PM Marković at Erste Group Executive Forum: Economic results are encouraging; Govt focus is on improving investment environment

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Prime Minister Duško Marković told the business community on Saturday that the focus of the economic policy of the Government of Montenegro is to strengthen political and macroeconomic stability by raising the level of competitiveness of the economy and that in the forthcoming period the Government will intensively work on further improvement of the investment environment and elimination of business barriers for investors.

"The focus of the Government is to strengthen political and macroeconomic stability, while raising the level of competitiveness of the economy, so that Montenegrin per capita income will be faster achieved by the one achieved in the EU. When I talk about macroeconomic stability, I am primarily thinking of fiscal and financial stability. Strengthening fiscal stability is based on the implementation of fiscal consolidation measures adopted by the Government of Montenegro within the medium-term Fiscal Strategy. ... The Government of Montenegro will intensively work on further improvement of the investment environment and elimination of business barriers for investors in the forthcoming period. The negotiation process for EU membership will particularly contribute to that, as well as stronger economic integration in the Western Balkans region, in order to have as many investors as the Erste Group, not only in the financial sector, tourism, telecommunications and other service industries, but also in agriculture, energy and industry, as areas in which investment projects can be successfully implemented in Montenegro accompanied by adequate financial support in a competitive business environment," Prime Minister Duško Marković said to the participants of the annual Executive Forum at the Hotel Regent in Porto Montenegro organised by the Erste Group, for the first time in Montenegro.

"By accomplishing one of the two key foreign policy priorities – membership in the North Atlantic Alliance, Montenegro sent an unequivocal message that it has tied its future to the so-called Western system of values, which it wants to share with the most developed countries of today's world. We are on the right way to achieve our second goal in the foreseeable future – membership in the European Union, with a certain positive outcome in the next four to five years. There is no doubt that Montenegro will be the first new EU member state," the Prime Minister said.

Speaking about the results of the current policy, PM Marković said that direct foreign investments reflected the investment environment of Montenegro and that they were the basis for a stronger growth of Montenegrin economy.

"The net inflow of foreign direct investment in Montenegro since the restoration of the country's independence in 2006 made up about 19% of GDP annually, while per capita is among the highest in Europe. This inflow of investments in the same period contributed to the expansion of the production and export base of the economy, and the average annual real economic growth of about 3.23% annually. The trend of a strong net inflow of foreign direct investments continued in the first half of 2017 and was characterised by an increase of 33.6% compared to the comparative period of the previous year. The total investment spending in the country in the first half of 2017 contributed to real economic growth of over 4%, which is above the original Government's projection," Prime Minister Marković said at the annual meeting of the Erste Group.

PM Marković presented the results of the Government's fiscal policy in 2017, saying that they are encouraging, that the total budget revenues for the first eight months amounted to EUR 977.2 million, which is 2.8 percent more than in the same period of the previous year, while the realised expenditures are below plan, concluding that by the end of the year we expect full accomplishment of the projected fiscal policy results that should contribute to the improvement of the country's credit rating and further improvement of the overall investment environment.

"Even after the adoption of fiscal consolidation measures, which of course are nowhere popular, but are focused on strengthening macroeconomic stability, Montenegro continues to have a competitive tax environment with one of the lowest corporate tax rates in Europe, which is 9%. Also, the rate of personal income tax is competitive and amounts to 9% and 11%. The general rate of VAT, which will be 21% from January 2018, is still among the lowest in Europe. At the same time, Montenegro is characterised by the existence of tax exemptions or reliefs, as important incentives for investors. Thus, in order to stimulate tourism, as one of the key development branches, from 2018 for services in hotels with 4 and more stars in the North and 5 stars in other parts of Montenegro, a lower VAT rate of 7% will apply – instead of the current 19%. Three years ago, fiscal preferences for investments in the sectors of luxury tourism, food industry, capital investments and energy were introduced. These incentives include the right to be exempt from paying VAT, customs, utilities, fees and taxes in order to valorise economic resources in the best way," the Prime Minister said.

PM Marković assessed that accelerated realisation of investment projects and the dynamics and quality of structural changes depend on the capacity and willingness of the banking sector to support good development ideas.

Speaking at the gathering that every year brings together senior officials, distinguished representatives of the business community, influential individuals and experts, the Prime Minister said that the invitation to speak at this important meeting, seen as the central annual event of the Erste Group, is another indicator of recognising the progress of Montenegro and its growing reputation in the international political, economic and financial public.

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