MONTENEGRO

Flag Description: A red field bordered by a narrow golden-yellow stripe with the Montenegrin coat of arms centered; the arms consist of a double-headed golden eagle - symbolizing the unity of church and state - surmounted by a crown; the eagle holds a golden scepter in its right claw and a blue orb in its left; the breast shield over the eagle shows a golden lion passant on a green field in front of a blue sky; the lion is symbol of episcopal authority and harkens back to the three and a half centuries that Montenegro was ruled as a theocracy.

Country profile

Location

Montenegro, a jumbled mass of mountains, with a small coastline along the Adriatic, borders Albania, Bosnia and Herzegovina, and Serbia.

Area:

total: 13,812 sq km
country comparison to the world: 162
land: 13,452 sq km
water: 360 sq km

Land boundaries:

total: 625 km
border countries: Albania 172 km, Bosnia and Herzegovina 225 km, Croatia 25 km, Kosovo 79 km, Serbia 124 km

Coastline: 293.5 km

Maritime claims:

territorial sea: 12 nm
continental shelf: defined by treaty

Climate: Mediterranean climate, hot dry summers and autumns and relatively cold winters with heavy snowfalls inland

Terrain: highly indented coastline with narrow coastal plain backed by rugged high limestone mountains and plateaus

Ethnic groups: Montenegrin 45%, Serbian 28.7%, Bosniak 8.7%, Albanian 4.9%, Muslim 3.3%, Roma 1%, Croat 1%, other 2.6%, unspecified 4.9% (2011 est.)

Languages: Serbian 42.9%, Montenegrin (official) 37%, Bosnian 5.3%, Albanian 5.3%, Serbo-Croat 2%, other 3.5%, unspecified 4% (2011 est.)

Religions: Orthodox 72.1%, Muslim 19.1%, Catholic 3.4%, atheist 1.2%, other 1.5%, unspecified 2.6% (2011 est.)

Population:

650,036 (July 2014 est.)
country comparison to the world: 168

Age structure:

0-14 years: 15.2% (male 48,231/female 50,659)
15-24 years: 10.8% (male 33,085/female 37,029)
25-54 years: 47.1% (male 164,644/female 141,380)
55-64 years: 12.9% (male 41,765/female 42,075)
65 years and over: 13.8% (male 36,081/female 55,087) (2014 est.)

 

The Republic of Montenegro declared its independence from Serbia in 2006. In 1996, Montenegro had adopted its own economic policy and even adopted the German mark as its currency. Upon gaining independence, it introduced significant privatization and adopted the euro as its legal tender despite not being a member of the eurozone. The Coalition for European Montenegro, an alliance between the Democratic Party of Socialists of Montenegro and two other center-left parties, won the October 2012 parliamentary elections. Its leader, Milo Ðukanovic, became prime minister in December 2012. Montenegro was invited to undertake a NATO Membership Action Plan in 2009, became a candidate for membership in the European Union in 2010, and became a member of the World Trade Organization in 2011. Its economy relies heavily on tourism and exports of refined metals. Unprofitable state companies burden public finances, and unemployment is high.

Montenegro - financial assistance from the European Union
The Instrument of Pre-Accession Funds, called IPA, is a funding mechanism of the EU, which includes candidate and potential candidate countries like Montenegro.
• Funding allocation for 2013: €34.6 million
• Montenegro has access to:
   - IPA Component I (Transition Assistance and Institution Building)
   - IPA Component II (Cross-Border Cooperation)
   - IPA Component III (Regional Development)
   - IPA Component IV (Human Resource Development)
   - IPA Component V (Rural Development).
This assistance is managed by the EU Delegation in Montenegro.

As a candidate country, Montenegro will be able to implement programmes under Components III to V when the country receives accreditation to manage assistance itself (under the Decentralised Implementation System).
• EU assistance focuses on:
   - Justice/home affairs – independent, efficient and accountable judiciary to fight corruption and organised crime.
   - Public administration reform – professional and de-politicised administration.
   - Environment/climate change – helping the country fully align with EU standards.
   - Agriculture/rural development – competitive and sustainable producers, better prepared for the implementation of the common agricultural policy (CAP) and EU standards (food, sanitary, phytosanitary).

 

Montenegro’s business climate
Montenegro's economy is slowly transitioning to a market system, but the state sector remains large and additional institutional changes are needed. The economy relies heavily on foreign tourism and the export of refined metals. Unprofitable state-owned enterprises, especially the Podgorica Aluminum Kombine, the country’s largest exporter, weigh heavily on public finances. During the MILOSEVIC era, Montenegro severed its economy from Serbia, maintained its own central bank, adopted the Deutsche Mark, then shifted to the euro - rather than the Yugoslav dinar - as official currency, collected customs tariffs, and managed its own budget. The 2006 dissolution of the loose political union between Serbia and Montenegro led to separate memberships in several international financial institutions, such as the European Bank for Reconstruction and Development. In January 2007, Montenegro joined the World Bank and IMF. Montenegro became the 156th member of World Trade Organization in December 2011. The European Council (EC) granted candidate country status to Montenegro at the December 2010 session. Montenegro began negotiations to join the EC in June, 2012, having met the conditions set down by the European Council, which called on Montenegro to take steps to fight corruption and organized crime. Unemployment and disparities in regional development, especially in the north, remain key political and economic problems. The global financial crisis had a significant negative impact on the economy, due to a credit crunch, a decline in the real estate sector, and a fall in aluminum exports. The Government of Montenegro increased value added tax (VAT) from 17% in 2012 to 19% in 2013 and raised income tax rates from 9% to 15% for those earning over €480 a month. In 2013, the government also retrenched by freezing pensions and limiting salary increases for public enterprises and members of the parliament.

