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Ministry of Finance Balkans.com interview with Deputy Prime Minister a...
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Balkans.com interview with Deputy Prime Minister and Finance Minister of Montenegro, PhD Igor Lukšić
Published on: Sep 3, 2010 • 5:50 PM Author: Ivona Mihajlović - administrator
Balkans.com: As Deputy Prime Minister and Minister of Finance of Montenegro, let me first say that we are honored that you have taken the time from your busy schedule to speak to our readers. The Balkans has been hit hard by the financial crisis. The psychology is down which leads to lower consumption, therefore lower production and hence we have the domino effect. As an economist, and someone who is very familiar with the region, what measures do you think the EU and the governments of this region should take to reverse the situation?
Deputy Prime Minister Lukšić: I think that the efforts of all governments in the past period were more or less focused on maintaining the financial and the real sector liquidity. Now we can say that the worst part of the crisis is behind us and that the world economy is entering a recovery stage. This has been pronounced in the last IMF’s and the World Bank’s reports and by the second quarter indicators of the current year. This does not mean that problems have been resolved. The crisis has left the consequences that the national economies will be struggling with for years. I think that the crisis was an important lesson for all and it enabled us in identifying the deficiencies of our economies and pursuing us in finding the long – term sustainable solutions. I believe that the solution to this should be found in the structural reforms area, improving the business environment and prudential fiscal policy, which will contribute to accelerated recovery of our economies, but also to a kind of a global economic system leveraging.
Balkans.com: How has the economic climate affected Montenegro; is there light at the end of the tunnel?
Deputy Prime Minister Lukšić: The economic and the financial crises effects have strongly influenced the downward growth of Montenegrin economy. Our banking sector was hit the most and has suffered the biggest consequences, as well as aluminum and steel industries that had to undergo the necessary restructuring process. However, there are some encouraging indicators. Among them are the foreign direct investments that have increased by 30% in four months of the current year against the same period last year, the unemployment rate is rising, budgetary revenues for the first seven months of the current year are by 1,67% higher against the last year realization with the supporting structure being more sustainable in the long run. The measures of strong support aimed at initiating and recovering the industrial sector and optimization of the number of employees in large industrial systems, along with the implementation of economic – social programmes, have resulted in the increase in industrial production. We may say that the fall of Montenegrin economy was halted in the first half of the year. Furthermore, regardless of the fall in economy, being estimated at around 5,3% in the last year, this is however less than the growth recorded in 2008 of almost 7%. Economically speaking, many other countries have lost one or several years during 2009.
Balkans.com: Needless to say, you have met with top investors, celebrities and business people throughout the world that have come to invest and enjoy Montenegro, can you tell our readers what inspired you to start a blog http://igorluksic.wordpress.com/?
Deputy Prime Minister Lukšić: I think this is a good model and a manner to provoke some new business ideas, exchange opinion and encourage entrepreneurs, investors, economic experts to become interested in Montenegro. A new blog under the slogan "Straight Talk from the Heart of the Balkans" has been designed to animate the international professional and other public and, through a modern communication form, to present Montenegro as a modern European country that is interested in and that comments the events in Europe and the world.
Balkans.com: Lord Byron saw the beauty of Montenegro and was truly inspired to write “At the moment of the creation of our planet, the most beautiful merging of land and sea occurred at the Montenegrin seaside... When the pearls of nature were sworn, an abundance of them were strewn all over this area..." From the top of Mt.Lovcen, Bernard Shaw exclaimed: "Am I in Paradise or on the Moon?!" and I am sure most of your tourists would agree with him, marking tourism as one of your top investment opportunities. Of course, with the crisis, tourism has been deeply afflicted, what is the outlook for tourism in the country this year and in the future?
Deputy Prime Minister Lukšić: Montenegrin exotic charms are known for centuries, but in today's global world they are becoming globally attractive. Definitely the tourism in the future period will be one of the main branch of economy, and tourism revenues will strongly balance the foreign trade account, generating the demand and economic growth in other sectors. We have planned that tourism revenues in 2010, will be the same as the last year. The latest indicators are showing that the visits in the last two months have exceeded the plan. I expect this trend to continue, and the measures taken by Montenegro in the field of improving hotel and tourist infrastructure, promotion and positioning on the world tourist map, to recognize and acknowledge Montenegro as an elite high-quality tourist destination.
Balkans.com: Which industries or sectors, besides tourism, in Montenegro do you find most promising in terms of growth and sustainability?
