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news 20 Dec 16

Montenegro Opposition Slams Govt's Planned Benefit Cuts

The draft budget for next year drew strong criticism from the opposition, mostly over the government’s plan to cut benefits for families with children and take new loans to plug fiscal gaps.

Dusica Tomovic
BIRN
Podgorica
Photo: Pixabay.

The country’s main opposition parties have criticised the government's budget proposal for 2017, arguing that benefit cuts will hit the vulnerable and proposed new loans will harm Montenegro’s economy.

The Social Democratic Party said that the proposal was an attack on the middle class and the poorest citizens of Montenegro.

The party claimed that income that the government is counting on will not be enough to cover all its expenses and the new measures will hit over 20,000 mothers who receive allowances if they have three or more children.

The government also proposes to abolish extra payments that are given to anyone in full-time employment, on a percentage of salary basis, rising with length of service.

Social Democratic Party official Izet Balic further criticised the fact that the draft budget proposes to collect only 12 million euros of around 700 million euros in unpaid taxes, which is mostly owed by private 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 in unpaid taxes, the government plans to collect only 12 million next year," Balic said in a statement on Monday.

The new government under Prime Minister Dusko Markovic adopted a draft budget for 2017 totalling 2,005 million euros, but to cover all its costs it is still missing 455 million euros, which will be covered by the new loans.

Real economic growth next year is estimated at 3.2 per cent. 

Meanwhile, benefits for mothers with three or more children will reduced by 25 per cent, salaries will be reduced by eight per cent for the 800 most senior state officials, including the prime minister, president, ministers, MPs, judges and prosecutors. 

The government is also proposing an additional excise tax of nine euro cents per litre on mineral fuels, which will mean higher fuel prices next year.

Nebojsa Medojevic, one of the leaders of the main opposition group, the Democratic Front, said that the country’s new cabinet, which was approved in November, does not have the knowledge, political credibility or legitimacy to start an economic recovery. 

"Instead of borrowing, public consumption-oriented bureaucracy, it is necessary to start production, exports, investments in the real sector and radical cuts in the bureaucratic public sector," Medojevic said.  

The government, however, defended its proposal, saying the draft budget was the “optimal possible combination” of measures aimed at strengthening fiscal stability, ensuring sustainable economic growth, maintaining the level of protection for the most vulnerable, and ensuring the stable functioning of public institutions.

A government press statement on Sunday said the cabinet rejected the possibility of raising VAT rates and of raising the income tax to 15 per cent for all workers in Montenegro whose salaries are above the average.

It said that it also rejected halting the adjustment of pensions and reducing overall social benefits.

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