At the end of 2020, the Montenegrin economy is entering a very uncertain phase of development which, according to forecasts, will take a long time. Bad economic policy in the last 30 years, as well as the disastrous impact of the corona virus in the last 6 months, contributed to this. The situation is therefore more difficult and the forecasts are even bleaker, because the end of this contagion, which is shaking the world economy and introducing many richer countries than ours into a state of recession, is not yet in sight. A highly debatable economic policy combined with the virus threatens to bring down our already fragile economy.
Perhaps the critics of my statement "that a bad economic policy was conducted" will respond with the data that in the last few years, Montenegro achieved the highest rate of GDP development in the amount of 3,5-5% and that it was the leader in the region. I don't dispute that fact of official statistics, however, according to macroeconomic theory, such growth rates had to be followed by the growth of population standards - which did not happen. In addition, the indebtedness of Montenegro grew much faster than GDP growth, and according to my forecast, if no action is taken, it will reach an incredible 100% in the coming period. And some of the most developed countries in the world have such a relationship, that's true, but it's also true that those countries have an economic structure in which the real sector (production) participates with over 80%, so they are able to borrow because they have somewhere to pay back. In contrast to such economies, the structure of the Montenegrin economy is catastrophic with only 12% of the participation of the real sector. In the mid-80s, the real sector in the structure of the economy of Montenegro participated with 45%, which for the then protagonists of the economic policy was small, so they tried to improve such a structure as well.
Today's structure of the Montenegrin economy is determined by the service sector - tourism and construction, agriculture, energy and a little bit of ferrous and non-ferrous metallurgy. I believe that this is an extremely unfavorable structure, which, after all, was also shown this year when, due to the corona virus pandemic, tourism collapsed on us like a house of cards. Who is to blame for the collapse of the economic structure and the reduction of the Montenegrin economy to one-sided development? The current government will say that wars in the environment and economic sanctions did it. I would say that there is some, but much less compared to irrational economic policy. Our strong ferrous and non-ferrous metallurgy, metal processing, chemical industry, textile industry, leather and footwear industry, powerful transport companies are being destroyed... I believe that all of this has been devastated by irrational economic policy, and above all by very dubious privatizations and the engagement of investors who are not took care of the further development of privatized companies, but of their own private interests. So, according to my deep conviction, the darkest point of the Montenegrin economy all these past years was its very unfavorable economic structure, so that if anyone in this country is thinking about the future economic development of Montenegro, they must work intensively on expanding the economic structure in the direction of real development. sector.
How to do it? Only investments. There is very little domestic accumulation, and what they have, domestic investors invest in magnificent shopping centers. Isn't it irrational to invest 30 million euros in a large shopping center and not in some production? And not only that, such large shopping centers are filled with imported food, thus suffocating the already small domestic production. We will soon hear that food imports have exceeded the figure of 600-700 million euros, which is truly incredible.
Montenegro needs urgent reforms, both at the level of the economic and financial system, and in the domain of legislation. When it comes to reforms at the level of the economic system, they mainly refer to changing the model of economic policy. It is urgent to abandon the one-sided model of economic development and move to a new, more complex one, which mainly includes the expansion of the economic structure and its diversification. Tourism and agriculture must continue to remain very important branches of economic development. All this cannot be done without investments. In addition to domestic accumulation, which still exists, credible foreign investors should be brought in. I believe that Montenegro can attract foreign investors who, under new conditions, without blackmail and racketeering, will come to Montenegro and invest in production. Much more investment must be made in the north because it is an area with much more natural resources compared to the coastal and central regions. We concreted the coast, and the central region, including Podgorica, has been overpopulated in recent years with a large population from the north, which left very rich areas. The northern region can be another Austria or Switzerland, where every glade should have a farm, food processing, school, hospital or tourist facility. Unfortunately, this was not recognized by the former communist government, nor by the latter, so the north is slowly but surely being "emptied" due to such a long-term policy.
On the legislative level, reforms are necessary, above all in tax policy, justice, education, etc. I will dwell only on the reform of the tax system. This kind of tax policy, especially the tax administration, does not serve anyone. I will not say anything new if I say that tax rates should be lowered and thus the tax base should be increased. Since I am in the process, as a bankruptcy administrator, I will announce the following: the current tax administration is numerically insufficient, and I believe that it is also insufficiently educated and that it does not act preventively. Maybe it's an expression of dissatisfaction, due to low income, but what I noticed with every concluded bankruptcy is the fact that the bankrupt debtor remained indebted to the state from 20 to 200 thousand euros, according to the folk saying "the wolf ate the donkey". Thus, a large number of Montenegrin companies build their power by "scrutinizing the state". That is why, as a matter of urgency, the Law on Business Companies and the Law on Bankruptcy should be changed, where the owner will be liable with private property, and the tax administration should be increased, well rewarded and professional management should be brought in. The main goal is to conduct a non-selective policy.
And at the very end, I ask the future government to do everything to ensure that salaries, pensions and social benefits are paid regularly by the end of the year, in order to meet normal demand and not to endanger such a fragile economy.
The author is a long-time businessman
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