Montenegro has made good progress and is moderately ready for the development of a functional market economy, the European Commission (EC) announced.
From that institution, they pointed out that the economy, after going through a sharp recession in 2020, recorded a strong recovery in the last year and continued to grow at a stable pace in the first half of this year, the RTCG portal reports.
In the document Progress towards meeting the economic criteria for EU accession: European Commission estimates for 2022, which was published on the EC website, it is stated that the consequences of Russian aggression against Ukraine have so far been limited, regardless of the very important contribution of these two countries to Montenegrin tourism in of the past.
Fueled by the rise in global commodity prices, the document says, inflation has risen significantly.
“The government has adopted an ambitious fiscal reform program called Europe Now to support post-pandemic recovery, while providing fiscal stimulus measures to ease the burden on households from rising energy and food prices. External imbalances have been significantly reduced thanks to the return of tourism, while the situation on the labor market has begun to improve, even if structural problems still exist”, the EC stated.
The banking system, as explained, remained stable, and non-performing loans did not increase significantly this year after the moratorium on loans adopted in the context of the crisis due to the coronavirus expired last year.
However, it is pointed out, strict supervision is needed to monitor and address risks regarding the tightening of financing conditions.
The EC said that in the coming year, in order to improve the functioning of the market economy, Montenegro should implement a medium-term fiscal consolidation plan, which aims to further reduce the public debt. Also, to strengthen fiscal management by establishing an independent body for fiscal supervision.
“The state should adopt a strategic plan for the analysis of all state enterprises and prepare a proposal for the optimal scope of state ownership. To develop and implement concrete measures to reduce the gray economy”, the document of the European Commission states.
As they said, a broad consensus on the key foundations of economic policy was maintained despite the changes in the government. The EC states that the last two governments have reaffirmed their strong commitment to the path to the EU and related economic reforms.
“The government expects to limit some of the negative impacts of the war in Ukraine on the local economy by reducing taxes on basic consumer goods and fuel, while supporting agricultural production. And focusing on alternative tourism markets to compensate for the loss of Russian and Ukrainian tourists”, the document states.
Montenegro, they said, has made some progress and is moderately ready to deal with the pressure of competition and market forces within the EU.
The structure of the economy has mostly remained unchanged, it is emphasized, but adjustments are taking place within the sector.
“All in all, small and medium-sized enterprises remain the backbone of the Montenegrin economy, making up about 94 percent of the total number of enterprises”, stated the European Commission, local media writes.