Government approves use of reserve funds for defence procurement

On 20 May 2024, the Montenegrin Cabinet, in a teleconference session and with the consent of the majority of its members, adopted the Information on the need for the use of current reserve funds.

The 2024 Budget Law prescribes financing for the procurement of equipment and resources for the Armed Forces of Montenegro. This includes the acquisition of two medium patrol vessels, 55-70 meters in length, with a total budget of up to 120 million euros, with the creditor to be determined during the year.

Recent market research and changes in military equipment prices, influenced by ongoing conflicts in affected areas, have led to revised offers from suppliers. Consequently, it has been assessed that the cost of the two patrol vessels, which fully meet the long-term needs of the Armed Forces of Montenegro, will increase by up to 15% compared to the funds initially planned in the 2024 Budget Law. This represents an additional 17.9 million euros, including financing costs (interest), with terms and repayment methods defined by the Ministry of Finance.

Given that the funds allocated in the 2024 Budget Law are insufficient to cover this increase, and in accordance with Article 43 of the Budget and Fiscal Responsibility Law, the Cabinet has approved the use of current reserve funds amounting to 17.9 million euros.

This decision ensures that Montenegro will meet its strategic commitments, including allocating at least 2% of GDP to the defence sector in 2024, in line with the Annual Strategic Report for Montenegro and its obligations as a NATO member.

With the upcoming NATO summit in Washington, Montenegro reaffirms its status as a credible partner and remains committed to strengthening its defence capabilities in response to current global challenges.