Fiscal stabilization remains key for the long-term economic growth of Montenegro this year, and significant potential is found in tourism and renewable energy, said the head of the European Bank for Reconstruction and Development (EBRD) office in Podgorica. Jaap Spray.
"The government, having developed a credible fiscal strategy, should stick to the agreed goals, even if economic growth slows down, in order to restore fiscal balance and reduce public debt," Sprey told the Mina business agency.
Sprey explained that the new highway project has significantly increased the public debt burden and carries significant exchange rate risk, as the loan is denominated in US dollars.
"Although the prospects for growth in Montenegro are relatively good, the fiscal surpluses in the coming years will convince the markets about the country's long-term sustainability," Sprey said.
He stated that the EBRD expects growth this year to be moderate to three percent, due to the fiscal austerity measures adopted in 2017, and the current highway construction cycle is coming to an end.
"Membership in NATO represents a major milestone on Montenegro's path to EU membership. It signals the country's stability and will further improve the investment climate. In February, the European Commission (EC) highlighted the possibility of Montenegro becoming a member of the EU if it achieves satisfactory progress in implementing the necessary reforms. Again, this is an encouraging signal for foreign investors", assessed Sprey.
He added that EBRD's experience and research show that businesses are concerned about issues such as competition from the informal sector and customs and trade regulations, while corruption remains a challenge.
He stated that the EBRD's goal is to further integrate Montenegro into the region by working on transport infrastructure. "At the end of last year, we approved a loan of 40 million euros for the upgrade and expansion of three main roads. At the beginning of last year, we approved a loan of 20 million euros in relation to the Port of Adria. We are potentially interested in financing the airport concession, and we are also considering projects with the railway," said Sprey.
For Podgorica, as he announced, they intend to attract EUR XNUMX million in grants from the EU regional energy efficiency program for the Western Balkans in order to improve the energy efficiency of public buildings and prepare a loan of EUR XNUMX million for this purpose.
So far, the EBRD has signed about 60 projects with Montenegro with a total investment volume of close to 570 million euros for total investments above one billion euros. Energy, transport and infrastructure and the private sector are the main areas in which investments have been made.
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