IMF supports Government’s proactive approach towards drafting fiscal consolidation plan

Minister of Finance Radoje Žugić, during his official visit to Washington, met with Head of the IMF Mission to Montenegro and Great Britain Alasdair Scott, with whom he exchanged views on the latest macroeconomic developments in Montenegro, with special emphasis on the proposed measures of medium-term fiscal consolidation within the context of strengthening structural reforms and competitiveness of the Montenegrin economy.

Mr Scott said that the IMF supports Government’s proactive approach in preparaing credible fiscal consolidation plan, which confirms its responsible attitude towards understanding and finding ways to overcome fiscal risks, managing public finances and respecting IMF recommendations. He agreed with Minister Žugić that a credible fiscal plan needs to be balanced between fiscal consolidation, which would not endanger the growth and competitiveness of Montenegro, and measures that are sufficiently conservative, which foreign investors and the capital market would recognise as real, credible and achievable. Balancing these two conditions is of particular importance for countries with limited monetary policy, as is the case of Montenegro. In that regard, the IMF will attentively analyse the proposed plan of consolidation, particularly in terms of the multiplication of fiscal effects on future growth and give suggestions, Mr Scott said.

On the occasion of the potential sale of the highway concession, Mr Scott believes that it would significantly reduce the risk profile of public finances.

Minister Žugić will meet tomorrow with Executive Director at the World Bank Frank Heemskerk, Executive Director of the IMF Menno Snel, and World Bank Vice President for Europe and Central Asia Cyril Muller, with whom he will discuss the new partnership framework of the World Bank in Montenegro, especially in the area of financial support for increasing resilience of the economy and, in particular, fiscal policy to external shocks.