Montenegro 

Montenegro country policy

Policy established 11 January 2007

• The country ceiling is 30 mln euro
• Early warning signal 30 mln euro
• - of which was used as at 2011-12-31 0 mln euro
• Private buyers: SIF facility

Country class: 6

Montenegro country facts

Country Report last updated :  1 April 2009
Country :  MONTENEGRO 

Political Situation
Rather Stable

Head of state
President Filip Vujanovic.

Form of government
Centre-left “List For A European Montenegro” (incl. the Democratic Party of Socialists and the Social Democratic Party), headed by p.m. Milo Djukanovic.
 
Internal Economic Situation
Slowdown Into Recession In 2009

General situation
In 2006-‘08H1 the domestic economy boomed, stimulated by large foreign investment inflows and high credit growth: real GDP-growth exceeded 8% p.a. But the booming economy had worrying side-effects such as high inflation (>9% in 2008; real estate prices by >30%), weakening private sector balance sheets because of over-borrowing and a huge external imbalance. In the course of 2008 GDP-growth started to falter and a recession has emerged as exports and tourism drop. The manufacturing sector is suffering from outCountry Report last updatedd technology and poor infrastructure (regular water and power cuts, bad road network). Although no EMU-member, in Montenegro the euro is legal tender. So no autonomous monetary policy, leaving fiscal policy even more prominent. Moderate public sector debt (32% GDP end 2008). High corruption (85th of 180 of the TI Index), large illegal trade (cigarettes) and weak judicial system.
 
External Economic Situation
Unreliable Figures Point At UNSUSTAINABLE TRADE DEFICITS
Main sources of foreign exchange
Tourism; aluminium exports.

Main foreign markets
EU, Serbia.

Main expenses of foreign exchange
Consumer goods.

Balance of payments
Very limited exportsector, resulting in substantial trade deficits. Until 2008 FDI-inflows, loans from mother-banks to subsidiaries and tourist revenues have been able to cover this very large shortfall.