Government and IMF agree on positive growth projections for Montenegro’s economy

“The Montenegrin Government and the IMF have managed to overcome the differences concerning growth projections for this and next year, and we now agree that the Montenegrin economy will experience a slight growth this year and that it will grow 2.5-3% next year,” Deputy Prime Minister Igor Luksic told the press after meeting with head of the IMF mission to Montenegro Gerwin Bell on Monday, November 22.

The Deputy Prime Minister underlined that Montenegro has managed to reduce the national budget deficit compared to last year, adding that it will remain at around 4%, according to government projections.

He announced that next year’s budget enables additional fiscal adjustment and that Montenegro is on the right track to meeting the medium-term fiscal targets, in terms of eliminating the primary deficit and bringing the overall budget deficit to the projected level by 2010.

“By doing so, we will be sending out a positive signal that the Montenegrin public finance is in good shape and in line with our long-term projections. This means that we need to work hard to further improve our business environment, which will additionally reduce the bureaucratic procedures and stimulate the productivity of our economy, on the one hand, as well as serve as an additional anti-corruption measure, on the other,” said Luksic.

Presenting the latest IMF projections on Montenegro’s economy, head of the IMF mission to Montenegro Gerwin Bell said: “Regarding this year, our assessment is that the contraction has ended and we are even projecting a small growth of 0.3%. We expect things to recover stronger next year, to close to 3% of GDP.”

He however noted that the current account deficits need to be reduced to a sustainable level in the medium-term.

Furthermore, the IMF official advised that Montenegro should rely less  on domestic demand and more on import competition and external demand, which requires improvement in Montenegro’s cost competitiveness

“And it is quite encouraging to see that this is actually happening, as evidenced by a desirable disinflation this year. So, in this year, we have seen inflation of about one-half per cent and we hope next year will be similar, between between one- half and one per cent,“ Bell said, adding the IMF was particularly encouraged with the government’s budget adjustment and pension reform plans.