If the Montenegrin economy continues to grow at around three percent, which is what it will be this year and what the government's macroeconomic projections predict for the next three years, and the growth of the European Union (EU) economy remains at the current 1,2 percent, Montenegro will reach the EU standard in 37 years. If we accelerate and if growth is at the level of five to six percent, that period of achievement is reduced to 15 years.
This was said by President Jakov Milatović at the lecture "Montenegro must accelerate" which he held today at the Faculty of Economics in Podgorica.
He pointed out that the most important international institutions have reduced the growth forecasts for the Montenegrin economy for this year - the European Commission from 4,2 to 3, the International Monetary Fund (IMF) from 3,7 to 3,2, the European Bank for Reconstruction and Development (EBRD) from 2,9 to 2,6 percent, and that inflation is accelerating and will be significantly higher than real economic growth this year.
"This situation needs to be reversed, with inflation at two to three percent and economic growth at five to six percent, so that this generation of young people can soon have the same standard and living conditions as your colleagues in the EU, and not have to wait 40 years and some new generations," said Milatović.
He also pointed out the main factors of GDP - that in the last three years, imports have increased by 1,4 billion, while exports are declining, that for the second year in a row we have had a decline in tourist traffic, that the number of overnight stays has fallen by one million compared to two years ago, that net foreign investments are decreasing and that 52 percent of them relate to the purchase of real estate, which is the least productive part of the economy with the smallest participation in creating future growth.
The President stated that we have five problems that have the most significant impact on the economy and that we must reverse this situation in order to achieve growth of five to six percent annually, namely declining exports, a decline in tourism, poor management of most state-owned enterprises, a lack of quality investments, and dysfunctional state institutions. He also pointed out that the biggest problem is that the party membership card remains the most important diploma.
He also suggested ideas for solving each of these problems.
He recalled that Montenegro still imports almost all basic food categories - from meat and dairy products to fish, vegetables and fruit. In response, he said that five urgent measures should be implemented urgently: increasing the agricultural budget to one hundred million and stronger support for domestic agriculture, putting the Development Bank on its feet, operationally enabling the Credit Guarantee Fund, introducing subsidies for employment in production activities and stimulating investments in sectors that create added value.
To improve tourism, he proposed urgently investing ten million in the international promotion of the "Visit Montenegro" brand, launching a tourist ambassador program, improving air accessibility, ensuring road traffic, reducing border waits to 30 minutes, introducing a requirement for card transactions in tourist and hospitality facilities, but also talking to representatives of the tourism industry and speeding up the resolution of their problems.
He also said that state-owned enterprises manage the largest resources in Montenegro, and that he will propose an initiative to the Parliament - the Declaration on Good Governance. He believes that the management of state-owned enterprises must be professional, based on knowledge, experience and results, responsible, homely, transparent and based on the principle that no one profits, but that everyone is better off.
The President stated that without a long-term strategy, investors do not know in which direction the economy is heading, that serious investments in industry, energy and export businesses are lacking, and that most of the current investments do not bring new value.
To attract new investments, it proposes faster procedures, less paperwork and more legal certainty, increasing subsidies for investments that create added value, developing industrial and technological zones, and accelerating EU integration.
He pointed out that according to the Transparency International survey, Montenegro will have the same corruption perception index in 2024 as in 2017.
"Institutional stability is key," said Milatović, adding that the essence of European integration lies in the efficient functioning of the Parliament, Government, judiciary, education, innovation, research and healthcare system. He also called on students to be active participants in the dialogue, emphasizing that "economy is a debate, not a monologue."
To improve the work of institutions, he proposes open electoral lists in order to increase the accountability of MPs, to ensure real independence for prosecutors and judges, to reform education and healthcare, and to invest more in innovation and research.
Milatović also pointed out that there is a very large structural budget deficit, and that if economic growth does not increase, it will be necessary to introduce new taxes to fill the budget.
He said that the Government is borrowing faster than it initially planned, and that there are evident delays in payments to citizens and the economy.
"In the last 15 years, the only budget surplus was achieved in 2023. You will recall that the current prime minister said back in April that the state would go bankrupt," Milatović said.
He pointed out that the IMF predicts a rise in the budget deficit from the current 3,5 percent of GDP to 4,3 in 2030.
He said that the capital budget has a direct impact on growth and that it should amount to at least 550 million euros annually, 200 million more than now, but that it should be invested in projects that bring added value.
The President said that Montenegro needs a clear change of course so that young people can live European standards in their country.
"If economic growth remains at 2–3%, tax increases and a decline in living standards will follow. To live by European standards here, we need 5% growth and 2% inflation - not the other way around," Milatović concluded.
One of the students asked whether it is too soon to want to join the EU in 2028 with nothing but a standard and quality of life, because "most of us young people will leave Montenegro" when we have the same conditions for work and employment in the EU in three years.
Milatović said that this is a key issue, and that because Montenegro and the current young generation no longer have time to wait, he proposes accelerating knowledge-based reforms in order to equalize the quality of life with the EU as soon as possible.
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