Montenegro should take a decisive fiscal stance this year in order to reduce inflation and be ready to use available tools to ensure price stability, it was ordered at the economic-financial dialogue between the European Union (EU) and the Western Balkans and Turkey.
Representatives of EU member states, the Western Balkans and Turkey, the European Commission and the European Central Bank met at the annual dialogue on economic policy in Brussels. The goal of the dialogue is to prepare the Western Balkans and Turkey for their future participation in the European Semester, i.e. the process of coordination in the area of economic and fiscal policy, employment and social issues within the EU.
As announced by the European House, the participants pointed out that Montenegro submitted the Program of Economic Reforms in January and noted that the guidelines from the conclusions of last year’s Economic and Financial Dialogue were implemented to a limited extent.
“It was concluded that political stability and commitment will be crucial for maintaining economic resilience, supported by the efficient use of IPA funds and the implementation of the Economic and Investment Plan for the Western Balkans,” the statement said.
This, it is added, will be of key importance to encourage inclusive growth, increase competitiveness and create new jobs and accelerate the transition to a greener and more digital economy, while ensuring fiscal sustainability and work on harmonization with the EU acquis.
“It should be supported by intensified efforts to implement structural reforms in key areas, including solving the problem of corruption, improving the rule of law, increasing transparency and strengthening institutions and social dialogue,” the statement said.
Montenegro is invited to take a decisive fiscal stance this year in order to reduce inflation, while at the same time providing targeted support to vulnerable households and businesses, if there is a need for it.
As stated, the Montenegrin authorities have committed to adopt a medium-term fiscal strategy along with the budget for the next year, including specific consolidation measures, as well as to ensure proper calculation of costs before adopting all new fiscal initiatives.
According to the conclusions, Montenegro is expected to implement the recommendations of the Public Investment Management Assessment (PIMA), which will give priority to key works in the field of public infrastructure.
The participants once again encouraged Montenegro to take concrete steps towards the formation of a supervisory fiscal council, and to prepare concrete budget recommendations for the reduction of tax benefits based on the analysis of their economic and fiscal impact.
They called on Montenegro to carefully assess and analyse price movements and be ready to use available tools to ensure price stability. According to the conclusions, Montenegro is expected to further strengthen the framework for reporting and risk management in the banking system.
“As well as to continue to improve and implement laws to further align with the EU regulatory and supervisory framework, including deposit insurance, and to accelerate efforts to provide sustainable and timely solutions for the quick and effective resolution of problem loans,” the document reads.
Montenegro is invited to improve the institutional and regulatory environment and improve energy resilience and transition to the implementation of the Green Agenda.
As announced, the authorities have committed to continue with the implementation of digital services and simplification of administrative procedures for micro, small and medium enterprises and to prioritize cyber security, data protection and business continuity for e-government services.
The participants, it was added, again called on Montenegro to prepare a road map for the reform of state-owned enterprises, as well as a framework for monitoring the work and management of state-owned enterprises and develop objective criteria for the selection of their management bodies.
The participants also called on the Montenegrin authorities to, based on the results of the survey on the informal economy, establish an action plan to combat the gray economy, with the expected cooperation of national and local authorities.
The authorities are invited to prepare an analysis of inspection services and the relevant legal framework in order to optimize the work of inspectors in order to minimize discretionary policies and inconsistencies in inspection powers.
The European House announced that Montenegro has committed to continue with preparatory activities for the implementation of the Youth Guarantee program, along with the necessary reforms within the Employment Agency. “As well as continuing efforts to reform measures of active labour market policy and the social and child protection system,” the announcement states.