The government aims to achieve sustainable and inclusive economic growth during its mandate, with a focus on improving the quality of life for all citizens, according to the Economic Reform Program for the period leading up to 2027.
The goal of economic policy during the mandate of the 44th Government is to raise the standard of living, create a predictable and encouraging investment and business environment, generate new jobs and accelerate the convergence of income and GDP per capita to the EU average, as reported by the RTCG portal.
“Montenegro has made significant progress in its EU accession negotiations and remains committed to becoming the next EU member state in the near future. The Economic Reform Program is the most important document for meeting the economic criteria in the accession talks. On one hand, it serves as a tool for planning the country’s economic policy and managing reforms aimed at maintaining macroeconomic stability, boosting international competitiveness, and improving conditions for inclusive growth,” the document states.
The Economic Reform Program is a key element of the “fundamentals first” approach in Montenegro’s EU accession negotiations, especially regarding the fulfillment of Copenhagen economic criteria.
“In the upcoming period, it is expected to maintain macroeconomic stability and fiscal health while stimulating economic growth and the investment cycle. According to the base macroeconomic scenario, Montenegro’s economy is expected to grow by an average of 3.7% annually in the medium term, with a projected 4.8% growth in the next year, followed by 3.2% in 2026 and 3.1% in 2027. As pressures on prices in Europe ease, inflation is expected to gradually slow down, averaging 2.9% during the period from next year to 2027,” the document outlines.
Strong household consumption, an increase in minimum and average wages, pension growth, tax policy and business environment reforms, an increase in investment activity, and continued growth in tourism, along with sectoral support measures and relevant economic and inflation forecasts for Europe, are the main assumptions for the medium-term macroeconomic scenario.
“Montenegro has recorded its lowest unemployment rate in history, a result of successful labor market activation measures and support for the private sector. Entrepreneurship and investment support programs, combined with tax system modernization, have led to significant growth in employment, pensions, and wages, thereby raising the standard of living,” the document explains.
In terms of fiscal policy, the main objectives from now until 2027 focus on achieving a surplus in current budget expenditures and maintaining a budget deficit at an average level of 3.2% of GDP during this period.
“The public debt level is expected to average around 62.7% annually from now until 2027, with net public debt at an average of 60.2%. Conditions will be ensured for new borrowing to be exclusively used for financing capital projects or refinancing existing government debts. A significant increase in funding through investments in the Capital Budget and EU-secured grants will mark the beginning of an intensive investment cycle and contribute to accelerating economic growth,” the document adds.
The document also highlights the aim to reduce the shadow economy to foster fair market competition and curb unfair practices.
From 2025 to 2027, an intensive investment cycle is expected, with investments coming through the capital budget and EU grants, the most notable of which are for the construction of the highway (Andrijevica-Mateševo section) and railway infrastructure reconstruction, which are already secured.
“Additionally, through the Western Balkans Growth Plan, Montenegro will have access to €383 million from 2024 to 2027 for structural reforms and infrastructure investments. The remaining funds required for the ambitious infrastructure development plan, which will enhance the country’s economic potential, will be secured through credit resources,” the document notes.
The strategy for managing public finances from now until 2027 is aimed at achieving a surplus in current public spending, which will enable the “golden rule” of fiscal responsibility – financing all current obligations from current revenue.
“The current spending surplus is achieved despite a reduction in tax burdens on wages, a measure implemented to support the competitiveness of the economy through a stimulating tax policy. By reducing the tax burden on wages, fixed costs for employers are lowered, while compensatory measures ensure growth in total public revenue and maintain fiscal sustainability,” concludes the document.
