Highlights from the 11th Cabinet session

During the 11th session chaired by Prime Minister Milojko Spajić, the Montenegrin Cabinet approved the Economic Reform Programme (PER) for the period 2024-2026. This document serves as the foundation for Montenegro's dialogue with EU member states and institutions on macroeconomic, fiscal, and structural reforms.

The PER, a crucial economic policy document, aims to maintain macroeconomic stability, enhance international competitiveness, and improve conditions for inclusive growth. Preliminary macroeconomic forecasts indicate an average annual economic growth of 3.2% over the next three years, driven by domestic demand, strong household consumption, and the initiation of a new investment cycle.

The fiscal framework of the PER 2024-2026 focuses on fiscal consolidation through reduced discretionary spending and creating conditions for new revenue generation. Key fiscal objectives include achieving a surplus in current budgetary expenditure, reducing the budget deficit to below 3% of GDP by 2026, maintaining public debt around 62% in 2024 with a downward trend in 2025-2026, and ensuring new borrowing is solely for capital projects or debt repayment.

The structural reform chapter outlines three key areas: Competitiveness, Sustainability and Resilience, and Human Capital and Social Policies. The reforms encompass enhancing the business environment, formalizing the informal economy, reforming state-owned enterprises, increasing energy resilience through Green Agenda implementation, promoting digitalization for economic sustainability, improving youth employability and education quality, and enhancing the effectiveness of the social and child protection system.

The Cabinet approved the work programme and financial plan for the limited liability company " Crnogorski operator tržišta električne energije (Montenegrin Power Exchange Operator)" for 2024, aligning with regulatory decisions. The program foresees total revenues of €814,357, while total expenses are projected at €803,337.

The Cabinet approved the signing of a donation agreement with the European Investment Bank (EIB) to finance the "Education Enhancement Programme." Originally slated for a €40.54 million investment in the education system, the project faced delays in implementation, necessitating a comprehensive revision of estimated values for each project segment. After revising estimates and considering market instability and inflation trends, it was determined that €63.92 million, excluding VAT, would be required for the project's successful implementation. In response, the Ministry of Education, Science, and Innovation sought alternative funding methods. In coordination with the EIB, the Ministry applied for a grant from the Western Balkans Investment Fund (WBIF). The application proved successful, securing €4,529,034 from the WBIF. Additionally, the EIB committed a donation of €6,464,830. The combined total of €10.99 million in grants will fund the project, emphasizing the commitment to enhancing Montenegro's education system.