Keynote speech of the Minister of Economics Dr. Vladimir Kavarić in V economic conference of South East Europe, Berlin, 15 jun 2011.

Dear hosts, distinguished guests,

Montenegro has become the candidate country for EU membership. This represents an essential step in the integration process and recognition and confirmation of efforts made by the Government regarding the achievement of overall reforms in the society. One of relevant achievement of our country is also the liberalization of visa regime with EU – a step which made Montenegrin citizens closer to Europe, provided freedom of movement, opened opportunities for improved economic and political cooperation, acquisition of new knowledge, free exchange of ideas, information… Moreover, the project on emission of euro bonds was successfully implemented, which represented “the first emerge” of Montenegro at the international capital market and confirmation that investors trust public finances and our economic system. A number of structural reforms have been initiated and we are leaders in the region in respect to their number. Thanks to the implemented internal reforms and fulfillment of obligations under the Partnership for Peace, we have entered into the new phase of Atlantic integration process and joined the Membership Action Plan.
Montenegro is not part of the euro zone, but is using benefits of the joint currency and joint market. Our largest foreign trade partner is the European Union. Therefore we also have mutual economic interests, which are primarily maintenance of fiscal and financial stability. Montenegro will contribute to the European economic stability by not being one of many countries with problems, which require assistance of transnational institutions.
Montenegro is now the market economy at the very end of transition process. In the years just before the crisis the economic growth was higher than in other countries of the region. The gross domestic product per capita exceeded all the other countries in the region, save for Croatia.
Due to high dependence on foreign sources of financing, the world economic crisis also affected Montenegrin economy. We undertook decisive anti-crisis measures which facilitated unfavorable effects and ensured maintenance of economic stability and standard of living.
The Montenegrin economy is recovering and records revival in its vital sectors. Stabilization of economic circumstances and economic growth perspectives were recognized by the European Commission and International Monetary Fund. Having regard to the strength of the crisis, this can not be deemed as an irrelevant achievement. It is realistic to expect in the next two years for Montenegrin economy to have growth of around 2.5% in 2011 and 4% in 2012.
Montenegrin economy has potentials to achieve long-term economic growth in the decades to come with average of 5% a year. By reaching such high growth rates, Montenegro would rapidly approximate to the development average of EU member countries. In order to reach high level of continuous and long term economic growth it is necessary to continue with relevant economic reforms, primarily through reduction of budget expenditures and with capital costs that would ensure higher investments into infrastructural projects. Reaching such fiscal goals would strengthen the trust of international investment community.
Dynamic private sector, with investing companies, which open new jobs and increase competition, promotes growth and expand possibilities for poverty reduction. With resolute business rules there is less grey economy and more of ones who are willing to undertake risk and invest. Regulatory reforms created basis for development of entrepreneurship, opening and development of small and medium-sized enterprises, new jobs in private sector, all towards reduction of business barriers.
Small economies have to remain open and flexible in order to respond to variable economic circumstances. Investors have recognized that key sectors of economy where Montenegro has comparative geographic and other location-related advantages are: energy, tourism, traffic and transit. By development of these sectors, Montenegro would accelerate economic growth and at the same time contribute to the reduction of regional differences.
In the previous years, Montenegro made significant progress in the tourism development, improvement of energy efficiency, together with higher reliance on renewable energy sources. We are strengthening capacities in agriculture, rural development, food safety, fishery, forestry and water management, in order to continue with the process of harmonization with the European legislation.
As regards to the traffic, the most important project is highway between Bar and Boljari. It is a project which is not important only in the context of transit traffic, but also in the context of internal infrastructural integration of Montenegrin territory.
Large infrastructural projects, privatization projects and public-private partnership projects should rapidly have influence to the increase of investments, aggregate demand, employment and productivity.
To summarize: for a short time Montenegro has gained a respectable international reputation. The Government will continue with achieving the strategic foreign trade priorities, which are well defined. Therefore we will continue with foreign policy in accordance with the needs of internal development and real possibilities, starting with the state interests and geo-strategic position, in order to achieve in the best possible way the key objectives- membership in NATO and European Union. Precondition for that is good neighbor policy and regional cooperation. We will affirm Montenegro through bilateral cooperation and through many regional initiatives, as the country which gives contribution to the stability of Western Balkan. The fact is that we do not have open issues with neighbors. We are recognized as the multiethnic oasis and politically and socially stable country and investment and tourism attractive destination, open for regional and wider interconnections in all spheres of economy and society.

Thank you for the attention