We are currently negotiating with seven renowned business banks – SocGen, J.P. Morgan, Erste Bank, Banca Intesa, Bank of America Merrill Lynch, Goldman Sachs and Deutsche Bank – on concluding the ISDA Agreement, which represents a legal basis for carrying out specific hedging transactions in order to avoid the exchange rate risks in highway construction, Finance Minister, Mr Darko Radunović, told Pobjeda daily.
These banks, Minister Radunović explained, have been global leaders in managing market risks, while Montenegro’s strong economic growth and a responsible fiscal policy would certainly contribute to the reduction in transaction costs.
When asked to say whether there would be any austerity measure introduced in 2020 and about factors that might affect such a decision, Mr Radunović told: “We plan no austerity measures if the economic parameters stay as they are now. Moreover, we have removed the so-called ‘austerity tax’ on personal incomes from 1 January of this year.”
On the possible increase in salaries for the police sector, military and other areas of the public sector, he said: “The 2020 budget envisages the increase in salaries in the area of health and education having in mind they are very important sectors where majority of public employees work. The proposed measure is the one the state budget can approve of. Of course, we do believe that salaries of other public sector employees are significant so we will consider it as well. For now, we cannot promise that as we must not jeopardize the principle of budget sustainability.”
As for this year’s revenues and whether there’s a danger that some won’t be collected, the Minister underlined: “The 2020 source budget revenues are projected at EUR 2.054 billion or 40.9 per cent of the estimated GDP, and are higher by EUR 220.3 million or 12 per cent compared to 2019. In addition to the aforementioned factors, this year’s revenue growth also includes the collection of a tax debt from the Airports of Montenegro, which depends on the settlement of Montenegro Airlines’ liabilities to this company. We also expect the revenues from the planned concession arrangement for the Airports of Montenegro, as well as the effects of the implementation of the economic citizenship project. It is about the one-time, but certainly significant budget revenues.
Having in mind that the Democratic Front, DF, often claimed in the parliament that the country’s finances have been on the verge of collapse, Minister Radunović touched on these statements as well, claiming that “they [statements on the economic collapse] existed even before and one doesn’t have to be a financial expert to perceive all the absurdity of statements announcing the forthcoming collapse of state finances.”
