Round table on Montenegro ERP 2018-2020: Focus on macroeconomic stability and competitiveness enhancement

As part of the public discussion on the Draft of the Montenegro Economic Reform Programme 2018-2020 – the Government's most important economic document structured and prepared according to the European Commission methodology –a round table was held on Wednesday, 27 December, with representatives of businessmen association, trade unions, non-governmental sector, local self-government, competent ministries and EU Delegation in Montenegro.

The Draft of Economic Reform Programme, whose drafting is coordinated by the Cabinet of the Prime Minister and which contains clear goals of economic policy, including a detailed Agenda for Structural Reforms, was presented by the Coordinator of the Working Group of the Government responsible for drafting the document, Nina Vujošević, while measures, policies and projections in the field of macroeconomics fiscal framework were presented by the Coordinator for chapters 2 and 3 of the document – Macroeconomic and fiscal framework – Iva Vuković, from the Ministry of Finance.

Programme Coordinator Mrs Vujošević pointed out that the Economic Reform Programme is a basic document in economic dialogue with the European Commission and the EU member states, through which the Government represents its economic policy in the medium term and submits it to the European Commission by the end of January. Vujošević emphasised that the document was drafted in accordance with the guidelines provided by the EC to Montenegro and set out the key development documents and priorities of the Government underpinning the development of the Economic Reform Programme. It is also based on the six key EU recommendations from the Ministerial Meeting held in Brussels in May 2017, which the EU has proposed to Montenegro in drafting the 2018 Economic Reform Programme. In the introduction, Vujošević informed the participants about the package of 20 priority reform measures that impact on the growth of competitiveness and which were chosen to respond to obstacles to growth, with the aim of increasing the competitiveness of the Montenegrin economy and accelerating economic growth.

She stressed that the achievement of country's development goal in the 2018 Economic Reform Programme, as in the previous year, is based on economic policy measures related to strengthening the country's macroeconomic stability, as well as measures to enhance competitiveness.

According to the Coordinator responsible for the second and third chapter of the document – Macroeconomic and fiscal framework, Mrs Vuković, the economic growth in the first three quarters of 2017 was strong at a rate of 4.5%. She highlighted that the macroeconomic framework in the next medium term would be based on investment activities that would have a strong impact on economic flows. Economic growth will be also impacted by the implementation of the fiscal consolidation measures envisioned in the Fiscal Strategy 2017-2020. According to the aforementioned and to the basic scenario, the average real GDP growth rate in the period 2018-2020 is about 2.8%.

The goal of fiscal policy in the period 2018-2020, as Vuković said, is the strengthening of fiscal stability as the main factor of overall macroeconomic stability, with the strengthening of economic activity and competitiveness of the economy.

She underlined that the deficit under the basic scenario was projected to: -1.6%, 0.1% and 5.4% of GDP in 2017, 2018 and 2019 respectively. Public debt is projected to 66.5%, 66.1% and 59.7% of GDP in 2017, 2018 and 2019, respectively, i.e. from 2019 its declining trend is being established.

The participants in the discussion gave constructive contributions, suggesting the possibility of adding new measures in Chapter 4 of the document, as well as the improvement of individual pieces of text such as employment and labour market and sectoral development. Representatives of the Montenegrin employers federation and Chambers of Commerce Montenegro, Mr Mulešković and Mrs Drakić, stressed the need to look into the possibility of addressing the problem of a large number of parafiscalities at the local level and the possibility of addressing them and reducing them through the current programme. Also, a representative of the Employers federation stressed the importance of strengthening the role of the Social Council as body that should verify all legal documents regarding their compliance with all interested parties. Montenegro's Chamber of Commerce praised the quality of the documents and pointed out that all their inputs for writing the draft programme were included.

Representative of the Union of Free Trade Unions, Mrs Pejović repeated earlier expressed views regarding the fiscal consolidation measures adopted by the Government and highlighted the importance of considering the possibility of including several reform measures related to the increase in corporate income tax, which at this point is 9%. Their opinion is that there should come to its increase in order to increase taxation of profitability of multinational companies and those who earn the most. The Trade Union representative has also proposed a number of measures related to the abolition of tax incentives, introduction of tax on luxury, strengthening measures against the informal economy, etc. Representative of Central Bank of Montenegro, Mrs Mitrović, emphasised the consistency of macroeconomic projections as well as inflation projections in the 2018 draft programme with projections published by the Central Bank. They also highlighted a well-defined choice of economic policy priorities as well as their compliance with the Fiscal Strategy, which further contributes to the quality of the document.

It was agreed that the participants would submit their comments and suggestions on the Draft Economic Reform Programme in written form so that they could be reviewed in order to contribute to the finalisation of the document.

PUBLIC RELATIONS SERVICE OF THE GOVERNMENT OF MONTENEGRO