In Montenegro, a pre-election or billboard economy is being conducted, and the consequences will be treated in the coming decades, because for the sake of gaining political points, a big risk was made for public finances, and the alternative policy is to strengthen the entrepreneurial capacity and competitiveness of the Montenegrin economy.
This was assessed at the round table of the KOD Organization on the topic "Economic sustainability of the Europe Now 2 program".
The executive director of the consulting company Fidelity consulting, Miloš Vuković, said that what was presented in the Fiscal Strategy deviates qualitatively and quantitatively from the billboard promises, PR Center reports.
"The minimum salary is not 700 euros, there is no increase of 25 percent for salaries over 565 euros, which was promised by the famous calculator from September 2023, there is no full employment, no reduction of non-productive consumption by 150-200 million euros and no full-time work," he said. is Vuković.
He claims that he knew in September of last year that the "Europe Now 2" program and an increase of 25 percent were not possible.
"These are data on gross earnings and net earnings from July 2023. Then the gross earnings were 993 euros, the net earnings were 797 euros, and the difference is 196. Take the digitrons, divide 196 by 797 and you get exactly a number with 14 decimal places. I also knew at that moment that the Europe Now 2 program was not possible. There is no analytics, people played with two numbers. That calculator was removed before the publication of the Fiscal Strategy, because it was already known at that moment that it was impossible to achieve," Vuković explained.
He also says that it is not known who the people who wrote the Fiscal Strategy are.
"Before the Fiscal Strategy that deals with the pension system, there had to be a reform and a clear strategy of what to do with the pension system. Also, all the talk about the raise is really that you'll get it out of your money. Let's say that of your 100 euros, 55 will go to the employer, and 45 will be given to you. So, of the 100 euros, you stay at 45 and that is sold to you as a great thing for you, and 55 euros goes to employers, the biggest winners of which are representatives of large capital from certain industries who already pay salaries of 600 euros and who will put the difference in their pockets . Therefore, the most unfair possible redistribution of your money is taking place," Vuković believes.
He believes that, should a major crisis occur, Montenegro does not have much of a chance except to finance itself from loans, tax increases, and excise duties.
President of the Parliamentary Committee for Economy, Finance and Budget Boris Mugoša said that he was particularly concerned about the "manipulative narrative that is very dangerous".
"First, wages are not increased, because wages are gross earnings. The fact that someone will give a higher net but the same gross salary means that our salary is the same, because the legal category for us is gross salary. The fact that they increase our net, while the gross remains the same, has repercussions on pensions. It is true that the calculation of pensions above certain salaries will be lower in the coming period," explained Mugoša.
He said that no one is against a salary increase, but the problem is that the increase will be less than before.
"They increase consumption taxes which lead to higher prices. I am against the consumption tax increase. The consumption tax affects those who have less the most. I am always a supporter of going for direct taxes that are related to property, wealth," said Mugoša.
He concluded that pre-election or billboard economy is being conducted in Montenegro.
"Economic policy that is reduced to the expenditure side of the budget is essentially the most wrong economic policy. We pump up the expenditure side, and since we do not have the growth of the essence of the economy, competitiveness, then we increase the tax rates on consumption, and we do not expand the tax base. I think that we will have to deal with the consequences of this kind of pre-election economy in the next several decades, because when you break the system like this, it is very difficult to return it to a normal level afterwards, because you know very well that no decision-maker will cut wages, pensions anymore, but will go to their increase", says Mugoša.
Advisor to the President for Economy and Economic Diplomacy, Mladen Grgić, said that when the state switches to depending on consumption, it automatically, that is, the Government, budget depends on inflation.
"Inflation favors the government, that is, every government likes inflation." It is an indirect tax, it is the most predatory form of tax. The government gives you a salary, then takes it by raising prices and collecting taxes, reducing the ratio of debt to GDP. We have now moved from light drugs to hard drugs. We will only depend on inflation", believes Grgić.
It is especially problematic that, as he said, the very projections of the Fiscal Strategy are in conflict with what we hear from the Government.
"We are told by the leading people that we are taking 200 million from the future, that is, the PIO Flow Water Heater Fund, in order to achieve accelerated economic growth that will bring us closer to the European Union average and to have a strong investment cycle. But open the annex at the end of the Strategy and see the contradiction. Our real growth in 2024 is projected at 3,8, 2025 in 4,8 and then declines. In order to reach Slovenia or the EU average with this given projection, it will not happen in 50 years," said Grgić.
