This study examines the impact of non-tax revenue on the budget balance in the Western Balkan countries, aiming to determine whether this segment of public revenues can represent a sustainable mechanism for fiscal consolidation. The analysis covers five countries (Serbia, North Macedonia, Montenegro, Albania, and Bosnia and Herzegovina) over the period 2008-2024, using annual panel data expressed as a percentage of GDP. The research procedure was conducted using Pooled OLS, Random Effects, and Fixed Effects models, which allow for a comparison of the impact of non-tax revenues under different assumptions about country heterogeneity. Additionally, the F-test, Breusch-Pagan LM test, Hausman test, as well as checks for autocorrelation and heteroskedasticity were conducted, enabling the selection of the optimal model specification. The panel test results indicate that there are no statistical reasons to apply REM or FEM approaches, and Pooled OLS is identified as the most appropriate model. The coefficient for non-tax revenues remains stable and significant across all models (β≈1.3), confirming the robustness of the findings and suggesting that an increase in non-tax revenues contributes to a reduction in the budget deficit. The Granger causality test shows a one-way relationship-non-tax revenues Granger-cause changes in the budget balance, while the reverse direction is not statistically confirmed. Thus, the study empirically confirms that diversification of the revenue side of the budget can serve as an effective channel for fiscal consolidation in a region predominantly reliant on tax revenues. The results indicate that the potential for strengthening non-tax revenues deserves greater attention in the formulation of fiscal strategies in the Western Balkans, as it can contribute to the creation of a more resilient, sustainable, and fiscally balanced budget system.
Gordan Janković (Wed,) studied this question.