Presentation of The Deputy Prime Minister and Finance Minister, Mr. Igor Lukšić, PhD., at the round table “Economic development Challenges of Montenegro”

At the outset allow me to thank you on invitation to attend the forum, as well as on choosing a topic containing the short - term and long - term perspective. When preparing the Project »Montenegro in the XXI century, in the Competitiveness Era" and the National Development Plan, Montenegro has committed in defining a vision of its long-term development within global trends prospectus, dilemmas and uncertainties that the time is bringing related to rapid and almost unpredictable economic changes. Economic and financial crisis has indicated that the modern economic systems are vulnerable in anticipating extraordinary global disorders and irregularities in the expected development trends. Financial control and banking sector monitoring have become the focus of attention. In addition, excessive monetary expansion over the past 20-25 years has heated up the growth in prices of all forms of property, apparently by stimulating the wrong allocation of resources. The last year’s fall in the economy has brought us almost the entire year back. Some countries had been brought by two or even three years back. Regardless of the fact that we are recording stabilization in circumstances or a moderate recovery in last two quarters, which could draw to the conclusion that we are slowly leaving behind the recession, that does not mean that the rapid recovery is just around the corner. I strongly believe that we did not fail in the recent period, or that we weren’t just dealing with the crisis threats. We have adopted many decisions aimed at improving the long – term productivity of the economy. The biggest challenge for Montenegrin economy, in years after the crisis, is certainly the continuation of initiated processes, primarily the completion of the privatization process, restructuring of large economic systems and creation of solid legal and institutional prerequisite and the environment for easier business, new investments, and development of small and medium – sized business. The business environment improvement and the care of healthy and new companies, and not the assistance through subsidies and the overflow of funds into old, unsustainable companies, being an important aspect of the further development of our economy. As for the key industries, countries have mostly opted for the restructuring by issuing state guarantees. The provision of direct budgetary loans to these companies aimed at achieving transparency, is a bad practice and it substantially deviates from the public finance concept that we are pursuing for. The Government has opted for issuing guarantees to these companies, which certainly implies the default risk, but also the possibility to decrease budgetary expenditures and to abolish subsidies to these companies in the forthcoming years.