"Collapse of public finances in autumn, change in economic policy required"

The previous economic policy of the Government of Montenegro, the so-called neoliberal school, was wrong and destroyed the economy. The participants of the "Economic and Financial Challenges of Montenegro" conference believe that an urgent consensus of all expert forces regarding the guidelines of the new economic policy is needed.

The economic crisis caused by the coronavirus pandemic will last five to ten years, every fourth job is at risk, the decline of the Montenegrin economy will be greater than expected, in the fall there will be a new budget rebalancing, significant cuts and salary reductions in the public sector, these are some of the conclusions of the conference. Economic and financial challenges of Montenegro" organized by the non-governmental organization "Ne damo Crna Gora", which was founded last week by a group of 77 academics and university professors.

The participants of the conference believe that the crisis has shown that the economic policy of the Government of Montenegro, the so-called neoliberal school, was wrong, that it destroyed the economy, and that it is urgently necessary, with the consensus of all experts, to create guidelines for a new economic policy that would not be based only on on tourism and real estate sales, but on the diversity of industry, agricultural development, new technologies,...

The government ran out of ammunition for the crisis

Prof. Dr. Milivoje Radović, former dean of the Faculty of Economics in Podgorica, said that international institutions expect a drop in the world economy by three percent, as well as that 59 million jobs in Europe will be threatened, that is, every fourth worker will be fired. He stated that the current economic crisis can be compared to the great depression of 1929, and that the recovery will take a very long time.

The consequences of the crisis, he said, will depend on the organization and capabilities of the state. Dr. Miloš Vulanović, professor of corporate finance at the Business School in Lille, said that the Government and the Central Bank have run out of ammunition in the fight against the economic crisis, and that Montenegrin companies will be left to the market without useful help from the Government. He stated that Montenegro has opened chapter 17 of monetary policy, according to which it has the obligation to reduce the public debt below 60 percent of GDP to a deficit below three percent, but that this will certainly not happen in the next five years.

A possible drop in the economy of up to 15 percent

Economist and business consultant Miloš Vuković said that due to the drop in income from tourism, which will be more than 90 percent, which is why he expects a drop in the economy of 12 to 15 percent this year.

He states that already in September there will be a significant drop in the liquidity and solvency of the company, as well as that instead of 850 million, the state budget will lack 1,1 billion, which will also mean a decrease in wages in the public sector.

He said that there must be changes in the current economic policy, but also fundamental changes in society, in order to live better in five or ten years. Economist Mladen Bojanić said that it was wrong to call the current economic policy "neoliberal" because that would imply that it is based on the rule of law and free institutions, which is not the case. He said that a more accurate name would be Potemkin's or vulgar economic school. According to him, the government has no money, cannot take on additional debt, nor does it have significant state assets left to sell. He believes that a turn in economic policy, based on research and development, is needed.

Money spent on unprofitable projects

Academician of CANU Igor Đurović said that statistics show that in the past period, Montenegro had "fat" years with significant economic growth, but at the same time, the real value of wages and purchasing power of citizens was falling. He believes that this is proof that the government spent money on unprofitable projects.

The representative of the Union of Employers, Zvezdana Olujić, said that the situation is extremely difficult, especially for small entrepreneurs, and that half of the registered companies are blocked. She said that they expect the new measures to be difficult, painful and expensive.

The easiest way for the government to increase taxes

She asked the moderators of the conference if they expect that there may be an increase in taxes and other duties at the state and local level in the fall.

Mladen Bojanic said that until now it was easiest for the Government to increase taxes on citizens and the economy, while Miloš Vuković said that progressive taxation should be introduced, that is, those who have more income should also pay taxes at a higher rate.

Filip Lazović from the Union of Employers said that a significant growth of the gray economy can be expected, which will threaten legal businessmen and state revenues. Miloš Vulanović criticized the Union of Employers for not being more active in protecting employers and criticizing the wrong decisions of the Government. Olujić and Lazović said that the Union of Employers is very active and that they had several studies and researches in which government policies were criticized.

The president of the Association "We will not give Montenegro" Prof. Dr. Zdravko Krivokapić said that Montenegro is now living in a circus of hoaxes, deceptions and incorrect information, as well as that this conference showed the human potential that Montenegro possesses but does not use. He announced that the Association will continue with similar conferences, and the next one will be on the rule of law on July 20.