The Economic Citizenship Program has brought significant benefits to Montenegro, and efforts should be made to continue it, stated speakers at yesterday’s conference on economic challenges and investment potential in Montenegro, organized by the Bankar portal at the Faculty of Economics.
Economic citizenship
During a panel on economic citizenship, participants including Radojica Petrović, Assistant Director of the Investment Agency, Blagota Radović, owner of Zetagradnja, and immigration law expert Bojan Bugarin, discussed the positive impacts of the program and the need to continue it. Petrović highlighted that in the past four years, 250 million euros have been invested in tourism projects, with nine hotels currently under construction in Kolašin. Of the 16 projects initiated through this program, all are in tourism, mostly in the northern part of the country, except for one in agriculture. The Innovation Fund alone has received 30 million euros from this program.
Bugarin shared that 900 applications have been processed, with 1,100 remaining, and suggested that the government continue to process these applications. He stated that while the program was effective, the state had failed to respond adequately.
“There were very wealthy investors ready to invest, but the state did not react, and they were forgotten, encountering closed doors,” Bugarin explained, referring to his experience working with numerous investors interested in the program.
He believes that the program was abandoned due to reports from the European Commission highlighting risks related to money laundering and misuse of the visa-free regime, but emphasized that the government has not yet had serious discussions with EU officials about these issues.
Bugarin added that a greater role for the EU could help make the process more transparent and counter the arguments against the program, noting that applicants underwent rigorous international checks, including those by Interpol. He argued that there was no risk of jeopardizing the visa-free regime, as most applicants hold citizenship from European countries and many already have Schengen and U.S. visas.
Radović pointed out that the state’s administration is neither prepared nor willing to support foreign investments. He suggested that to attract investors willing to build five-star hotels, the government should waive utility fees.
“Albania offers more favorable conditions, and I fear we are losing an important step, as these hotels are crucial for year-round operation,” Radović said, adding that the state needs to create an entrepreneurial culture in Montenegro.
Radović also noted that while he completed a hotel project in Kolašin, the state has not regulated the infrastructure.
“The state earned 250 million euros, where did that money go? Wasn’t it a priority to provide infrastructure for those who invested?” Radović asked, predicting that none of the hotels in Kolašin would open this year due to the lack of infrastructure.
Challenges and projections
Milena Milović, the Prime Minister’s economic policy advisor, stated that despite the challenges of recent years, Montenegro’s economy has demonstrated resilience, with a dynamic GDP growth rate of over 5%, macroeconomic stability, declining unemployment, and rising budget revenues. She added that these positive indicators, along with a reduction in public debt, provide good expectations for the year ahead.
Dr. Maja Baćović, a professor at the Faculty of Economics, expressed skepticism about the Ministry of Finance’s projection of 4.8% economic growth this year. According to preliminary data from her research, growth is likely to be closer to 2.9%, as projected by the European Bank for Reconstruction and Development.
“The projected growth rate is too optimistic. It will be based on increased consumption, but we must consider our dependency on imports. For every euro spent in Montenegro, 66 cents go toward foreign products, while domestic production is not sufficiently supported,” Baćović explained. She also noted that export optimism is low, even if tourism recovers, and that export levels will be further impacted by anticipated challenges in electricity production.
Diversification
Milović emphasized that major decisions are needed regarding the diversification of the economy and structural changes to make it more competitive and ready for EU integration. She highlighted the importance of increasing wages, pensions, and social benefits, while projecting growth in tourism and investments. She added that Montenegro traditionally relies on tourism, energy, renewable energy production, and hospitality, but it is essential to diversify the tourism product itself.
Dr. Nikola Fabris, Vice Governor of the Central Bank of Montenegro (CBCG), stated that deposits reached a historic high, amounting to 5.84 billion euros at the end of last year. He stressed that the banking system is carefully managing risks, with non-performing loans continuously declining and a credit growth rate of 13.76%, indicating a strong contribution to economic growth. However, Fabris noted that Montenegro is highly dependent on foreign capital, and the country’s liquidity problem is reflected in the number of blocked businesses.
Fabris emphasized that diversifying the economy will take at least five to six years and requires boosting the manufacturing sector, IT industry, and green economy. He also highlighted the need to improve road and energy infrastructure, create favorable export conditions, and support innovation.
Barriers
Nikola Vujović, Vice President of the Chamber of Commerce (PKCG), stated that micro and small businesses are struggling with liquidity and financing issues, though they see opportunities in the Credit Guarantee Fund and the Development Bank. He identified the lack of skilled labor as a major barrier.
“I fear that in one or two years, we will be talking about survival, not just barriers. This is most evident in sectors like tourism, agriculture, and construction, and if we don’t act soon, we will have a problem,” Vujović warned, pointing out that wages in the public administration are higher than in business, which is leading people from the private sector to the public sector.
Responding to Milović’s mention of new laws regarding permanent seasonal workers and foreigners, Vujović argued that these issues cannot be solved solely through legislation. He also acknowledged the progress made in addressing the informal economy, citing a 50% increase in the collection of contributions.
