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CURRENT REVENUES1 ESTIMATES AND THE ANALYSIS OF GENERATED PUBLIC SPENDING IN MONTENEGRO FOR 2010 General Government Consumption2 in 2010 is estimated at the amount of EUR 1.401,62 million or 46,33% of GDP, which is by EUR 120 million less than in 2009. Estimated public spending amount was financed by taxes in the amount of EUR 755,09 million, contributions EUR 379,76 million, duties EUR 26,78 million, fees EUR 99,65 million, other current revenues in the amount of EUR 45,12 million and receipts from the repayment of loans in the amount of EUR 3,62 million. In addition to the current revenues, the public spending in 2010 was also financed by borrowings and loans in the amount of EUR 243,88 million, donations in the amount of EUR 2,76 million and privatization revenues and sales of property in the amount of EUR 25,39 million. The use of deposits in 2010, amounted at EUR 78,44 million or 2,59 % of GDP. Public current revenues were estimated at the amount of EUR 1.310,01 million or 43,31% of GDP forecasted for 2010 (EUR 3.025,00 million). The most important items in the public revenues structure represent the taxes – 24,96 % of GDP and contributions - 12,55% of GDP. Compared to the plan, collection of current public revenues was 97,69%. It is important mentioning that the current revenues structure in 2010 has changed compared to previous years. Namely, the increase in direct taxes in the total tax revenues is evident, levering the reduction in indirect taxes (45,4% : 54,6% ratio in favor of indirect ones)3. Current public consumption for 2010, amounted at EUR 1.238,09 million or 40,93% of GDP. Compared to the plan, the public spending was executed at 99,25%. Pursuant to the economic classification and by individual items, the highest share in expenditures have the Social Protection Transfers – EUR 423,93 million or 14% of GDP, Gross Wages – EUR 317,37 million or 10,49% of GDP, Transfers to Institutions, Individuals, NGO’s and Public Sector – EUR 203,44 million or 6,73 % of GDP, while the capital budget amounted at EUR 163,54 million or 5,41% BDP-a. Public sector cash deficit4 for 2010, has been planned in the amount of EUR 139,90 million, and it was estimated at EUR 91,6 million, representing 3,03 % of forecasted GDP for 2010. The deficit of the Budget of Montenegro was estimated in the amount of EUR 84,57 million, while the Local government budget was estimated in the amount of EUR 7,04 million. Budget deficit was financed from Eurobond proceeds while municipal deficit was mainly financed out of deposits. General Governm ent Consum ption in 2010 1400,00 1200,00 Plan 2010 mil € 1000,00 Execution 2010 800,00 600,00 400,00 200,00 0,00 -200,00 1 Current Public Revenues Consolidated Public Consumption Surplus/deficit The Ministry of Finance is required to submit the Draft Final Account for 2010, to the Government by 1st June 2011, containing the final data. 2 The Ministry of Finance has assessed the execution of local governments budget in 2010, on the basis of the budgetary plans of municipalities for 2010, and on the basis of the data on execution of municipalities for the first nine months of 2010. 3 This ratio in 2009 amounted to 43,8:56,2 in favor of public revenues. 