GDP (purchasing power parity):

$7.429 billion (2013 est.)
country comparison to the world: 159
$7.318 billion (2012 est.)
$7.358 billion (2011 est.)
note: data are in 2013 US dollars

GDP (official exchange rate):

$4.518 billion (2013 est.)

GDP - real growth rate:

1.5% (2013 est.)
country comparison to the world: 163
-0.5% (2012 est.)
3.2% (2011 est.)

GDP - per capita (PPP):

$11,900 (2013 est.)
country comparison to the world: 107
$11,800 (2012 est.)
$11,900 (2011 est.)
note: data are in 2013 US dollars

GDP - composition, by end use:

household consumption: 84.4%
government consumption: 22.1%
investment in fixed capital: 18.4%
investment in inventories: 1.1%
exports of goods and services: 40.2%
imports of goods and services: -66.2%
(2011 est.)

GDP - composition, by sector of origin:

agriculture: 0.8%
industry: 11.3%
services: 87.9% (2011)

Agriculture - products: tobacco, potatoes, citrus fruits, olives, grapes; sheep

Industries: steelmaking, aluminum, agricultural processing, consumer goods, tourism

Labor force:

251,300 (2011 est.)
country comparison to the world: 166

Labor force - by occupation:

agriculture: 6.3%
industry: 20.9%
services: 72.8% (2011 est.)

Unemployment rate:

19.1% (2012 est.)
country comparison to the world: 159
11.5% (2011 est.)

Population below poverty line:

6.6% (2010 est.)

Distribution of family income - Gini index:

24.3 (2010)
country comparison to the world: 139
30 (2003)

Budget:

revenues: $1.68 billion
expenditures: $1.58 billion (2012 est.)

Taxes and other revenues:

37.2% of GDP (2012 est.)
country comparison to the world: 55

Budget surplus (+) or deficit (-):

2.2% of GDP (2012 est.)
country comparison to the world: 16

Public debt:

52.1% of GDP (2012 est.)
country comparison to the world: 61
45% of GDP (2011 est.)

Fiscal year:

calendar year

 

Business Reforms in Montenegro

2014:
Dealing with Construction Permits:
Montenegro made dealing with construction permits easier by introducing a one-stop shop and imposing strict time limits for the issuance of approvals.

Registering Property:
Montenegro made registering property easier by introducing a notary system.

2013:
Dealing with Construction Permits:
Montenegro made construction permitting less costly by reducing the cost of pre-construction and post-construction procedures

Employing Workers:
Montenegro lowered redundancy costs—though it also reduced the maximum duration of fixed-term contracts and increased paid annual leave.

Getting Credit:
Montenegro improved access to credit information by guaranteeing borrowers’ right to inspect their personal data.

2012:
Starting a Business:
Montenegro made starting a business easier by implementing a one-stop shop.

Paying Taxes:
Montenegro made paying taxes easier and less costly for firms by abolishing a tax, reducing the social security contribution rate and merging several returns into a single unified one.

Resolving Insolvency:
Montenegro passed a new bankruptcy law that introduces reorganization and liquidation proceedings, introduces time limits for these proceedings and provides for the possibility of recovery of secured creditors’ claims and settlement before completion of the entire bankruptcy procedure.

2011:
Starting a Business:
Montenegro eliminated several procedures for business start-up by introducing a single registration form for submission to the tax administration.

Paying Taxes:
An amendment to Montenegro’s corporate income tax law removed the obligation for advance payments and abolished the construction land charge.

Trading Across Borders:
Montenegro’s customs administration simplified trade by eliminating the requirement to present a terminal handling receipt for exporting and importing.

2010:
Starting a Business:
Montenegro eased business start up by simplifying the post-registration process including the registration for taxes, social security and employment, as well as the process to obtain the municipal license.

Dealing with Construction Permits:
Montenegro improved the process of dealing with construction permits with a new construction law implemented, reducing procedures, providing for new mechanisms of construction permit approval and building control process in general, and introducing a risk-based system of approval, where small scale projects are controlled by local municipalities.

Employing Workers:
Montenegro allowed the use of fixed-term contracts for permanent tasks and set no limits on the maximum duration of fixed-term contracts. In addition, it eliminated the requirement for third-party notification for the redundancy dismissal of one worker and reduced redundancy costs.

Paying Taxes:
Montenegro has reduced the tax burden on business and employment by cutting corporate income tax by almost half to 9%, and social security rates to 12% for 2009 and 9% for 2010.

2009:
Dealing with Construction Permits:
To follow the best practices set by EU, Ministry of Economy and Ministry of Tourism and Environmental Protection introduced stricter compliance requirements. However, it led to administrative backlog and increase of time by 43 days. Cost was increased by EUR 6,466 due to new methodology of calculation

Getting Credit:
Montenegro created a new public credit registry, increasing coverage of borrowers from 0 to 30%. The new public credit registry will facilitate access to credit by providing credit information on borrowers to lenders.

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