I want to clearly inform the citizens of Montenegro that the most important task of the new Government will be to improve the quality of life of every family and every individual in our country. It must be a visible shift, it must be felt realistically, in everyday life. This is the key task facing this Government. This is also our clear promise to citizens. This is also our willingness to bear the responsibility for fulfilling this promise, said Duško Marković in the Assembly on November 28, 2016, in an exposition before the election for the President of the 41st Montenegrin Government. Whether citizens have realistically felt the improvement of the quality of life can be determined by comparing income growth with inflation.
In the month when Marković was sworn in, the average salary, according to the Monstat methodology, was 503 euros, and now it is 516 euros, that is, a nominal growth of 2,6 percent was achieved. The average pension in the same period grew by 1,4 percent, from 284 to 288 euros. Cumulative inflation for three years is 5,4 percent, which means that the real value of the average salary is lower by 2,8 percent, and the average pension by four percent. This indicates that the standard of living of the average citizen is declining.
Unemployment reduced on paper
The Government's goal to reduce unemployment and increase the number of employees, at least on paper, has been fulfilled. In November 2016, according to the then methodology, there were 46 unemployed, while now there are 36. The data are not comparable because the methodology has been changed in the meantime, in fact new reasons have been introduced for deleting the unemployed from the records. By month, it happens that the number of deleted persons is five times higher than the number of employees in that month, which gives an unrealistic picture. For example, the number of unemployed people with a university degree "reduced" from 11 to 6,3 thousand. Last year, there were five thousand university students on the professional training program, which is one of the new reasons for deleting them from the records.
The number of employees increased from 178 to 205 thousand in three years. However, there is a big difference between the number of employees according to the two methodologies. According to employers' reports, that number is officially 205 thousand, and according to the data of the Tax Administration, the number of those for whom taxes and contributions are paid is on average 50 thousand less. If taxes and contributions were paid for all 205 thousand, the income of the state would be higher by 150 to 180 million euros.
Public debt grew faster than GDP
"In order to increase the quality of life of citizens as the main goal of economic policy, the imperative of this Government must be to define a formula for achieving more dynamic, sustainable and inclusive economic growth at an average rate in the range between 3,5 and 4% per year, which will bring higher income and more an opportunity for employment", said Marković three years ago.
This economic theory has not proven to be correct in practice. GDP growth of 2017 percent in 4,7 and 2018 percent in 5,1 did not result in income growth at a higher rate than inflation.
Public debt at the end of 2016 in net amount was worth 2,5 billion euros, while at the end of the year it will amount to 3,3 billion. It grew by 32 percent, which is twice as much as GDP growth in those three years.
At the end of 2016, liabilities from loans for highway construction in the public debt amounted to 189 million euros, while now they are around 600 million. This means that slightly more than half of the increase in public debt was related to this project.
Higher duties, abolition of the "crisis tax"
Marković's government began its four-year mandate by adopting the first package of austerity measures, which took effect on January 1, 2017, and included an eight percent reduction in the salaries of about 800 top government officials who had previously received a 30 percent increase, the abolition of benefits for mothers of three and more children, an increase in excise duty on fuel by nine cents, VAT on computer equipment from seven to 19 percent... These measures were not enough to fill budget holes and stabilize finances, so in July 2017 a new fiscal strategy was adopted, according to which from On January 1, 2018, the general VAT rate was increased from 19 to 21 percent, which affected the growth of prices of consumer goods, telephone bills, electricity, fuel... Excise duties on cigarettes, alcohol, coal and carbonated juices were increased.
Starting next year, the crisis tax on salaries above the average will be abolished, that is, the rate will be lowered from 11 percent to nine percent. It was a "temporary measure" for seven years, which brought in tens of millions of euros to the state treasury.
Stabilization that costs money
Three months after the adoption of the budget for 2018, the first rebalance followed in March, which the Government announced as the crowning achievement of the successfully completed first phase of hard work in stabilizing public finances. That rebalancing cost the citizens 144 million euros.
The amount of indebtedness through Eurobonds was increased from 400 to 500 million.
