With a proposed budget of €3.79 billion for 2026, which is €238 million less than this year, the Montenegrin Government expects to increase its own-source revenues from €2.8 billion to €3.08 billion, driven by higher collections from taxes, contributions and other fiscal charges. Expenditures are projected at €3.36 billion, while the Government plans to cover the remaining €710 million through the use of deposits left at the end of 2025 and new borrowing of up to €500 million. Deposits at year-end are expected to stand at around €200 million, which is €40 million less than previously planned.
Revenues
The Government expects an additional €173 million in 2026 from VAT, personal income tax, corporate profit tax and excise duties, bringing the total to €2.35 billion. Finance Minister Novica Vuković indicated that excise duties on tobacco may increase, noting that Montenegro currently applies the lowest rate tolerated by the European Commission. Revenues from excise taxes are projected to rise by €25.8 million.
Income from pension contributions (PIO) is expected to increase by €2 million, reaching €400 million, while health insurance contributions are forecast to fall by €1 million to €5 million. The Government also anticipates more than €2 million in additional revenue from administrative, court, residence and other fees, bringing this category to nearly €20 million. Tourist residence taxes are expected to reach almost €3 million, about €0.5 million more than this year.
Expenditures
The draft 2026 budget allocates €726 million for gross wages, an increase of nearly €9 million compared to this year. Other personal income expenditures total €24.6 million, slightly higher than in 2025, with a notable rise in allowances for housing and separation, which will grow by over €624,000 to almost €3.5 million.
Minister Vuković noted that contract-based work has been reduced by 20% compared with the previous year. For 2026, €15.5 million is planned for such contracts—€1.37 million less than this year. A substantial increase appears under software development and maintenance, for which €40.3 million is allocated—€7 million more than in 2025.
A major spending increase is also seen in pensions and disability insurance rights, which rise by €60 million to €837.2 million, exceeding the entire public-sector wage bill. This category covers old-age, disability and family pensions, allowances and related payments. Nearly €56 million of the increase is attributed to old-age pensions alone, now budgeted at €527.9 million.
Travel, services and subsidies
Official travel expenses will total about €8.5 million, a slight rise from 2025, while representation expenses will decrease from €1 million to €962,300. Communications services are set at €7.5 million, transport services at €1.13 million, and consultancy services, projects and studies rise sharply to more than €50 million, an increase of €5 million.
Spending on legal, notary and attorney services will fall from €9.5 million in 2025 to €6.1 million next year. Subsidies will also grow—from €69 million to €74.5 million.
Borrowing and investment plans
Beyond the €710 million in financing needed to close the budget gap, the Government will have the option to borrow up to €1 billion to refinance debt and build fiscal reserves for 2027 and 2028. Montenegro faces €1.2 billion in maturing debt in 2027. An additional borrowing capacity of nearly €2 billion is foreseen for 37 capital projects, including:
- €313 million for the University Clinical Center,
- €120 million for the Velje Brdo project,
- €100 million for the Podgorica bypass,
- €113 million for railway modernization,
- €88 million for road reconstruction,
- €60 million for wastewater systems,
- €250 million for military and police equipment,
- €300 million for a new data center.
Macroeconomic outlook
According to the Ministry of Finance, the 2026 budget foresees a deficit of 3.2% of GDP, or €278 million, while achieving a current expenditure surplus of €72 million. The Government expects the economy to grow by 3.2% next year, supported by higher investment activity and increased private consumption. Inflation in 2026 is projected to fall below 3%.
