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NewsMontenegro, continuation of responsible fiscal management is key for further economic growth

Montenegro, continuation of responsible fiscal management is key for further economic growth

Podgorica – Montenegro, in order to further stimulate economic growth, must continue responsible fiscal management with special attention to the implementation of structural reforms, said the president of the Council of Foreign Investors (SSICG), Tamaš Kamaraši.

– Future reforms must be aimed at improving market conditions, removing business barriers, retaining foreign investors and attracting new ones, Kamaraši said in an interview with the Mina-business agency.

Global events, above all the situation in Ukraine, in many ways, he believes, influenced the post-pandemic recovery.

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“Despite the very significant Russian and Ukrainian contribution to Montenegrin tourism in the past, according to data from the Central Bank (CBCG), revenues from tourism for the first nine months of last year recorded a 30 percent increase compared to the same period in 2021,” Kamaraši said.

According to him, thanks to the recovery of tourism, external imbalances have significantly decreased, while the situation on the labor market has begun to improve, despite the fact that structural problems still exist.

– Due to the rise in global commodity prices, Montenegro was not immune, which affected the significant increase in inflation in the country. However, inflation reminds us of increased responsibility in fiscal management, said Kamaraši.

Speaking about the business environment and how much the political situation has affected foreign investments, he said that in the coming period the Government must work on designing new policies to attract foreign investors, especially in the context of conducting international disputes with renowned investors and a greater presentation of Montenegro to investment destinations, improving the efficiency of public administration, digitizing services and creating a predictable tax environment.

“I would like to emphasize that, regardless of the fact that we have positive economic indicators in relation to the region, the slowdown of systemic reforms is evident, especially in terms of digitization,” Kamaraši said.
He believes that political leaders have the responsibility to initiate the resolution of the political crisis as soon as possible through dialogue, which undoubtedly affects the implementation of key reforms from the ambitious EU accession plan, as well as the overall and international image of Montenegro.

When asked what are the most significant barriers for foreign investors, Kamaraši replied that special attention should be paid to the implementation of reform processes in the sectors analyzed by the White Paper, which their members evaluated with low marks (labor market and employment, real estate development, taxation/contributions, corporate governance , rule of law) in order to improve the business environment, attract foreign investments and create conditions for improving the economic standard of all citizens of Montenegro.

– In all our reports, the rule of law is recognized as the most challenging prerequisite for business development. A predictable business environment, which implies the transparency of the work of state authorities, is also of crucial importance, said Kamaraši.

He said that as a serious concern for the country’s economic stability, investors recognize the “discipline” of paying taxes, in other words, the lack of systematic and strict tax collection.

– From our point of view, “discipline” directly affects the competitiveness of companies on the market and unfair working conditions. Also, the change in tax policy has a negative effect on the predictability of investments and the general attractiveness of the country, stated Kamaraši.

According to his opinion, the government should continue the fight against the gray economy, which requires a decisive reaction from the relevant institutions and is an Important factor for fair market competition.

“Also, we believe that digitization is one of the key processes that will positively affect the efficiency and professionalism of public administration, which will contribute to the reduction of corruption,” Kamaraši added.
Kamaraši said that a predictable business environment is one of the key prerequisites for investors, and it is precisely through frequent changes in regulations – changes in procedures, conditions, tax rates and other benefits – that decision-makers can negatively affect the business environment and business security.

– We fully understand that changes are inevitable and in many cases desirable, because the process of harmonizing Montenegrin legislation with more advanced economies is long-term and complex. On the other hand, the way in which they are managed and implemented in the regulatory environment is what makes the difference between a stable, predictable environment that allows companies to plan and invest, and one in which investors make conservative investment decisions because they are not in the ability to predict conditions that should not change without notice, detailed analyzes of the impact on the private sector and a sufficient period for investors to adapt to them, stated Kamaraši.

According to him, it is very important for decision-makers to understand that adapting the private sector to new conditions and procedures often entails unplanned costs, additional training or additional manpower and time.

Kamaraši, speaking about the Council’s plans and activities for this year, said that in the part of giving recommendations for further improvement of the business environment, the Council will publish the next edition of the White Book at the end of March as the main publication of the Council, which represents a credible source and report used by the Government when defining key structural reforms, as well as international institutions, primarily the European Commission and the World Bank during regular assessments of the economic situation in the country.
“Our committees for finance, information and communication technologies and for regulatory policy will closely monitor the changes in the regulatory framework in their sectors and propose initiatives for improvement in areas important for the business of our member companies,” said Kamaraši.

He said that they will continue to be an active member of the Government Council for Competitiveness, as well as to closely cooperate with the EBRD Secretariat at the Council for Competitiveness in order to achieve their common goals and promote their common interests.

“We remain a partner to the Government and business associations in further work on improving the competitiveness of the economy and attracting foreign investors,” Kamaraši concluded for local media.

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