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Serbia and Montenegro: First Review Under the Extended Arrangement Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Serbia and Montenegro

Montenegro's fiscal program for 2003 entails an adjustment effort of 1/2 percent of GDP.The projected increase in the fiscal deficit by 1 i 1/2 percentage points of GDP (to 5.6. percent of GDP) in 2003 compares with a new burden - stemming from increased contributions to finance union - level spending - of around 2 percent of GDP.Adjustment to this new burden will be achieved by containing current spending, especially subsidies, lending to enterprises, and wages; the latter will be implemented in part thgrough retrenchments that were originally envisaged to take place in 2002.Revenue is projected to rise in relation to GDP as a result of tax reforms and customs harmonization with Serbia (see below), although staff noted that the revenue projections were subject to some downward risks...Download