Montenegrin Parallel Budget

Uncontrolled Money

In Montenegro, parallel with the official, there is the unofficial budget which the government, when necessary, draws money for the official one, but also finances various other things. It is believed that most of the money in this parallel budget flows in from the state smuggling of cigarettes and other commodities

AIM Podgorica, 13 November, 1999

For years already, Montenegrin authorities are bragging about a balanced budget and their capability not to spend more than the planned sum. When time came to settle accounts in the paliament for the past year, everything appeared to be quite logical and clear on paper. The income amounted to this much, and expenses to this much. Period. The ruling majority was in fact taking things for granted, while the opposition minority suspected and accused the government of "fixing" the balance sheet of the budget. However, it could not corroborate its suspicion and accusations with any tangible evidence. Until recently, that is.

In the course of the recent parliamentary debate about the draft balance sheet of Montenegro for 1998, in front of the noses of the ministers and deputies of the ruling "To Live Better" coalition, deputy and political leader of the opposition Liberal League, Miodrag Zivkovic, started waving crucial evidence that the government had forged the balance sheet of the budget and thus committed a crime which remains punishable for twenty years. The paper in his hand was the letter of the Ministry of finance dating back from October last year in which the government was informed about the estimates of the budgetary income and expenses until the end of the year. The enormous difference between the amount of interest stated in the letter and the one written in the draft balance sheet of the budget implied that there was something fishy there.

In mid October last year, the Ministry of Finance informed the government that the expenses on the basis of interest had already piled up and amounted to 166.77 million dinars with a tendency to continue to grow and reach the sum of more than 181 million. In the annual balance sheet of the budget drafted by the government and sent to the parliament for adoption, expenditure based on interest dropped to less than 25 million dinars. Although this also considerably exceeded the planned expenditure (nine million) for interest, at least it was not concealed. According to the opinion of the Liberals the problem is that the government had hidden a part of the budgetary expenditure, forged the annual balance sheet and tried to avoid responsibility for having exceeded the budget.

That members of the government were caught red-handed by evidence which was pubicly presented by the deputy of the Liberal League was obvious after the hasty but unconvincing defence of Dr Predrag Goranovic, deputy prime minister responsible for financial issues. He tried to deny the accusation by imprecise explanations that the interest could be changed and that there existed budgetary reserves for that, and "that aid offered to other subjects and loans could not be considered as interest".

A more precise (although not more convincing) explanation of the secret of the vanished interest in the income side of the budget was later offered by Milan Dabovic, assistant minister of finance and Dr Predrag Ivanovic, deputy of the Democratic Party of Socialists, the most powerful member of the ruling coalition. The essence of their explanation was that during the budgetary year of 1998, the government extended loans to economic subjects and that they were booked in the account of interest simply because the loans had to be registered somewhere.

"This is neither the expenditure of education nor of science - it is a loan. It was registered on that account. Mr Dabovic could have registered it on any account. However, when the annual balance sheet is submitted to the parliament, this temporary evidence must be cleared. Only real interest can be booked on the account where interest is registered, which is an expenditure", deputy Ivanovic, professor and dean of the Economic Faculty in Podgorica, explained in the parliament.

The government also referred to the report of the authorised auditor of the famous Deloitte & Touche company in which it was stated that "the draft balance sheet of the budget of the Republic of Montenegro for 1998 objectively presented income and expenditure". But since Deloitte & Touche stressed that the scope of the audition was limited, as demanded by the party which had ordered the job, one could do nothing but take the word of the government for it.

This was sufficient for the parliamentary majority to pass the annual balance sheet of the 1998 budget. Suspicion remained, and it was additionally corroborated by a reminder of a statement made last year by Nebojsa Medojevic, cooridnator of Group 17 of independent economists and at the time advisor in the Agency of Montenegro for reconstruction of the economy and foreign investments.

"The government of Montenegro is for the time being succeeding in filling all the gaps in the budget by taking shortterm loans from business banks, and as a result the expenditure of the budget due to interest reached the unthinkable 200 million dinars", said Medojevic in an interview to Belgrade Dnevni telegraf on 13 November last year.

Medojevic still firmly stands behind his statement which undermines the official interpretations. According to what Medojevic, himself a member of one of the parties (Social Democratic) of the ruling coalition, claims, the government filled the deficit in the budget by taking loans or by borrowing money for somebody else. In any case, the interest in budgetary expenditure is the result of loans taken by the government and not of registering its "loans to economic subjects". Medojevic's statement sounds even more logical when one knows that nobody has denied it. It is hardly possible that it was simply overheard by Montenegrin government.

It can all be brought down to the conclusion that in Montenegro, parallel with the official, there is the unofficial budget from which, when need ariss, the government fills the official one, but also finances various other things. It is believed that most of the money in the parallel budget comes from the state smuggling of cigarettes and other comodities. More precisely, these are the foreign currency reserves of Montenegro, which is a fact known both to the citizens and the parliament, but the legislative authorities control neither the income nor the expenditures in this financial forbidden ground. Those well informed claim that not even all the members of the former single-party government of the Democratic Party of Socialists could peep into it, least of all of the current multi-party one.

When in mid 1996, the opposition parties raised their voices against the government and demanded an answer to the question: "Where is the people's money, who controls it and in whose interest", former prime minister and current president of Montenegro Milo Djukanovic indignantly retorted that they would never know. Later on, at a debate of his party, he admitted that foreign currency reserves were among other used to balance the budget.

"For a long time Montenegro has lived with a complex that it unconditionally depended on someone else - for its foreign currency, and for its dinars, and for everything else for that matter. We have definitely overcome this complex. At the most difficult time we have formed foreign currency reserves with which without any problem, we solved all the troubles of the economy, balanced the budget...", three years ago Djukanovic used to say.

The single-party Montenegrin government equally as the current multi-party one wished to convince the public and its political opponents that the money from the purse which they cannot even peep in is managed with great care. Perhaps this is true, but, just in case, a long time ago the principle of budgetary publicity has been invented. If this is true for the official, there is even more sense in it being applied to the alternative one. "It is impossible to extract honey without licking one's fingers", an opposition deputy in Montenegrin parliament once said.

Dragoljub VUKOVIC

(AIM)