In response to the government’s announcement of new measures to control food prices starting May 15, economic analyst Mirza Mulešković emphasized the need for sustainable strategies over short-term price interventions. He argued that to effectively combat high prices, decision-makers must move beyond “catalogue-based discount actions” and begin implementing subsidies for domestic production. This, he said, is the only way to strengthen the Montenegrin economy and influence market prices in the long run.
The government’s new measures will follow the expiration of the “Limited Prices” campaign. Deputy Prime Minister and Minister of Economic Development, Nik Đeljošaj, stated that upcoming policies will focus primarily on domestic and agricultural products to boost local production, support economic activity, and encourage tourism. It remains unclear whether the measures will involve state subsidies or another round of margin limitations for retailers.
Mulešković criticized the lack of transparency and evaluation regarding the impact of previous price-limiting campaigns. “We keep extending these actions without understanding their actual effects. Global prices have stabilized, so it’s questionable whether these domestic actions had any real impact on keeping food prices from rising,” he noted, adding that the government has taken no concrete long-term steps since the global price surge began three years ago.
Parliamentary proposals: VAT reductions and support for local products
The Parliamentary Committee on Economy, Finance, and Budget recently adopted conclusions from a consultative hearing on retail prices, led by Committee Chairman Boris Mugoša. The Committee recommended additional measures to protect consumers and called on the government to take a systemic approach to tackling high prices.
Mugoša shared on social media that the Committee suggested lowering VAT on fruits and vegetables, considering VAT reductions on processed meat products, and analyzing the country’s excise tax policy. It also stressed the need for increased budget allocations to support domestic production and boost competitiveness in the Montenegrin economy, particularly through the agro-budget.
The Committee proposed better visibility for domestic products in stores and the potential creation of dedicated retail spaces for price-limited items. Additionally, it recommended requiring retailers to display both the current and previous prices of products to ensure greater price transparency.
Balancing VAT cuts with fiscal stability
Commenting on the VAT reduction proposal, Mulešković acknowledged its potential to lower prices in the short term but warned that long-term solutions require a comprehensive strategy for promoting local production and reducing public administration costs. He also noted that VAT plays a crucial role in Montenegro’s fiscal stability.
“Lowering VAT on fruits and vegetables should have been done earlier and will slightly reduce prices, but how sustainable is it, considering our heavy reliance on VAT revenue? The recent quarterly collection data shows that the state urgently needs higher income,” said Mulešković. Still, he concluded, authorities must also focus on helping citizens and reducing public expenditures through smarter governance.