Deputy Prime Minister Lukšić: The strategic commitment of the Government, which by its Economic Policy has defined the tourism, energy and agriculture as priorities in the economic development, has made us more interesting and attractive for investments. Apart from tourism, is of course, the energy sector being interesting for investments and further development of our economy, which Montenegro has recently made it open for investments. At the same time, this does not mean that the further development of certain forms of industrial production of aluminum and steel industry may not through reprocessing additionally influence the further economy diversification. The same statement stands for the wood processing and mining for example. It is the fact that Montenegro is a small country, but it has many resources that can be used to add value.
Balkans.com: What specific opportunities are available at this time in the country or will be in the near future?
Deputy Prime Minister Lukšić: We are developing the rule of law state and we streamlining the procedures to create business friendly environment in which each area will be considered attractive and appealing to investors. I do not believe in economic engineering, but in instinct of an entrepreneur. The State should be building institutions that will encourage this instinct.
Balkans.com: Do you have any plans for additional incentives or reforms to benefit the investor or business communities?
Deputy Prime Minister Lukšić: Montenegro is a small attractive tourist destination which at its road to the EU has shown a political maturity, reflecting as well on economic development. By implementing the policy of maintaining stability in the previous period, large inflow of foreign direct investments, low taxes policies, we have positioned Montenegro on the list of the most competitive countries in Europe. Furthermore, we are actively working on eliminating the business barriers and improving the business environment, which is recognized in a number of international reports, primarily the Freedom House and Doing Business. By creating new business opportunities we are opening new jobs, thus creating conditions for increasing the living standards of our citizens.
Balkans.com: Montenegro recently assumed the presidency of the South-East European Cooperation Process. What other roles would you like to see Montenegro playing in the Balkans?
Deputy Prime Minister Lukšić: Over a longer period of time, the international community has recognized Montenegro as a country which with its policy is contributing to the Europeanization of our region. Primarily, by contributing to the political stability, as well as the development of a tolerant society with a clear vision of the EU and NATO membership. As the Chairman of such initiatives, such as cooperation process in Southeastern Europe, we will use our best endeavors in further expansion of these values and assisting in overcoming the regional problems.
Balkans.com: Our readers are investors and business people who are already present or about to launch a business/investment in the region. What advice do you have for them?
Deputy Prime Minister Lukšić: The Western Balkans region has the greatest potential for economic growth in Europe. I am more than certain. Montenegro belongs to the countries that are dedicated to creating the most favorable environment for investment and strengthening institutions, with equal opportunities for any investor.
Journalist Jelena Mišić
Deputy Prime Minister Lukšić: I think that the efforts of all governments in the past period were more or less focused on maintaining the financial and the real sector liquidity. Now we can say that the worst part of the crisis is behind us and that the world economy is entering a recovery stage. This has been pronounced in the last IMF’s and the World Bank’s reports and by the second quarter indicators of the current year. This does not mean that problems have been resolved. The crisis has left the consequences that the national economies will be struggling with for years. I think that the crisis was an important lesson for all and it enabled us in identifying the deficiencies of our economies and pursuing us in finding the long – term sustainable solutions. I believe that the solution to this should be found in the structural reforms area, improving the business environment and prudential fiscal policy, which will contribute to accelerated recovery of our economies, but also to a kind of a global economic system leveraging.
Balkans.com: How has the economic climate affected Montenegro; is there light at the end of the tunnel?
Deputy Prime Minister Lukšić: The economic and the financial crises effects have strongly influenced the downward growth of Montenegrin economy. Our banking sector was hit the most and has suffered the biggest consequences, as well as aluminum and steel industries that had to undergo the necessary restructuring process. However, there are some encouraging indicators. Among them are the foreign direct investments that have increased by 30% in four months of the current year against the same period last year, the unemployment rate is rising, budgetary revenues for the first seven months of the current year are by 1,67% higher against the last year realization with the supporting structure being more sustainable in the long run. The measures of strong support aimed at initiating and recovering the industrial sector and optimization of the number of employees in large industrial systems, along with the implementation of economic – social programmes, have resulted in the increase in industrial production. We may say that the fall of Montenegrin economy was halted in the first half of the year. Furthermore, regardless of the fall in economy, being estimated at around 5,3% in the last year, this is however less than the growth recorded in 2008 of almost 7%. Economically speaking, many other countries have lost one or several years during 2009.
