The Vienna Institute for International Economic Studies (wiiw) warns that Montenegro’s planned Euro wage model poses a significant fiscal risk, projecting the budget deficit will reach 4.5% of GDP in 2028. Its autumn outlook forecasts the deficit rising from 3.7% of GDP in 2026, while the wage increases are planned for January 2027.
The publicly available summary of the Montenegro analysis, titled “Montenegro: Moving forward, with many question marks”, says: “The Government’s new ‘Euro model’ represents a significant fiscal risk.” Economists Branimir Jovanović and Bernd Christoph Ströhm wrote the analysis.
The warning concerns a government plan to raise minimum wages that Prime Minister Milojko Spajić announced for January 2027. According to the Prime Minister’s Cabinet, the model sets minimum wages at 1,000 euros for jobs requiring basic and lower levels of education, 1,250 euros for the secondary level and 1,400 euros for the higher education level.
Wiiw projects budget deficits of 3.7% of GDP in 2026, 4% in 2027 and 4.5% in 2028. Based on those published projections, the deficit would increase by 0.8 percentage points between 2026 and 2028.
The institute forecasts economic growth of 3.1% in 2026, 3.2% in 2027 and 2.9% in 2028. It expects inflation to slow gradually from 4% in 2026 to 3.8% in 2027 and 3.5% in 2028.
Wiiw also projects a current account deficit of 20.5% of GDP in 2026, 19.5% in 2027 and 21.1% in 2028. The authors describe the economy as recovering, but identify high inflation and large external imbalances as key weaknesses; they expect those imbalances to persist throughout the forecast period.
The authors also point to renewed political tensions in Montenegro. The institute’s autumn projections cover central, eastern and south-eastern Europe, including Montenegro.