According to him, as far as inflation is concerned, there is no popular measure that can influence the reduction of inflation.
"Fiscal measures as a fight against inflation are difficult, painful, politically unpopular, they are usually carried out by technical governments, because you have to tighten everything, possibly leave investments in infrastructure. This is the only way to fight inflation," Grgić explained.
Economic analyst and former MP Zarija Pejović believes that the "Europe Now 1" program has given some good results, that the rate of risk of poverty has decreased, there has been a decrease in social differences, and the minimum pension has been increased.
"However, it is to be expected that this Europe Now 2 measure will generate a deficit. We will see how much of a deficit it will generate, and it is already significant. The Europe Now 2 measure comes at a time when we have elections, but if you were lucky enough not to run into a deficit once, I'm not sure we'll be lucky enough not to run into a significant fiscal deficit the second time. "Will we end up in an ad hoc situation, how can we further prevent deficits, which is a further increase in VAT, which is a very bad scenario that we fear," said Pejović.
He believes that an alternative scenario is to strengthen the entrepreneurial potential of Montenegro.
"There are grant funds to support entrepreneurs, to turn a person with entrepreneurial potential into an entrepreneur. An alternative policy is to strengthen the entrepreneurial capacity and competitiveness of the Montenegrin economy," said Pejović.
Inflation, as he said, reduced the effects of "Europe Now 1", and will reduce the effects of the "Europe Now 2" program even faster.
"It seems to me that now, for the sake of gaining political points, a great risk has been taken for the public finances of Montenegro, and we will not be able to deal with this inflation so easily unless we change the market structure," said Pejović.
Economic analyst Mirza Mulešković pointed out that the first and basic postulate that should be taken into account when increasing wages, pensions is the productivity of the economy, in order to see if our real economy has grown so much that all those costs that will burden the economy and the state.
"We invested the money that the state earned due to the inflation and over 100 thousand foreigners in the state administration. We have invested little in the development of the real economy. We had to pay much more attention to productivity, structure and everything else related to the economy," said Mulešković.
His main criticism is that in the Fiscal Strategy there is no scenario of what will happen if something happens, for example if foreigners leave.
"If foreigners won't leave, how much will it cost to build the infrastructure for them to live here? If the foreigners leave, we will have a significant revenue plan in the budget. Furthermore, what if citizens change their financial literacy and start saving? We have oriented the entire system towards consumption and we depend on indirect taxes, but what will we do if citizens start saving for the future? We didn't take into account that we have a big problem with people who should be employed in potential investments, because we have a shortage of manpower," Mulešković asked and stated.
He also pointed out that there is not enough capacity to fight against the informal economy, which is especially prevalent in the tourism sector.
"Every government guarantees pensions and no one questions it. We question where all this will be financed. We do not generate enough new income to be able to finance such a deficit, so it is clear that it will have to be financed by borrowing. How much debt will it be, will we be able to sustain it, can our economy sustain it, because the economy creates money. In my opinion, it cannot," said Mulesković.
The General Secretary of the Union of Free Trade Unions, Srđa Keković, said that at one point it was expected that the contribution would be completely abolished and that, in his opinion, would be "an even crazier variant than the current one".
"What will certainly happen is that we will have a hot winter, because when the first October salary is paid, and then the minimum wage of an employee with a secondary education and below will be 600 euros, and on that day a wave of union actions will begin, because, for example, medical nurse and technician to have a salary 50 euros higher than the salary received by the one with the lowest NK qualification, with all due respect. But that wave is going and the Government did not take it into account. Earnings will have to level out," Keković said.
One of the participants in the discussion, Srđan Perić, a former member of the Parliamentary Committee for Economy, Finance and Budget, said that the problem starts with "Europe Now 1" and that it is not economic but non-economic in nature.
"At critical moments in history, the key economic inputs are not economic but non-economic. We have an open logic that it is not important to work a lot, that you do not have to make much progress and that things will take care of themselves and everything will be fine. The door to our irrationality is open. In this process, we marginalized an entire socio-economic group. These are people over 50 years old, more difficult to employ, who do not have IT skills, and do not have a high level of education. They are already in a terribly big problem," said Perić.
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