Montenegro passes 2018 budget, reducing deficit

SARAJEVO, Dec 27 (Reuters) - Montenegro’s parliament passed a 2018 budget late on Tuesday, setting the deficit at 2.6 percent of national output, down by a half from a year before.

Forty-one deputies in the 81-seat parliament of the European Union candidate country voted for the budget. The opposition boycotted the vote.

Opposition lawmakers have been largely boycotting parliament in protest over the 2016 election day arrest of a group accused of having planned to kill Montenegro’s ruling party leader Milo Djukanovic.

The new budget assumes 3 percent growth in gross domestic product (GDP) next year, down from 4.2 percent in 2017.

The government this year adopted a set of fiscal measures to help rein in the debt by 2020 due to the financing of large infrastructure projects, such as the highway linking the port of Bar with neighbouring Serbia.

They include raising value added tax from 19 percent to 21 percent as of 2018, freezing employment in the public sector, cutting salaries for public officials and scrapping some benefits.

In September, the International Monetary Fund affirmed its 2017 growth forecast for Montenegro at 3 percent, but said the pace of expansion would slow to 2.75 percent in 2018, due to planned fiscal consolidation.

While infrastructure projects will boost growth, their financing has added to Montenegro’s debts, the Washington-based lender said. (Reporting by Maja Zuvela; Editing by Andrew Bolton)