Montenegro Will Need External Financing to Cover 2009 Budget Gap – C-bank

CBCG said in a quarterly bulletin that although the budget showed a positive result at the end of June, revenue will most likely be much below plan by the end of the year and activities on  securing external financing have already been launched.

In July, Finance Minister Igor Luksic said the government had revised its 2009 balanced budget, projecting a deficit equivalent to 2.6% of the gross domestic product instead as the global crisis deepened. End-year budget shortfall was projected at 900 million euro back then. Luksic also said Montenegro and the International Monetary Fund would agree on a financial support package in the following two to three months but did not elaborate.

Current budget revenue in the first half of the year was 501.6 million euro ($739 million), or 14.2% of projected GDP, CBCG said. It was 21.8% lower than planned and 14% down on the year, CBCG said.

Half-year consolidated spending was 482.8 million euro, or 13.7% of projected GDP. It was 32.3% below plan and 4.0% down from the first half of 2008.

Moody's said in August that Montenegro's fiscal policy has been fairly prudent and the government's debt affordability was high.

"The ratio of interest payments to government revenue is forecast at only 2.0% in 2009, compared with the Ba rating category median of 12%.

"However, access to finance is partly constrained in the current environment, and the government was forced to inject most of the budgetary surpluses it accumulated in 2006-08 into the banking system in late 2008 to support liquidity," Moody's said.

($=0.6756 euro)