Montenegro's Cabinet holds thematic session dedicated to structural reforms

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Kolašin, Montenegro (18 April 2016) -- The first part of a two-day Cabinet’s thematic sitting dedicated to structural reforms was completed late this evening in Kolašin, Montenegro’s winter tourist centre.

Opening the session, Prime Minister Milo Đukanović stressed that it is the Government’s responsibility to offer before the end of the mandate their vision of the continuation of structural reforms, with clear guidelines that will serve the future government as a starting point for achieving the strategic objective of economic and social development of Montenegro, namely the increase in the quality of life of all citizens in Montenegro.

Continuation of structural reforms makes the way of the state’s functioning change, creating an institutional environment that will motivate and encourage entrepreneurship and attract knowledge and high technology through investments in order to achieve the projected average annual growth of 4 – 5%.

The document entitled "Reforms for Competitiveness - 2020" defines the primary goal of economic development of Montenegro - increasing competitiveness of the economy and shows the way in which this can be achieved. Boosting competitiveness of the economy affects productivity growth and employment, and this can be achieved through creating an institutional framework in which the Montenegrin entrepreneurs and domestic and foreign investors generate more revenue with the creation of higher added value, thus ensuring Montenegro a good position in the international value chain. The activity rate of the workforce is projected to increase from 86% to 91% of the EU average. The employment rate in the age group 15 - 64 years is also projected to grow from 51% to 56%, which would mean 20,000 new employees and income per capita of EUR 10,000 in 2025.

Reforms for competitiveness are focused on six areas: entrepreneurship, small and medium-sized enterprises and investments; labour market, social welfare and pension system; education system; health care system; public financial management, and administration.

During today's work, it was discussed about reforms in the fields of entrepreneurship, small and medium-sized enterprises and investment, labour market, social welfare, pension and education. By the same token, on the basis of proposals from the relevant ministries, the Cabinet agreed on 6 measures for pursuing the established policies regarding the improvement of the competitiveness of the Montenegrin economy.

Today’s discussion indentified the major impediments to faster development of business, such as the length of administrative procedures, lack of entrepreneurial skills, and the unavailability of the banking system in financing businesses. Measures to overcome the issues in this area are related to, inter alia, boosting efficiency in the execution of contracts, entrepreneurship development support programmes, SMEs and industry, incentives and tax breaks in tourism, incentives for direct investment, development of business zones (national and local), practical training programmes, etc. The Cabinet also supported the model of high quality tourism development, including 76 hotels of high category.

Reform of the labour market, social welfare and pension system will be implemented through the following reform measures: advancing flexibility and mobility of the labour market, elimination of fictitious employment, and the elimination abuses of the social welfare system.

The starting points in reforming the education system reform are the principle of long-term development of the economy based on knowledge and innovation, as well as the notion implying that educated workforce is a significant competitive advantage for an economy. Identification of obstacles at all levels of education defines reform measure that aims to contribute to improving the quality of education, increasing the level of competitiveness of the workforce and better employability, which will have a positive impact on GDP growth.

In that context, the reform measures are focused on increasing the level of knowledge of English, upgrading high school education through the creation of specialised departments, school network optimisation, harmonisation of higher education with the needs of the labour market, etc.

The thematic session of the Government was organised after extensive preparations, during which the Government’s permanent working bodies in several sessions over the past two weeks considered strategic and concrete proposals which should contribute to Montenegro maintain the planned pace of development and GDP growth, and catch up with the developed economies.

The session will be resumed on Tuesday morning.