4 The Organic Budget Law, Article 16 is defining the cash deficit or surplus representing the difference between the receipts and expenditures, whereas the receipts are being reduced by borrowings, received transfers, donations and receipts from the sales of real estate, and expenditures for the repayment of principal in the country and abroad, pursuant to the debt generated from obtaining a loan or issuing securities and change in the net liabilities generated in previous years not implying the borrowing characteristics. Change in net liabilities generated in previous years has been indicated as a difference in liabilities at the beginning and at the end of the fiscal period. In the light of the above, the cash – deficit should encompass outstanding liabilities. The amount of outstanding liabilities will be determined by 15 th February 2011. However, pursuant to the preliminary data, the forecasted deficit will be bellow 4% of GDP. The Table bellow5 is indicating the execution and the plan of both the current public revenues and public consumption with financing for 2010, in million EUR and % of GDP: Plan 2010 Public expenditure Current public revenues mil € Execution 2010 % of GDP mill € % of GDP % of Execution 1341,02 44,33 1310,01 43,31 Taxes 820,47 27,12 755,09 24,96 92,03 Personal income tax 105,86 3,50 115,07 3,80 108,70 Corporate profit tax 49,58 1,64 20,27 0,67 40,88 Real estate turnover tax 18,83 0,62 16,46 0,54 87,44 VAT 398,86 13,19 364,18 12,04 91,31 Excises Duties 149,89 4,96 134,26 4,44 89,57 International trade and transactions taxes 48,87 1,62 50,81 1,68 103,98 Local taxes 38,79 1,28 42,45 1,40 109,43 9,79 0,32 11,59 0,38 118,30 Contributions 323,93 10,71 379,76 12,55 117,24 Pension and disability insurance contributions 198,64 6,57 233,50 7,72 117,55 Health insurance contributions 115,23 3,81 129,90 4,29 112,73 10,06 0,33 10,15 0,34 100,88 0,00 0,00 6,22 0,21 0,00 30,11 1,00 26,78 0,89 88,96 110,02 3,64 99,65 3,29 90,58 49,65 1,64 45,12 1,49 90,88 Other revenues Contributions from unemployment Other contributions Duties Fees Other revenues Receipts from the repayment of loans 97,69 6,84 0,23 3,62 0,12 52,84 Public expenditure 1480,92 48,96 1401,62 46,33 94,65 Current public expenditure 1247,46 41,24 1238,09 40,93 99,25 Current expenditures Gross wages and contributions charged to employer Other personal income 625,22 20,67 589,56 19,49 94,30 314,66 10,40 317,37 10,49 100,86 30,58 1,01 24,50 0,81 80,11 Expenditures for material and services 151,09 4,99 130,56 4,32 86,41 Current maintenance 33,43 1,11 31,43 1,04 94,02 Interest 33,10 1,09 31,20 1,03 94,24 9,96 0,33 8,69 0,29 87,17 45,08 1,49 39,73 1,31 88,12 7,31 0,24 6,10 0,20 83,49 Social protection transfers 407,19 13,46 423,93 14,01 104,11 Transfers to public institutions, NGO’s 198,53 6,56 203,44 6,73 102,47 Capital budget 233,46 7,72 163,54 5,41 70,05 Capital expenditures of the current budget and state funds Capital budget of MNE 21,24 121,00 0,64 91,32 2,09 52,27 Rent Subsidies Other expenditures Local government capital budget 0,70 4,00 2,67 88,68 0,15 80,89 4,94 0,16 110,13 12,02 0,40 16,22 0,54 134,92 Surplus / Deficit -139,90 -4,62 -91,61 -3,03 Primary deficit -106,80 -3,53 -60,42 -2,00 Borrowings and loans 91,22 4,49 Reserves Debt repayment 3,02 19,40 63,25 152,86 5,05 258,86 8,56 169,34 Repayment of principal to residents 22,84 0,76 62,29 2,06 272,67 Repayment of principal to nonresidents 43,34 1,43 45,34 1,50 104,61 174,48 Repayment of liabilities from previous years 86,67 2,87 151,23 5,00 -292,76 -9,68 -350,47 -11,59 292,76 9,68 350,47 11,59 8,29 0,27 38,43 1,27 463,56 100,00 3,31 205,45 6,79 205,45 Donations 21,77 0,72 2,76 0,09 12,70 Privatization revenues 73,22 2,42 25,39 0,84 34,68 Use of state deposits 89,49 2,96 78,44 2,59 87,65 Financing needs Financing Borrowings and loans from domestic sources Borrowings and loans from abroad 5 The aforementioned table indicates forecasted execution of current revenues and public spending. The final data will be published in the Final Account for 2010. The Consolidated public expenditure (public spending reduced by contributions charged to employer and communal fees) was estimated at the amount of EUR 1.361,58 million or 45,01% of GDP, while compared to 2009, the public spending after the