At yesterday's session, the Cabinet approved the Draft Revised Budget for 2012.

The main reasons for revising the Budget are negative economic developments in the euro zone which have caused investments reduction, thereby reducing the budget revenues, lower revenues in the first months due to severe weather conditions and the need to provide additional funds due to payments made under given loan guarantees.

According to the revised budget, Montenegro’s fiscal policy will be directed to the retention of existing basic tax rates, further fiscal consolidation through cutting expenditures and implementation of measures to increase budget revenues.

The revised budget envisages new tax measures, such as fees on SIM cards, cable TV, electricity metres and smoking zones, rise in excise duties on heating oil and gas, and rise in taxes on official pensions.

It also prescribes additional measures related to public officials and civil servants which include cutting salaries of top executives in public institutions, as well as benefits for membership in working bodies and reimbursement of public servants’ expenses, and introduces the part-time work institution.

The total fiscal impact of the new measures for 2012 is expected to amount to EUR 23.8 million, representing an increase of about 0.7 % of GDP.

The 2012 budget expenditures are predicted to reduce by EUR 16 million or 0.5% of GDP, of which current expenditure decreased by EUR 11.3 million, while the capital budget decreased by EUR 4.7 million.

Following the revision, the budget deficit for 2012 reaches EUR 86.7 million, which is 2.5% of GDP, thus staying within the Maastricht criteria.

The projected state debt in 2012 amounts to EUR 1.706.05 million or 50.1% of GDP.