The Ministry of Finance has confirmed that pensions in Montenegro will not be reduced but will increase, thanks to the anticipated rise in average wages. This announcement follows a recent roundtable discussion on Montenegro’s Fiscal Strategy.
According to the Ministry, all concerns raised during the discussion have been addressed, including those from participants who could not attend. The increase in both minimum and average wages, and consequently pensions, is just one of the numerous measures outlined in the Fiscal Strategy, which aims to enhance living standards, improve the business climate, and boost economic competitiveness.
The proposed tax reform, which involves reducing contributions to pension and disability insurance at an estimated cost of €180 million to €200 million, is described as both sustainable and fiscally neutral. This reform will be financed through various countermeasures detailed in the Fiscal Strategy, expected to generate €240 million in revenue. The Ministry assured that there will be no deficit in the Pension Fund, with stable funding ensured.
The Fiscal Strategy does not foresee increases in general tax rates, such as VAT, income tax, or corporate tax. The Ministry also clarified that revenue from the legalization of illegal buildings and the seizure of unlawfully acquired assets was not included in the compensation measures.
The new minimum wage structure, ranging from €600 to €800 depending on qualifications, is the result of social dialogue with employer representatives. This approach aims to increase wages for all employees, not just those in the public sector, making the reform inclusive and beneficial for both employees and retirees while maintaining macroeconomic and fiscal stability.
The Ministry emphasized that increasing pensions through average salary growth does not necessitate reforms to the Pension Fund or the introduction of a second pension pillar. All pensions will continue to be financed solely through the Pension Fund.
The Fiscal Strategy for 2024-2027 is considered fiscally sustainable, with a projected budget surplus for this period. Montenegro is expected to become one of the lowest-cost labor markets in Europe.
The Ministry of Finance underlined the importance of maintaining public financial stability, as evidenced by the budget surplus from January to June of this year, revenues exceeding expectations, and no new debt associated with these reforms. Key indicators include a real GDP growth rate of 4.4% in the first quarter and the lowest unemployment rate ever recorded at 11.9%.
