The Ministry of Finance of Montenegro has urged all political entities participating in the parliament to urgently adopt the state budget to avoid potential damage to the country, its citizens and the implementation of the EU reform agenda.
The ministry stressed the urgent need for the Parliament to approve the state budget as soon as possible to ensure fiscal stability, the continuation of reform processes, and the fulfillment of international obligations.
“2025 is a challenging year, and failure to adopt the budget and rely on temporary financing could significantly disrupt the functioning of the state and delay the timely financing of obligations. Timely action is crucial for maintaining economic prosperity and stability. We also note that temporary financing reduces available funds for planned reforms, capital projects, and the regular activities of institutions,” stated the Ministry of Finance in its announcement.
A special challenge, according to the Ministry, is securing the country’s liquidity, as adopting the budget and debt decisions would create the necessary conditions to secure sources of financing for servicing the state’s obligations.
“Without the adopted budget and debt decisions, the country relies on regular revenues and carried-over funds in deposits, which are insufficient to cover all obligations. In 2025, we have inherited debt of about €820 million, which must be repaid. Failure to service public debt on time could jeopardize the country’s creditworthiness and lead to a downgrade of the credit rating, further complicating financing and increasing borrowing costs. We are obligated to point out all these challenges arising from the failure to adopt the budget and temporary financing, as the Parliament of Montenegro did not adopt the Budget Law for this year by December 31, 2024,” the Ministry explained.
In terms of determining expenditures allocated to consumer units, the Ministry noted that some consumer units, which are legally obligated to be financed, were established in the second half of 2024 (new ministries).
“Furthermore, mandatory expenditures, such as social benefits, pensions, salaries, and other mandatory expenditures, are adjusted based on actual calculations, noting that the actual calculation of these expenditures in December 2024 was higher than 1/12, or the actual average expenditures from the previous year. Additionally, servicing public debt, which is a legal obligation, requires timely execution based on a defined schedule, with debt repayment costs in this year significantly higher than in the previous one. This situation further reduces available resources for planned reforms, capital projects, and regular institutional activities,” the statement added.
The failure to adopt the budget, as emphasized, prevents the creation of annual and medium-term plans, including public procurement and staffing plans, which could delay the implementation of significant activities such as capital projects and reforms. This could negatively impact the overall macroeconomic and fiscal environment and the achievement of planned macro-fiscal projections.
“As mentioned, delaying the adoption of the budget could endanger the regular financing of obligations to citizens and partners. We highlight that in 2025, approximately €820 million is needed for repaying debt from previous periods, with the majority due in April for the payment of government bonds issued on the international market in 2018, totaling €500 million. In addition, funds are needed for obligations arising from credit arrangements with the World Bank from 2018 and 2020, amounting to about €55 million, a Chinese loan from 2014 for about €60 million, a loan from Deutsche Bank in 2023 for about €40 million, as well as a loan from the IMF for budget financing due to COVID-19 in 2020, amounting to around €20 million, and others. Furthermore, the failure to adopt the budget jeopardizes the implementation of the EU Reform Agenda – the Growth Plan for the Western Balkans, which provides Montenegro access to financial support of about €400 million. These funds are crucial for implementing reforms necessary for European integration, and their realization requires the adoption of the legal prerequisites defined by the annual budget,” concluded the Ministry of Finance.