Fabris on public debt: There are reasons to worry, but no place for panic

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The growth in public debt is not something only Montenegro is facing, but almost all countries in the EU, saide Vice Governor of Central Bank of Montenegro, Nikola Fabris. He said there are reasons to be worried, but not to panic.

Montenegro has already surpassed criteria from Mastriht when it comes to public debt, and due to its constant growth, it gets warnings from all over the world. Fabris explained to RTCG whether this damages public finances of Montenegro, and whether the country has a solution for this problem.

“It is clear that during the last year we surpassed the level of Mastriht debt of 60%. However, we must keep in mind that these criteria are not what they used to be, because they were devalued by those who set them. In eurozone the average level of public debt at the end of last year was 90%, so we can note a global trend in the growth of public debt. Putting public debt in acceptable and reasonable frameworks is a matter solved by doing crisis management plan of fiscal consolidation, that will probably be done by the end of this, or the beginning of next year”, Fabris said.

Due to the current level of public debt and budget deficit, we must create a management plan by the end of this year, and we can often hear from the Government that this will not be done at the expense of citizens’ life standard. Fabris responded to a question of how Montenegro plans to bring these two parameters back to reasonable level.

“At this time, it is difficult to say which direction the Government will follow. The key measure could be selling concession for the highway, or having potential concessioner pay the public debt. Instructions on how to consolidate fiscal matters we can find in example of countries that have done it successfully”, Fabris said.

The logical question appears – should citizens be worried due to current condition of public finances.

“There are reasons to worry, but no place to panic”, Fabris said.

Source: Cafe Del Montenegro