PM Marković: Government's economic policy yields very good results, budget rebalance replaces part of state debt by more favourable one

Podgorica, Montenegro (17 July 2019) -- Prime Minister Duško Marković noted in the Parliament earlier today that the proposed budget rebalance does not imply a new debt that will increase the public debt of Montenegro, but that the previously raised loan will be replaced by a more favourable one, that the Government's economic policy yields very good results, that the Government has been financing current spending for the third year in a row from the original budget revenues and that the Government has been making efforts to relieve the economy and increase salaries and pensions.

"The proposed amendments to the 2019 Budget Law do not introduce any new debt that will increase the public debt of Montenegro in the years to come. On the contrary - here are the carefully designed measures of repayment of the state debt, with the aim of replacing the part of the debt by more favourable one. ... The economic policy of the Government has yielded very good results, unfortunately, you spoke about some with some of the shortcomings and weaknesses, but I am surprised that you did not noticed the results. Montenegro's position in the international financial market has improved, the original revenues of the budget, increased savings and control in the part of expenditures have increased, which contribute to the creation of a surplus of the current budget. We are focused on strengthening fiscal stability and increasing the competitiveness of the economy. In that context, the creation of conditions for the refinancing of the principal of the existing public debt that is due to be paid in 2020 - which is the main goal of the proposed rebalance. Since the existing part of the debt is due in 2020, amounting to about EUR 530 million, of which EUR 321 million refers to Eurobonds emitted in 2015, the Government and the Ministry of Finance are closely monitoring developments in the international financial market. And these days and weeks the conditions for issuing eurobonds for developing countries are very favourable. For this reason, we consider it fully justified to ensure that the repayment of debt due in the coming year is ensured with lower costs. This will contribute to the gradual reduction of public debt to below 60% of GDP in 2022. I can assure both you and the citizens that this financial operation will not be a burden for the new generations, as you have said, but it is a thoughtful and timely response, relying on the responsible economic policy we have been pursuing. Montenegro does not differ from any other state, the development of the country relies in part on loans, and there is nothing controversial about that fact. In that context, I emphasise that during the Government's term of office more than 1.2 billion euro of public debt has been repaid, and next year, we plan to repay another 520 million euros," said Prime Minister Duško Marković answering a question by Raško Konjević from the Social Democratic Party.

The Prime Minister pointed out that in two last years, a surplus of the current budget amounted to EUR 115 million, of which EUR 100 million in 2018 alone, and the increase in debt in this period is directed exclusively to financing development through capital projects.

"These are projects that have strong multiplier effects on the economy, such as the motorway project. The increase in the public debt of 600 million euros in 2016, which you mentioned in your question, dominantly relates to the withdrawal of funds for the construction of the priority section of the motorway and other development projects financed from the capital budget. So, I will repeat what I stressed during the previous Prime Minister Questions session. The construction of the first section of the motorway together with other investment projects, has influenced the increase in gross investments in the country, which contributed to the economic growth of nearly 5% which we achieved in the last two years. It is expected that the level of GDP in 2021, compared to 2015, will be higher by about 20%. The strong investment activity in the country, which is partly financed from the loans, accelerated economic growth and brought the gross domestic product per capita in Montenegro to nearly 50% of the European average, which is the higher rate in the region, Serbia it is only at 40%," Prime Minister Duško Marković concluded.