Montenegro opposition parties are responding negatively to a plan by the government of Prime Minister Dusko Markovic to adopt a draft budget for this year that would include new loans to cover a shortfall of about $481 million.
Much of what critics are protesting in the new budget
involves plans to cut back on social support for families.
Some of the austerity measures in the government's plan look similar to proposals put forward by centrist
politicians in countries under financial duress. One plan is to decrease government payments to individuals with full-time employment
according to their salaries.
Cutting benefits in this way, critics say, will effect more
than 20,000 mothers receiving payments for children.
Members of opposition parties argue that companies may not be paying their fair share of taxes under a government dominated
by the Democratic Party of Socialists
of Montenegro, which is Markovic’s
political party and a traditional front-runner in Montenegro’s politics, with 11 consistent election wins.
A Balkan Insight article from late 2016 shows Social Democrat Party
official Izet Balic contending
that Markovic’s government
will only collect only a fraction of unpaid taxes by large companies.
"The fact that they protect the
tycoons and those who are not paying taxes is demonstrated by the fact that out
of 700 million euros ($741 million) in unpaid taxes, the government plans to collect only 12
million ($12.7 million) next year," Balic said in a press statement.
Other parties are also chiming in. Democratic Front leader Nebojsa Medojevic has questioned the
government’s knowledge and capability of working out budget measures without
hurting common citizens financially, according Balkan Insight.
Meenal Bhanushali at Aranca spoke to
Balkan Business Wire
about the interplay of the country's finances and its debate over social spending. Bhanushali has researched equity markets in the Middle East
for leading buy- and sell-side research firms, including researching several
sectors and tracking macroeconomic developments.
“The government of Montenegro’s budget proposals have been
squarely criticized by opposition parties for cutting back on social benefits,
while not pursuing higher tax collections from corporates,” Bhanushali said. “Since
December 2016, when the government adopted the Draft Law on the budget for
2017, the ongoing criticism has been unabated in spite of the government
adopting key measures for adjusting the amount of public debt and budget
deficit over the next few years.”
Bhanushali said the government’s plan to borrow the $481 million partially to service existing debt.
“Additionally, the government proposed to
abolish extra payments provided to anyone in full-time employment, reduce
benefits provided to mothers having three or more children by 25 percent and
reduce salaries for most senior state officials by 8 percent, amongst others," she said. "With debt levels already as high as 66.5 percent of GDP, the opposition
criticized the draft budget, arguing that additional loans would hurt the
economy and the stated benefit cuts will mainly affect the vulnerable.”
Bhanushali said Montenegro’s debt is likely to increase to
high levels relative to the country’s GDP and that the nation will face
additional “refinancing risk.”
“Taking all this into consideration, the European
Commission's Directorate-General for Economic and Financial Affairs cut its
projection for Montenegro's 2017 economic growth to 3.4 percent in January of
2017, down 0.5 percent versus its previous forecast provided in October.” Bhanushali
Montenegro government feels backlash over financing plan
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