State Debt Rises, Saving Measures Not Helping

By , 17 May 2018, 13:46 PM Business
State debt increased on 37,4 million euros: Government State debt increased on 37,4 million euros: Government GOV.ME/B.CUPIC

Share this:

The total government debt at the end of the first quarter of this year was about EUR 2.66 billion, or 60.6 percent of gross domestic product (GDP), showed the data from the Ministry of Finance.

The total government debt at the end of the first quarter of this year was about EUR 2.66 billion, or 60.6 percent of gross domestic product (GDP), showed the data from the Ministry of Finance. 

"The State debt increased by EUR 37.4 million compared to the end of 2017, primarily due to the issue of government bonds," stated the State’s Debt Report on March 31st this year. External debt amounted to about EUR 2.196 billion, and internal EUR 469.2 million. Deposits at the end of the first quarter of 2018 were EUR 72.4 million or 1.6 percent of GDP. The government continued to indebt citizens even after the first quarter, despite savings measures (higher excise, 21% increase in the VAT), whose aim is to combat the public debt. 

Thus, in April, the executive authority lent EUR 500 million through the Eurobond emission of stocks, while another EUR 250 million was committed last week, with the World Bank guarantee. The total debt from the beginning of the year amounts to about EUR 825 million. By the rebalance of this year's budget, it is foreseen that the Government may owe up to about EUR 940 million in 2018.

The Vice President of the Democratic party, Zdenka Popovic, expects to break the EUR 940 million limit "given the fact that the government in the first quarter of this year was very up-to-date and prudent when it came to citizens' debt."

"Every new debt of Montenegrin citizens is a step back from EU membership. Therefore, it would be good if Mr. Djukanovic explained to the citizens how he thinks he will 'return Montenegro to his house,' if the government, with its economic policy, makes Montenegro lose its track in that process of looking for the 'road back home,'" Popović said.

vl1.jpg 

 Popović PHOTO: Savo Prelević


She reminded that Montenegro, with the new debts, is stepping away from the Maastricht criterion, which clearly defines the level of state debt that must not be more than 60 percent of the GDP. 

"The debt problem would not be detrimental to the citizens of Montenegro if we indebt ourselves for investments in capital projects and development. The problem is that we are indebted for expenditures and the repayment of loans and interest. All this is followed by a systemic problem, a weak economy, a huge gray market, a pre-eminent administration, fiscal undisciplined economic entities, and the work of the government in favor of privileged individuals and transitional winners, not in the interest of citizens," said Popovic.

The Vice President of the URA Citizens' Movement, Miloš Konatar, said that announcing new loans is no longer news and the amount of over 800 million euro in debt for the first four months of 2018 are defeating and pointing to the impending government's policy in the area of public finances. 

"Proof that the government does not know what they are doing is best shown by the data that the budget for 2018 was foreseen to be worth EUR 295 million and that now, after only four months, we reached the sum of over 800 million euro," Konatar said. 

She also recalls the URA in the economic program as one of the key measures and proposed the adoption of a moratorium on further government loans.

"At present, we need a social consensus so that we can cut off the government's future borrowing for liquidity financing. Political change is necessary for Montenegro, but also for changes in the economic policy that will first lead to halting the country's unreasonable borrowing," Konatar said. The Ministry's report states that between the 1st of January and the 31st of March this year, credit arrangements with the International Bank for Reconstruction and Development (IBRD) for the project MIDAS 2, and EUR 30 million and EUR 14 million for the project of revenue tax improvement were signed. For the purchase of three helicopters for the Ministry of Defense, the Export Development Canada (EDC) loan amounts to 26.55 million euro.

"During the first quarter, the government’s debt was paid on the basis of the principal amount, totaling EUR 99.75 million, of which EUR 82.57 million related to repayment of debt to residents, including EUR 74.53 million for refinancing government bonds, while the repayment of debt to non-residents amounted to EUR 17.18 million," the Ministry said.

During the first quarter, the government allocated EUR 8.2 million for infrastructure projects, including the construction of the first section of Bar-Boljare Highway.

"The project for financing the construction of the first section of the Bar-Boljare highway, Smokovac-Matesevo, during the first quarter, from a loan with Chinese Exim Bank, has been committed to a total of EUR 6.4 million or 5.2 million, while in the same period for the mentioned project, the budget provided an amount of about EUR 0.8 million, " the Ministry reports.

Text by Biljana Matijasevic, on May 16th 2018, read more at Vijesti

Remax Property of the Week

Property of the week.png

Editorial

Interview of the week

Photo of the Week

Photo galleries and videos