Balkans.com: Needless to say, you have met with top investors, celebrities and business people throughout the world that have come to invest and enjoy Montenegro, can you tell our readers what inspired you to start a blog http://igorluksic.wordpress.com/?
Deputy Prime Minister Lukšić: I think this is a good model and a manner to provoke some new business ideas, exchange opinion and encourage entrepreneurs, investors, economic experts to become interested in Montenegro. A new blog under the slogan "Straight Talk from the Heart of the Balkans" has been designed to animate the international professional and other public and, through a modern communication form, to present Montenegro as a modern European country that is interested in and that comments the events in Europe and the world.
Balkans.com: Lord Byron saw the beauty of Montenegro and was truly inspired to write “At the moment of the creation of our planet, the most beautiful merging of land and sea occurred at the Montenegrin seaside... When the pearls of nature were sworn, an abundance of them were strewn all over this area..." From the top of Mt.Lovcen, Bernard Shaw exclaimed: "Am I in Paradise or on the Moon?!" and I am sure most of your tourists would agree with him, marking tourism as one of your top investment opportunities. Of course, with the crisis, tourism has been deeply afflicted, what is the outlook for tourism in the country this year and in the future?
Deputy Prime Minister Lukšić: Montenegrin exotic charms are known for centuries, but in today's global world they are becoming globally attractive. Definitely the tourism in the future period will be one of the main branch of economy, and tourism revenues will strongly balance the foreign trade account, generating the demand and economic growth in other sectors. We have planned that tourism revenues in 2010, will be the same as the last year. The latest indicators are showing that the visits in the last two months have exceeded the plan. I expect this trend to continue, and the measures taken by Montenegro in the field of improving hotel and tourist infrastructure, promotion and positioning on the world tourist map, to recognize and acknowledge Montenegro as an elite high-quality tourist destination.
Balkans.com: Which industries or sectors, besides tourism, in Montenegro do you find most promising in terms of growth and sustainability?
Deputy Prime Minister Lukšić: The strategic commitment of the Government, which by its Economic Policy has defined the tourism, energy and agriculture as priorities in the economic development, has made us more interesting and attractive for investments. Apart from tourism, is of course, the energy sector being interesting for investments and further development of our economy, which Montenegro has recently made it open for investments. At the same time, this does not mean that the further development of certain forms of industrial production of aluminum and steel industry may not through reprocessing additionally influence the further economy diversification. The same statement stands for the wood processing and mining for example. It is the fact that Montenegro is a small country, but it has many resources that can be used to add value.
Balkans.com: What specific opportunities are available at this time in the country or will be in the near future?
Deputy Prime Minister Lukšić: We are developing the rule of law state and we streamlining the procedures to create business friendly environment in which each area will be considered attractive and appealing to investors. I do not believe in economic engineering, but in instinct of an entrepreneur. The State should be building institutions that will encourage this instinct.
Balkans.com: Do you have any plans for additional incentives or reforms to benefit the investor or business communities?
Deputy Prime Minister Lukšić: Montenegro is a small attractive tourist destination which at its road to the EU has shown a political maturity, reflecting as well on economic development. By implementing the policy of maintaining stability in the previous period, large inflow of foreign direct investments, low taxes policies, we have positioned Montenegro on the list of the most competitive countries in Europe. Furthermore, we are actively working on eliminating the business barriers and improving the business environment, which is recognized in a number of international reports, primarily the Freedom House and Doing Business. By creating new business opportunities we are opening new jobs, thus creating conditions for increasing the living standards of our citizens.
Balkans.com: Montenegro recently assumed the presidency of the South-East European Cooperation Process. What other roles would you like to see Montenegro playing in the Balkans?
Deputy Prime Minister Lukšić: Over a longer period of time, the international community has recognized Montenegro as a country which with its policy is contributing to the Europeanization of our region. Primarily, by contributing to the political stability, as well as the development of a tolerant society with a clear vision of the EU and NATO membership. As the Chairman of such initiatives, such as cooperation process in Southeastern Europe, we will use our best endeavors in further expansion of these values and assisting in overcoming the regional problems.
Balkans.com: Our readers are investors and business people who are already present or about to launch a business/investment in the region. What advice do you have for them?
Deputy Prime Minister Lukšić: The Western Balkans region has the greatest potential for economic growth in Europe. I am more than certain. Montenegro belongs to the countries that are dedicated to creating the most favorable environment for investment and strengthening institutions, with equal opportunities for any investor.
Journalist Jelena Mišić
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