Montenegro’s Ministry of Finance will submit the 2027 budget proposal to Parliament by the legal deadline of 15 November, but it is not yet known whether the budget accounts for the costs of the Euro model. The model’s annual burden on state finances and its effect on the budget deficit and public debt also remain unclear, the ministry confirmed.
The ministry, led by Finance Minister Novica Vuković, said preparations would be completed within the statutory timetable. Montenegro’s Budget and Fiscal Responsibility Law requires the proposal to be sent to Parliament by 15 November. The ministry said the public would be informed in due course about the details of the proposed legislation.
That leaves the proposed budget’s treatment of the Euro model unresolved ahead of the filing deadline. The available information does not specify whether its costs have been included, how much the model would cost the state annually, or what effect it could have on the deficit and public debt. Those figures matter for assessing the budget’s projected financing needs, but no estimate for them has been provided.
Pay increases and fiscal costs
Prime Minister Milojko Spajić presented the Euro model in mid-September. It envisages a minimum wage of 1,000 euros for jobs requiring primary or lower education, 1,250 euros for jobs requiring secondary education and 1,400 euros for jobs requiring higher education, starting from the New Year.
The plan also envisages adjusting pensions four times a year from 2027 so they fully track wage growth. The government has electronically approved a package of six laws intended to enable higher wages and pensions. The package covers local government financing, corporate profit tax, compulsory social insurance contributions, personal income tax, pension and disability insurance, and labour legislation.
The proposed legislative changes have been associated with a possible new annual budget gap of 650 million to 700 million euros. Added to the existing deficit of about 300 million euros, the potential shortfall could reach about 1 billion euros, according to the figures cited in the debate over the package. These are potential amounts; the available facts do not establish the final fiscal effect or whether the 2027 budget proposal incorporates it.
The package’s approval did not have the support of Vuković, and unofficial information indicated that his ministry had not participated in preparing the proposals. On 21 September, Vuković said his colleagues had analysed the laws quickly and that he would need several days. He also said the ministry would set out its position “absolutely in accordance with procedure” throughout the process.
Speaking in Bangkok in mid-October at the annual meetings of the International Monetary Fund and the World Bank, Vuković described the Euro model as an important step in preparing Montenegro for European Union membership and equal participation in the single European market. He said European integration should not be limited to aligning laws and institutions with European standards, but should also improve living standards, recognise work and create better-quality jobs.
Vuković said workers’ pay in Montenegro had for years failed to reflect the value of their work, and that the imbalance had been corrected through the previous two economic programmes while public-finance stability was maintained. He also said the economy should provide people with prospects for living and professional development and reduce the risk of labour outflows, which other countries had faced during enlargement.
Employers and municipalities seek changes
The Chamber of Economy of Montenegro, the Employers’ Union of Montenegro and the Association of Municipalities have asked for the Euro model to be reviewed and adjusted, citing what they describe as negative consequences. The three organisations submitted proposals for changes and sought meetings and a response from Spajić, but their requests had not received an answer at the time reported.
On 30 October, the Chamber said Spajić had introduced the new wage-increase model 44 days earlier. It said the six laws changed labour and tax rules, removed contributions for pension and unemployment insurance, and altered how local governments are financed. The Chamber also said the usual procedure for preparing draft legislation had not been followed and that it first invited the prime minister to a meeting on 24 September.
The Association of Municipalities said it had sent Spajić an assessment of the model’s impact on local public revenues, together with proposed compensatory measures supported by all 25 municipalities. Local governments want their budgets kept stable and warn that lower revenues combined with higher spending could put development projects and public services at risk. The association proposed a meeting between municipal presidents and mayors and the prime minister, with ministers responsible for implementing the measures also attending.
The Employers’ Union invited Spajić to a meeting on 14 October and proposed a support package for businesses. It said wage increases needed to be accompanied by measures enabling companies to absorb higher costs, retain jobs and continue investing in development. The union proposed minimum wages of 800 euros and 1,000 euros, below the levels in the government’s model for the two education categories.
The Democratic Party of Socialists has asked Parliament’s leadership to ensure Vuković attends the next session for MPs’ questions to answer about the model. Its parliamentary group leader, Andrija Nikolić, said 47 days had passed since the model was presented, the Ministry of Finance still had no position and Vuković was not scheduled to face questions. Nikolić said his group had seven questions for the minister and that there was no plan for when he would respond.
Nikolić also called on the Central Bank of Montenegro and the Fiscal Council to give their positions on the Euro model. The Ministry of Finance has not specified whether the proposed 2027 budget will include the model’s costs; the statutory submission deadline remains 15 November.
