget expenditures while fostering economic growth.
