Economist Mirza Krnić from the Preokret economic group has sharply criticized the Montenegrin government’s approach to tackling inflation, particularly the recent announcement by Minister of Economic Development Niko Đeljošaj about limiting profit margins on certain products. Krnić argues that such measures are short-sighted and insufficient for addressing the root causes of inflation.
Krnić believes that instead of focusing on superficial fixes, the government should be establishing commodity reserves and implementing mandatory purchases of domestic products at controlled prices. He argues that these steps would help stimulate local production and provide the government with more robust tools to manage inflation. “The government is standing by and missing real opportunities while talking about delivery services run by a state-owned company—are they joking with us?” Krnić remarked.
He emphasized that limiting margins on a select few products could lead to higher prices on others, as it only addresses the symptoms of inflation rather than its causes. Krnić also pointed out that it’s easy for companies to manipulate reported costs and show artificially lower margins, especially since the actual bookkeeping costs aren’t closely monitored. He criticized the government for not showing the willingness or capability to effectively control this issue. According to Krnić, this recent measure seems more like a public relations move than a genuine effort to benefit citizens.
“By limiting margins, the government may inadvertently cause other prices to rise. This isn’t a sustainable solution. The rising cost of living has been a persistent issue over the past three years, and inflation in June was still at 4.1%, far higher than the 2.5% average in the European Union,” Krnić noted.
He added that the government should be more focused on long-term strategies such as creating commodity and oil reserves, which would help mitigate market disruptions. He also advocated for supporting domestic production through initiatives like promoting Montenegrin premium products and finding export markets, which would boost the economy and reduce dependency on imports.
Krnić suggested that the government should work closely with domestic producers and retailers to offer products at fair prices, which could, in turn, pressure other retail chains to lower their margins. He also emphasized the importance of forming clusters of small producers to enhance their competitiveness in foreign markets.
Regarding foreign retail chains, Krnić acknowledged that they could have a positive impact by providing better opportunities for domestic producers, potentially even more so than local large capital. “We could find ourselves in a paradox where foreign chains do more for domestic producers and consumers than our own big businesses. This is a lesson the government needs to learn quickly if we want a strong and vibrant domestic economy,” he added.
Meanwhile, Minister Đeljošaj recently invited citizens to submit their suggestions for which products should have their margins limited, indicating that the government is still in the process of finalizing this model. He stated that the government aims to protect citizens’ living standards and promote economic development using modern European methods.
However, Nikola Janović from the Democratic Party of Socialists (DPS) criticized this approach, arguing that the government should be making decisions based on protecting citizens rather than acting as a jury for public suggestions. He expressed skepticism about the government’s willingness to challenge the monopoly of major retail chains, noting that their profits have tripled over the past three years.
“Montenegrin citizens no longer trust the government,” Janović concluded.