consolidation is less by 4,83 % of GDP. Plan 2010 Public expenditure Current public revenues mil € Execution 2010 % of GDP mill € % BDP % of Execution mil € 1297,21 42,88 1269,96 41,98 97,90 Taxes 820,47 27,12 755,09 24,96 92,03 Personal income tax 105,86 3,50 115,07 3,80 108,70 Corporate profit tax 49,58 1,64 20,27 0,67 40,88 Real estate turnover tax 18,83 0,62 16,46 0,54 87,44 VAT 398,86 13,19 364,18 12,04 91,31 Excises Duties 149,89 4,96 134,26 4,44 89,57 International trade and transactions taxes 48,87 1,62 50,81 1,68 103,98 Local taxes 38,79 1,28 42,45 1,40 109,43 9,79 0,32 11,59 0,38 118,30 Contributions 283,72 9,38 343,31 11,35 121,00 Pension and disability insurance contributions 173,91 5,75 211,09 6,98 121,37 Health insurance contributions Other revenues 101,48 3,35 117,43 3,88 115,72 Contributions from unemployment 8,33 0,28 9,18 0,30 110,17 Other contributions 0,00 0,00 5,62 0,19 0,00 30,11 1,00 26,78 0,89 88,96 106,42 3,52 96,05 3,18 90,26 49,65 1,64 45,12 1,49 90,88 6,84 0,23 3,62 0,12 52,84 Consolidated public expenditure 1437,11 47,51 1361,58 45,01 94,74 Current public expenditure 1203,65 39,79 1198,04 39,60 99,53 Current expenditures Gross wages and contributions charged to employer Other personal income 581,41 19,22 549,51 18,17 94,51 274,46 9,07 280,92 9,29 102,36 30,58 1,01 24,50 0,81 80,11 Expenditures for material and services 151,09 4,99 130,56 4,32 86,41 Current maintenance 33,43 1,11 31,43 1,04 94,02 Interest 33,10 1,09 31,20 1,03 94,24 Duties Fees Other revenues Receipts from the repayment of loans Rent 9,96 0,33 8,69 0,29 87,17 45,08 1,49 39,73 1,31 88,12 3,71 0,12 2,50 0,08 67,47 Social protection transfers 407,19 13,46 423,93 14,01 104,11 Transfers to public institutions, NGO’s 198,53 6,56 203,44 6,73 102,47 Capital budget 233,46 7,72 163,54 5,41 70,05 Capital expenditures of the current budget and state funds Capital budget of MNE 21,24 121,00 0,64 91,32 2,09 52,27 Subsidies Other expenditures Local government capital budget 0,70 4,00 2,67 88,68 0,15 80,89 4,94 0,16 110,13 12,02 0,40 16,22 0,54 134,92 Surplus / Deficit -139,90 -4,62 -91,61 -3,03 Primary deficit -106,80 -3,53 -60,42 -2,00 152,86 5,05 258,86 8,56 169,34 Repayment of principal to residents 22,84 0,76 62,29 2,06 272,67 Repayment of principal to nonresidents 43,34 1,43 45,34 1,50 104,61 Repayment of liabilities from previous years 86,67 2,87 151,23 5,00 174,48 -292,76 -9,68 -350,47 -11,59 292,76 9,68 350,47 11,59 8,29 0,27 38,43 1,27 463,56 100,00 3,31 205,45 6,79 205,45 Donations 21,77 0,72 2,76 0,09 12,70 Privatization revenues 73,22 2,42 25,39 0,84 34,68 Use of state deposits 89,49 2,96 78,44 2,59 87,65 Borrowings and loans 91,22 4,49 Reserves Debt repayment Financing needs Financing Borrowings and loans from domestic sources Borrowings and loans from abroad 3,02 19,40 63,25 Public expenditure in Montenegro is comprised of central government expenditure including state funds and municipal expenditures. BUDGET OF MONTENEGRO Budget receipts for 2010 were estimated6 at EUR 1.369,16 million. Current revenues of the Budget for 2010, amount at EUR 1.138,62 million or 37,64 % of GDP, while the Execution against the plan is at 97,75 %. Current revenue January - Decem bar 2010 140,00 120,00 mil € 100,00 80,00 60,00 Current Revenue - Execution 40,00 Current Revenue - Plan 20,00 Av gu st Se pt em ba r O kt ob ar N ov em ba r D ec em ba r Ju l Ju n M aj Ap ri l M ar t Ja nu ar Fe br ua r 0,00 Tax revenues amount at EUR 675,80 million, being lower by 9,44 % against the planned ones. The lower collection of the corporate profit tax was generated due to lower profits of the legal entities in 2009, and due to the amendments to the legislation related to the abolition of the corporate profit tax prepayment. Lower collection of excises duties