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Montenegro, Focus on fight against inflation

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The fight against inflation is the focus of almost all European countries, and with the recent action “Stop Inflation”, Montenegrin businessmen and the Ministry of Economic Development and Tourism offered citizens a group of at least 25 products whose price is limited in order to mitigate the inflationary effect on citizens’ purchasing power.

When it comes to similar actions, for example the Government of Portugal prepared a list of 44 basic products on which it abolished VAT, thus trying to alleviate the galloping inflation. However, MERT, headed by Goran Đurović, points out that the action being carried out in our country gives good results, and that they will closely monitor market developments and prepare further steps in coordination with retail chains.

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– The previous practice has not shown that the reduction of the VAT rate leads to a significant reduction of the final prices, and the state loses a significant amount of income in this way, so such measures are not part of the current activities. Of course, in the event of sudden changes on the market, the Government can consider other models, and all in accordance with the legal regulations – said the MERT.

The department points out that the citizens’ reactions to the action are positive, and that they are looking for a way to transfer this initiative to other products and services.

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– We believe that in the coming period, the list of products with reduced prices will be further expanded and that the campaign will have a multiplier effect, encourage competition and therefore influence inflation to be within control limits. The current “anti-inflationary basket”, according to the agreement with the traders, will last until May 1, after which a new one will be formed, in relation to their possibilities and the state of the market. As the well-being of citizens, especially those with lower and social incomes, is our first priority, in cooperation with shops and other partners we will try to come up with the best possible solutions – emphasized the MERT.

Economic analyst Oleg Filipović states that any action that will improve the position of the population should be supported.

– It has produced results and the joining of an increasing number of businessmen should be welcomed. However, our action should not be compared with actions in the West, because the market and the economy are significantly different. Their agriculture is organized much differently and more seriously, so we are not comparable categories – believes Filipović.

He also states that the state must be more agile in dealing with inflation and work to encourage domestic agriculture.

– We are facing imported inflation and have been conducting an expansive fiscal policy for a long time, and it is not related to our profit, but to borrowing. In addition to tourism, we must focus on agricultural production, and it is good that the agricultural budget has been increased, but imports must be limited, otherwise we have not done anything. We must also finally reactivate commodity reserves, because this situation has shown us how much they mean – concluded Filipović.

We have to change the entire economic system

Filipović points out that the next moves of the Government are also very important, given that the current campaign expires on May 1.

– The abolition of VAT on domestic products might give incentives to domestic producers, but it would also deprive the state of significant revenues. The bottom line is that we are developing a new economic system, because the previous one has proven to be unsuccessful. With the development of agriculture and industry, tourism and IT and the financial sector, they could control the situation on the domestic market, because inflation is imported here – said Filipović.

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