The current financial situation in Montenegro is stable, as evidenced by a budget surplus of €93.7 million for the first eight months of the year. This figure represents a remarkable improvement compared to the planned deficit of €138.3 million, resulting in a positive budget balance of €232 million. Minister of Finance Novica Vuković noted that this indicates an increasing international reputation and investment potential for the country.
Vuković highlighted ambitious plans aimed at enhancing the economic development of Montenegro, particularly through reforms designed to improve citizens’ living standards, reduce unemployment, increase investment potential, and maintain stable inflation. He emphasized the importance of responsible public finance management and reducing the informal economy as steps toward a sustainable and competitive economy.
Montenegro recently improved its credit rating after 11 years, marking a significant achievement alongside a positive budget outcome. The minister expressed optimism about the country’s economic policies and development processes undertaken in the past ten months. He noted that investor confidence in Montenegrin bonds reflects a growing trust in the country.
The financial outlook remains stable, with expectations of continued growth in revenue due to changes in tax policy and a stronger fight against the informal economy. The Ministry of Finance aims to create a sustainable fiscal and macroeconomic framework, achieving a current consumption surplus and reducing non-productive expenditures while boosting budget revenues.
Priorities for the upcoming budget include improving public resource allocation through better coordination and inter-institutional cooperation. Key reform plans are outlined in Montenegro’s Fiscal Strategy for 2024-2027, along with the Public Finance Management Reform Program for 2022-2026.
Regarding the increase in VAT for the tourism sector, Vuković explained that the intention was to standardize VAT rates across various hospitality services to eliminate discrimination among market participants. This adjustment aims to maintain fiscal stability while addressing lost state revenue due to reduced labor tax burdens, positioning Montenegro as one of the most favorable tax systems in Europe for labor costs.
To manage public debt effectively, the Ministry of Finance recognizes the impact of public debt on the sustainability of credit ratings and overall public finances. The recent trend has shown a decrease in public debt relative to GDP, attributed to robust economic growth. However, with approaching deadlines for large debt repayments, the ministry emphasizes the importance of generating budget revenues for timely debt servicing.
Inflation in Montenegro is reportedly decreasing, with the latest figure at 2.2% in August, the lowest since April 2021. The government anticipates a continuation of this downward trend. In response to inflationary pressures, measures have been implemented to limit margins on essential food products, aiming to stabilize prices and enhance purchasing power for citizens.
The Ministry is focused on increasing transparency in budget spending and combating corruption in public finances. Regular reporting on budget execution is part of their strategy to ensure accountability. Future plans involve developing gender-responsive budgeting and adhering to international standards.
Through the “Europe Now 2” program, the government aims to stimulate private sector growth and reduce unemployment. With the minimum wage set to increase, the government seeks to retain talent within the country and make it more attractive for investments. Measures will also facilitate easier access to financing for businesses.
The establishment of a financial police is in the pipeline to tackle illegal business activities and corruption effectively. This initiative will involve a comprehensive analysis of the current legal framework and cooperation with Italian authorities for expertise in combating financial malfeasance.
In summary, Montenegro’s financial strategy focuses on stability, growth, and transparency, with the government committed to creating a favorable environment for both domestic and foreign investments. The “Europe Now 2” initiative is expected to enhance living standards while supporting a sustainable economic framework.