was generated due to decreased oil products sales, subsequently recording a slight recovery. At the end of 2010, the collection of excises duties was generated by 10% below the plan, which is still above collected amount in 2009. VAT based revenues collection for the first eight months were collected pursuant to the plan, while in the last quarter of the fiscal year, it was subjected to the decrease in collection by 8,7%, i.e., EUR 34 million indicated in absolute amount. This strong deviation was partly a result of the increase in the tax debt by EUR 13 million, whereas at the end of 2010, uncollected VAT debt of the Tax Administration in the amount of EUR 26 million. Furthermore, in planning this type of revenues for 2010, among other things, this type of collected revenues in previous years is being accounted for. Considering the fact that in the second half of 2009, the revenues have significantly increased due to the partly privatization of EPCG, when developing the VAT collection plan for 2010, the influence of the partly privatization of EPCG was not appropriately neutralized, hence resulting in higher revenues plan. Current Revenues 400,00 Execution January - December 2010 350,00 Execution January - December 2009 300,00 mil € 250,00 200,00 150,00 100,00 50,00 0,00 Personal Income Tax on Profits of Tax Legal Persons Value Added Tax Excises Tax on Contributions for Contributions for International Trade Pension and Health Insurance and Transactions Neporeski prihodi Disability Insurance 6 Final revenues execution can slightly deviate from the revenues evaluation for 2010. Budget receipts include apart from current revenues (taxes, contributions, excise etc) privatization receipts, credit proceeds, grants Plan 2010 Budget of Montenegro Current revenues Taxes Personal income tax Corporate profit tax Real estate turnover tax VAT Excises Duties International trade and transactions taxes Local taxes Other revenues Contributions Pension and disability insurance contributions Health insurance contributions Contributions from unemployment Other contributions Duties Fees Other revenues mill € Execution 2010 % of GDP mill € % of GDP % of Execution 1164,89 38,51 1138,62 37,64 97,75 746,27 83,63 49,58 5,65 398,86 149,89 48,87 9,79 323,93 198,64 115,23 10,06 0,00 22,04 32,45 33,36 24,67 2,76 1,64 0,19 13,19 4,96 1,62 0,32 10,71 6,57 3,81 0,33 0,00 0,73 1,07 1,10 675,80 89,75 20,27 4,94 364,18 134,26 50,81 11,59 379,76 233,50 129,90 10,15 6,22 20,54 27,43 31,48 22,34 2,97 0,67 0,16 12,04 4,44 1,68 0,38 12,55 7,72 4,29 0,34 0,21 0,68 0,91 1,04 90,56 107,32 40,88 87,44 91,31 89,57 103,98 118,30 117,24 117,55 112,73 100,88 0,00 93,20 84,54 94,36 6,84 0,23 3,62 0,12 52,84 Expenditures 1298,10 42,91 1223,20 40,44 94,23 Current budget expenditure 1177,11 38,91 1159,95 38,35 98,54 561,47 18,56 526,08 17,39 93,70 Transfers to public institutions, NGO’s 279,35 25,48 135,45 28,94 32,14 9,43 44,07 6,61 21,24 406,86 43,53 20,96 321,00 14,06 7,32 173,78 9,23 0,84 4,48 0,96 1,06 0,31 1,46 0,22 0,70 13,45 1,44 0,69 10,61 0,46 0,24 5,74 283,67 18,84 112,90 28,02 30,16 8,24 39,04 5,23 19,40 423,17 51,59 20,07 330,99 12,64 7,87 174,64 9,38 0,62 3,73 0,93 1,00 0,27 1,29 0,17 0,64 13,99 1,71 0,66 10,94 0,42 0,26 5,77 101,55 73,92 83,35 96,82 93,83 87,34 88,58 79,17 91,32 104,01 118,52 95,78 103,11 89,92 107,54 100,50 Capital budget 121,00 4,00 63,25 2,09 52,27 4,26 9,50 0,14 0,31 4,07 12,59 0,13 0,42 95,74 132,53 Surplus / Deficit -133,22 -4,40 -84,57 -2,80 Primary deficit -101,08 -3,34 -54,42 -1,80 127,86 4,23 215,82 7,13 168,79 17,84 43,34 66,68 0,59 1,43 2,20 56,82 45,34 113,66 1,88 1,50 3,76 318,42 104,61 170,46 -261,08 -8,63 -300,39 -9,93 Financing 261,08 8,63 300,39 9,93 Borrowings and loans from domestic sources 0,00 100,00 19,19 59,00 