The second rebalance from July showed that almost nothing of what was planned in the "year of austerity and stabilization" was achieved because there was a drop in excise revenue, current expenditures were not kept at the previous level but increased, and the number of employees in the public administration was not reduced. already significantly increased, the deficit rose from 114 to 142 million, and the need for borrowing from 295 to 739 million. Due to the drop in excise revenue, due to the organized smuggling of cigarettes, their amount was partially returned to the previous level.
Stabilization is expected in the coming year due to higher tax collection, issuance of airports... The Government assessed the new budget as developmental. Montenegro borrowed in advance to pay back old debts in 2020, after the Ministry of Finance estimated that they should do it this year due to a cheaper loan.
The State Audit Institution (DRI) found that the government deviated from the fiscal strategy because last year it had a deficit in the state treasury of 169,86 million euros, which is 43,46 million euros more than planned.
The IMF, the World Bank (WB) and credit agencies "Standard and Poor's" and "Moody's" indicated in their reports that the projections on the surplus of the state treasury in 2020 can hardly be realized. The reasons for these estimates are, among other things, the cost overrun for the construction of the highway and possible pressures that will increase spending just before the elections, which are planned for the second half of next year. Those forecasts turned out to be correct, because the budget proposal for 2020 projected a deficit of 50 million euros instead of a surplus in the budget.
Secret budget reserve
The work of this Government is also characterized by the non-transparent spending of money from the current budget reserve, because it is not known where the millions from that item go. From the beginning of the mandate to the end of May last year, a total of 22,01 million taxpayers' money was distributed to legal entities on the basis of secret Government decisions. This is contrary to the Law on Budget and Fiscal Responsibility, where it is defined that the executive power (Ministry of Finance) is obliged to prepare a report on expenditures from the budget reserve, which is why they cannot be secret. The spending of that money must be detailed in the Law on Final Accounts, but only scanty information is published.
Economic citizenship
At the beginning of this year, the economic citizenship program started, from which revenues of 10 million were expected this year, but this was not achieved, so the Government again made a projection for 2020 that it will generate 15 million euros on this basis.
The program lasts three years and it is planned to distribute 2.000 passports in exchange for investments in some of the projects that should contribute to development. At the meeting with the Council of Foreign Investors, the Prime Minister said that so far they have approved six projects under the economic citizenship program.
Rescue of Montenegro Airlines
Whether Montenegro Airlines will finally be saved at the state's expense and how, it could be known by the end of the year because a lex specialis law is being prepared just for this company.
Whether Montenegro Airlines will finally be saved at state expense and how, could be known by the end of the year
The national airline received 7,2 million euros from the state budget last year, 9,7 million the year before... in violation of the State Aid Act. The company has a debt of about 90 million euros, predominantly old.
Finance Minister Darko Radunović admitted in November of last year that they did not fully respect the law in their desire to try to save the company.
The budget for the next year foresees 21 million euros for "creating letters for the sustainability of MA", and it is stated that the company will also buy new planes for 50 million euros. It was announced that this will be defined by a special law.
Tenant for airports
When Marković announced three years ago that he would "adapt the airports to the growing needs of tourism development", it was expected that the expansion of the airports would finally begin from the deposited profits of the state company Aerodromi of about 25 million euros, as well as from the 30 million euros loan from the EBRD which was almost already agreed upon. However, a year and a half later, it was proposed that the airports be given on a long-term lease.
Regardless of the assessments of a part of the professional public that the state should manage this valuable resource.
After a year of preparation, the Government adopted the concession act in July of this year, and the public call for prequalification was published on October 11. The government expects the entire procedure to be completed by the summer of next year. The main conditions of the competition are investments of at least 80 million euros, a one-time fee of at least 100 million and an annual fee of 10 percent of the profit. According to the analysis from the concession act, the state would get 30 million from this business in 300 years, and the investor would get a profit of 800 million.
Highway: Costs are rising, works are late
Marković's Government inherited omissions regarding the work of the century - the construction of the section of the Smokovac-Mateševo highway.
