The Economic Editorial Board of the civil association STEGA has addressed Prime Minister Milojko Spajić, urging urgent reforms to tackle Montenegro’s fiscal challenges. The board argues that the current fiscal policy has led to significant risks, including a high budget deficit, rising public debt, and a low credit rating. They recommend a major shift in economic policy, focused on fiscal consolidation, reduction of the budget deficit, and improving the country’s credit rating.
After a brief surplus in 2023, Montenegro’s 2024 budget returned to a deficit, with the IMF projecting a 3.5% GDP deficit for 2025. Interest payments already consume a significant portion of the budget. Rising labor costs due to salary increases have made Montenegrin products less competitive, especially in tourism. Imports continue to outstrip exports, signaling an unsustainable current account deficit. Montenegro’s credit rating remains below investment-grade levels (Ba3 from Moody’s, B+ from S&P and Fitch), making it more expensive to access financing. New borrowing is largely used to repay old debts, signaling early-stage insolvency and worsening fiscal conditions.
The board recommends cutting non-essential expenditures, including official travel and operational costs across ministries. They also suggest modernizing the tax administration and increasing VAT collection by including all business sectors. New borrowing should be limited to high-return projects, and repayment periods for existing debt should be extended. They also emphasize focusing public investment on sectors with high returns, such as infrastructure, healthcare, education, and technology.
STEGA advocates for strong fiscal reforms to achieve a balanced budget, reduce public debt, and ultimately reach an investment-grade credit rating. This will ensure Montenegro’s economic stability and its path toward European Union membership. They emphasize the need for continued political commitment to implementing these changes.
