Following the establishment of the US-Montenegro Economic Dialogue in September 2021, the first US Trade Mission was successfully completed at the end of last year. The US Embassy is interested in investing in the development of reciprocal trade with Montenegro within a cooperative economic relationship. As well as creating opportunities for US businesses, it is hoped that the joint venture will help to further increase Montenegro’s prosperity and economic resilience.
The recent rebound of economic activity in the country has already boosted government revenues and created a favourable business environment for domestic and foreign investment. In addition to forging links with the US, Montenegro is also benefiting from European financial and advisory programmes. These initiatives, together with attractive rates of corporate tax, make the country more appealing to both established companies and young entrepreneurs.
Creating a Favourable Economic Climate
Like most countries across the globe, Montenegro experienced a recession in 2020. However, over the past two years, Montenegro’s economy has surged by over 20%, largely because of a growth in domestic spending and foreign tourism. Although Montenegro is the smallest economy in the Balkan region, it is geographically well placed to trade with other European markets, and opportunities for partnership are likely to increase as Montenegro comes closer to being accepted to the EU. In addition, businesses in Montenegro benefit from relatively low rates of corporation tax of up to 15% depending on their turnover. Companies that report profits below €100,000 are eligible for a rate of just 9%. The favourable economic conditions of Montenegro, very business friendly, are attracting entrepreneurs and creating further prosperity in the country.
Investing in Young Entrepreneurs
While all types of business can benefit from Montenegro’s advantageous economic conditions, some younger entrepreneurs might need additional funding in order to get their enterprises off the ground. To address this issue, the European Bank for Reconstruction and Development (EBRD) is offering financial support for entrepreneurs under 35 in Montenegro through its Youth in Business Programme. Small and medium-sized businesses could benefit from a €3 million loan which will be distributed by a microfinance institution based in Montenegro. The EBRD has already invested over €700 million in Montenegro that has primarily been directed towards helping the country transition towards a greener economy and make its private sector more competitive.
Opportunities for Progress
In addition to financial support for businesses, several employment protection programmes have been introduced by the Montenegrin Government and the Ministry of Labour and Social Welfare. With the support of the EU, a new initiative to support employment and social policy sectors aims to ensure a fairer society offering opportunities for progress for every citizen in Montenegro. Implementing reforms to the labour market will not only improve employment conditions for its workforce but will also enable Montenegro to access wider EU funding when it eventually joins the European Union.
As Montenegro’s economic climate remains favourable to businesses and entrepreneurs, financial and advisory support from international collaborations bolster conditions further.