82,89 0,00 3,31 0,63 1,95 2,74 19,99 205,45 1,38 3,72 69,85 0,66 6,79 0,05 0,12 2,31 Current expenditures Gross wages and contributions charged to employer Other personal income Expenditures for material and services Current maintenance Interest Rent Subsidies Other expenditures Capital expenditures in the capital budget Social protection transfers Social protection rights Severance pay Pension and disability insurance rights Other health protection rights Other health insurance rights Borrowings and loans Reserves Debt repayment Repayment of principal to residents Repayment of principal to nonresidents Repayment of liabilities from previous years Financing needs Borrowings and loans from abroad Donations Privatization revenues Use of state deposits 0,00 205,45 7,21 6,30 84,27 Contribution based revenues amount at EUR 379,76 million, which is by 17,24 % higher than planned in 2010. The collection of contributions during the entire year, has evidently surpassed the plan, due to the introduction of other personal income taxation (hot meal and annual holiday allowances). However, increased taxes and contributions collection has resulted in the lower private sector spending, or lower indirect taxes. Compared with collected revenues in 2009, current budgetary revenues for 2010, are lower by 2,62%. We are emphasizing that in 2009, revenues in the amount of EUR 44 million were collected based on the loan repayment of Prva banka and if we exclude these temporary type revenues, collected revenues in 2010 are by 1,9% above collected ones in 2009. The following Table indicates the comparison of current revenues for the period 2009&2010, with the following structure: Final Account 2009 Budget of MNE mill € % of GDP Current revenues 1125,27 Tax revenues Execution 2010 % share % share % 2010/2009 mill € % of GDP 37,75 100,00 1138,62 37,64 100,00 1,19 1019,98 34,22 90,64 1055,56 34,89 92,70 3,49 Direct taxes 457,27 15,34 40,64 489,78 16,19 43,02 7,11 Indirect taxes 562,71 18,88 50,01 565,78 18,70 49,69 0,54 Non-tax revenues 105,28 3,53 9,36 83,07 2,79 7,30 -21,10 Pursuant to this Table, it can be concluded that the share of tax revenues in the total revenues of the Budget has increased, as well as the share of direct taxes in the total tax revenues. Direct taxes in 2010 are higher by 7,1% against the previous year. The reason behind this increase is significantly increased collection of compulsory insurance taxes. Indirect taxes are slightly higher against 2009. The following Graph provides the comparative monthly distribution of current revenues in previous two years, indicated in million €: Current revenue January - Decem bar 2009 & 2010 140,00 120,00 mil € 100,00 80,00 60,00 Current Revenue - Execution 40,00 Current Revenues 2009- excluding Prva banka 20,00 Av gu st Se pt em ba r O kt ob ar N ov em ba r D ec em ba r Ju l Ju n M aj Ap ri l M ar t Ja nu ar Fe br ua r 0,00 It is evident that the monthly collection in the period 2009&2010 is almost the same in the first quarter and at the end of the year. Due to improved tourist summer season, revenues are higher in summer months, while significantly higher collection of revenues is collected in the period September - October 2009, as a consequence of increase in aggregate demand and partly privatization of EPCG. Budgetary expenditures in 2010, were estimated at EUR 1.223,20 million or 40,44% of GDP, being collected by 94,23% against the plan. Current budgetary spending amounts at EUR 1.159,95 million or 38,35 % of GDP, while capital budget amounts at EUR 63,25 million or 2,09 % of GDP. The highest deviation of expenditures from the plan. i.e., above planned expenditures, has been recorded with the gross wages expenditures, social protection rights, pension and disability insurance