“Specifically for guarantees concerning the ships, it depends on the market price. We express our concern that these guarantees may become a burden for the budget,” Zugic said answering the question of the Chairman of the Board and MP of the Socialist People’s Party (SNP) Aleksandar Damjanovic.
Zugic added that if it happened they could consider how to transfer these guarantees into government debt.
“It is much easier to pay that in instalments than at once,” Zugic explained.
During the session at which the Draft Law on Budget for the past year was adopted and the report of the State Audit Institution (DRI) on the revision of the document was discussed, Damjanovic said that guarantees were a level of €300 million of what is already due.
Commenting on the Draft Law on Budget, Damjanovic said an interesting thing started to get a systemic character – the fact that the amounts paid by state in instalments have again been higher than the amount of the capital budget.
“We are talking about the figure around €75 million. That’s a huge amount of money given only for interests, as a result of the emission of Eurobonds and a variety of assignments,” Damjanovic said.
Zugic said that they managed reduce the burden of this segment of financing public debt through the refinancing of liabilities and to at least halve interest rates.
Explaining the Draft Law on Budget for the past year, Zugic said that the focus was on the area of narrowing of gray economy in order to increase the tax base, thus creating the precondition for higher public revenue collection.
“Fiscal policy in the past, this and subsequent years cannot and will not be based on an increase in tax rates but on strengthening the competitiveness and hence liquidity to the objectively possible extent,” said Zugic.
Last year, GDP amounted to €3.45 billion, whereas total public spending amounted to €1.65 billion or 47.3% of GDP.
As he added, a large part of the budget spending referred to social benefits which totalled €492 million last year and it accounted for a third of budget spending.
Gross earnings represented another significant part of the budget spending and €387.3 was allocated for that.
Zugic said that the cash budget deficit stood at 2.98% and had not reached the limit defined by the Maastricht criteria of three percent.
“State debt and net public debt at the end of last year amounted to 58.48% of GDP,” said Zugic.
MP for Positive Montenegro, Goran Tuponja, reminded that DRI found exceeding the budget spending amounting to €424 million, out of which €60 million was unauthorised.
Tuponja said it represented a violation of the law.
He asked Zugic how the Ministry of Finance could be forced to obey the law and whether it bore any consequences because of that.
Tuponja believes and that the Ministry through “artful mathematics” managed to set the debt below 60% of GDP, in order to avoid rehabilitation plan.
Zugic said it was not “artful mathematics”, but a real economic category.
MP for the Democratic Party of Socialists (DPS) Filip Vukovic said that it was important for GDP to grow at a higher rate, even though the Maastricht criteria have been exceeded.
Independent MP Damir Sehovic commented on the tax debt, estimated by DRI at the end of last year at€ 550 million.
He said that it was worrying that the Tax Authority was not able to collect revenues at satisfying level and that it did not crate all conditions for that.