Due to the poor preparation of the project, the construction contract based on the conceptual design, as well as "forgetting" to include in the contract the construction of the Smokovac interchange, water and electricity networks, the deadline for completion was moved from May 11, 2019 to September 30, 2020. Previous Government concluded the loan agreement in dollars, so Marković's cabinet now has to negotiate and pay for currency risk insurance. The value of the forgotten works is already over 90 million euros, and the cost of currency risk insurance will be known next year. The first annual installment of 67 million euros without interest is due in 2021. The new deadline for the completion of the highway construction falls right before the next parliamentary elections.
Large and small power plants
Of the large infrastructure facilities, Marković announced for the four-year period the start of the second section of the Mateševo - Andrijevica highway, the completion of the construction of the submarine energy cable with Italy, the start of the construction of the second block of the Pljevlja Thermal Power Plant and the hydroelectric power plants at Morača and Komarnica. Of these projects, the cable to Italy has been completed, the construction of the second TPP unit has been abandoned, the start of the construction of the second section of the highway has been postponed to 2023. If the public debt falls below 60 percent of GDP by then, the Morača power plants are not being promoted now. , while the construction of HPP at Komarnica is still current. Instead of the second block, environmental rehabilitation of the existing thermal power plant will be carried out, along with the heating of Pljevlja.
This job worth 54 million euros was awarded to a consortium that includes Chinese companies Dec International, as well as Montenegrin companies - BB solar, the son of the country's president Blaž Đukanović, Bemax and Permonte. The heating of Pljevlja should be completed within 12 months, the environmental rehabilitation of the thermal power plant by the end of 2021, and the rehabilitation of the Maljevac landfill by 2023. In the past three years, the construction of two wind farm parks in Krnovo and Možura was completed, and the construction of a solar power plant near Ulcinj began.
The turn in the government's policy occurred two months ago when it was announced that it would start procedures for mutual termination of the contract for the construction of small power plants on seven watercourses. It is not known how much the compensation to the investors, who were in various stages of preparation for construction, will amount to, and the total announced investments are worth 44 million euros.
Increased emigration from the north
Prime Minister Marković admitted that one of the most complex challenges in the coming period will be the policy of more even regional development.
"The previous government directed significant attention towards the northern region, and the north reciprocated with its support for the government's development course, and that support represents a special obligation for us," said Marković, promising large investments in this region, but also stating "that it is still a lot of space for creativity that should contribute to increasing the quality of life in the north of the country".
If the success of the Government's regional policy is measured by migration, then it is unsuccessful. Emigration from all municipalities in the north, except Petnjica and Gusinje, continued and increased. In 2016, 633 residents moved out of Bijelo Polje, and last year that number increased to 780. The number of emigrations from Rožaj increased from 195 to 304, from Pljevlja from 266 to 379, from Mojkovac from 104 to 188, Kolašin from 105 to 142...
Promised commitment to young people, and they leave
"My daily obligation as a mandate holder, and all ministers in the cabinet, will be full commitment to the needs and demands of the young generation. We want the Montenegrin youth to see a clear perspective to build the future in their country, to renew the realistic hope that education pays off, and that only that, and nothing else, guarantees a quality workplace and a safe and better life in Montenegro," he said. Marković three years ago.
Statistical data show that the government has not been successful in retaining young people. According to official data from Eurostat, the number of emigrants from Montenegro, who receive residence permits in EU countries, is growing year by year, and the highest growth occurred in the past three years.
Last year, three thousand people left Montenegro in this way, which is twice as many as in 2014 and three times more than in 2010. A total of 7,7 thousand people left in three years.
Next, an increase in emigration is expected due to the new German Labor Law, which allows foreign nationals to be employed under the same conditions as Germans.
Research by the British Westminster Foundation showed that 70 percent of young people are thinking of leaving Montenegro. Marković is not worried about this data, because he stated that it "means that the borders are opening, the world is opening up, the offers are better".
The Minister of Sports and Youth, Nikola Janović, questioned the data from the survey, stating that it is only about the perception of a certain number of respondents, and that it is not a realistic picture.
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