rights and capital budget. Gross wages expenditures are by 1,5 % above the plan, as a consequence of introducing taxation of other personal income in 2010, taxes and contributions on other personal income were paid off from the gross wages item. Therefore, the execution on the item covering other personal income is bellow the plan, since only a net personal income amount has been paid off from this position. Budget Expenditures in 2010 in m ill € 423,17 493,94 16,66 Current outflow s Transfers in public institutions, NGO 63,25 174,64 Social security transfers Capital budget Other expenditures Capital budget execution is lower due to the two reasons, first is the postponing of the construction of the highway Bar-Boljare, the amount of EUR 25 million has not been spent representing the annual participation in financing of the state (co-financing). The second reason is the absence of disbursement of certain funds on the basis of loans and donations being planned as a source of financing of a part of the capital budget (donations EUR 8,3 million and loan EUR 14,47 million). Lower generation of expenditures for material and services was a result of cost – saving measures being implemented by the Ministry of Finance (lower monthly spending plans), as well as public procurement control process, and planned but non – disbursed funds on the basis of loans and donations of almost EUR 18 million. In 2010, budgeted expenditures for the pension and disability insurance rights have increased due to the regular alignment of pensions, being significantly higher than the planned one at the beginning of 2010. Namely, pensions alignment, pursuant to the previous Law on Pension and Disability Insurance, has been made twice a year pursuant to the so – called “Swiss Formula” relying on inflation and wages increase in economy. When planning the budget for 2010, it has been estimated that the inflation is low not requiring wages increase in 2010, thus requiring slight alignment. However, following the introduction of other personal income taxation, MONSTAT pursuant to its methodology has incorporated them into the gross wages, which resulted in the statistical increase in wages by around 10%. In the light of the above, the Swiss Formula application has resulted the increase in pensions by 5,5%. Furthermore, the expenditures for social protection rights have increased by 18,5% against the plan, incurred on the basis of increase in social protection rights beneficiaries. The deficit of the Budget of Montenegro with the state – owned funds has been estimated at EUR 84,57 million or 2,80% of GDP, which is by around EUR 48,6 million lower than planned, while against 2009, the deficit will be lower by 2,71% of GDP. However, as we have already indicated this is not final, until the budget arrears are being determined. Local Government Pursuant to the Article 3, of the Rulebook on the manner of reporting on planned and collected revenues and expenditures of the budget of municipalities and budgetary indebtedness of municipalities, Municipalities are submitting these Reports to the Ministry of Finance on a quarterly basis, within 15 days following the expiry of a quarter. Concerning the fact that Municipalities did not submit Reports for 2010, the Ministry of Finance, pursuant to the plan for 2010, Report for the first nine moths of 2010, and municipal budgets rebalance for 2010, has made the estimates of collected revenues and expenditures execution by the end of 2010. Estimated local government expenditures for 2010, amount at EUR 179,33 million or 5,93 % of GDP, which is significantly less compared to the execution in 2009, which amounted at EUR 222,68 million or 7,42% of GDP. Plan 2010 Local Government Current revenues mill € Execution 20107 % of GDP mill € % of GDP % Execution 176,13 5,82 171,39 5,67 97,31 Taxes 74,20 2,45 79,29 2,62 106,85 Personal income tax 22,23 0,73 25,32 0,84 113,87 Real estate turnover tax 13,18 0,44 11,52 0,38 87,44 Local taxes 38,79 1,28 42,45 1,40 109,43 8,07 0,27 6,24 0,21 77,35 Fees 77,57 2,56 72,22 2,39 93,10 Other revenues 16,29 0,54 13,64 0,45 83,74 Duties Expenditures 183,57 6,07 179,33 5,93 97,69 Current local government expenditures 92,35 3,05 98,44 3,25 106,60 Current expenditures 63,75 2,11 63,48 2,10 99,57 Gross wages and contributions charged to employer 35,31 1,17 33,70 1,11 95,43 Other personal income 5,10 0,17 5,66 0,19 111,04 15,64 0,52 17,66 0,58 112,88 Current maintenance 4,49 0,15 3,41 0,11 75,96 Interest 0,96 0,03 1,04 0,03 107,88 Rent 0,53 0,02 0,45 0,01 84,14 Subsidies 1,01 0,03 0,69 0,02 68,29 Other expenditures 0,70 0,02 0,87 0,03 124,29 Expenditures for material and services Social protection transfers 0,33 0,01 0,76 0,03 230,30 Transfers to public institutions, NGO’s 25,51 0,84 29,70 0,98 116,44 Capital budget 91,22 3,02 80,89 2,67 88,68 Borrowings and loans 0,23 0,01 0,87 0,03 371,79 Reserves 2,52 0,08 3,63 0,12 143,92 Surplus / Deficit -6,68 -0,22 -7,04 -0,23 105,31 Primary deficit -5,72 -0,19 -6,00 -0,20 104,88 Debt repayment 24,99 0,83 43,04 1,42 172,20 Repayment of principal to residents Repayment of liabilities from previous years Financing needs Financing 5,00 0,17 5,47 0,18 109,40 19,99 0,66 37,57 1,24 187,90 -31,68 -1,05 -50,08 -1,66 158,08 31,68 1,05 50,08 1,66 158,08 Borrowings and loans from domestic sources 8,29 0,27 18,44 0,61 222,46 Donations 2,58 0,09 1,38 0,05 53,51 Privatization revenues 14,22 0,47 21,67 0,72 152,43 Use of state deposits 6,59 0,22 8,59 0,28 130,24 Budget Transfers 0,75 0,02 0,90 0,03 119,90 7 Ministry of Finance Estimates The spending was financed from taxes in the amount at EUR 79,29 million, duties EUR 6,24 million, feed EUR 72,22 million and other current revenues in the amount at EUR 13,64 million. Total current revenues of the local – self government for 2010, are estimated at EUR 171,39 million or 5,67 % of GDP, which is less than its execution in 2009, which amounted at EUR 183,70 million or 6,12% of GDP. Izvorni prihodi budžeta lokalne samouprave za 2010. godinu 90,00 plan 80,00 izvršenje 70,00 mil € 60,00 50,00 40,00 30,00 20,00 10,00 0,00 Porezi Takse Naknade Ostali prihodi Public finance system at the local level in 2009, and at the beginning of 2010, was featured by the fall in current revenues, increase in outstanding liabilities and illiquidity, increase in indebtedness and high budgetary deficit level. Due to the aforementioned problem, majority of local self – governments have implemented the following: cost – saving and rationalization programmes in local self – government units and public enterprises founded by the Municipalities, suppliers debt reprogramming plan, solving the problem of employees proclaimed redundant. In the second half of 2010, public finance system has stabilized at the local level, however it is evident that the repayment of liabilities incurred in previous period, is still at the high level. Local govenm ent expenditures in 2010 5,26 63,48 80,89 29,70 Current outflow s Transfers to public institutions, NGO Capital outflow s Other expenditures Due to the lower collection of the local – self government current revenues of, as well as shared revenues, the deficit is estimated at EUR 7,04 million or 0,23 % of GDP. Local self – government deficit in 2010, is significantly lower than the one in 2009, which amounted at EUR 36,41 million or 1,21% of GDP. Estimated deficit was to the greatest extent financed from the sale of assets, partly by using borrowings and loans from domestic sources and the use of deposits of municipalities.