World Bank: Montenegro must be more serious in fiscal consolidation

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Montenegro must have more serious fiscal consolidation if it wants its public debt to decrease, they said in the World Bank.

In the tenth Regular economic report of WB for southeastern Europe that was presented this week, Montenegro is listed as facing significant fiscal challenges and a growing debt.

“Although Montenegro’s economic chances are still positive, there are significant negative risks. The economy should grow in 3,3% a year until 2018, and construction and tourism fields will facilitate growth”, the Report reads.

WB reminded that parliamentary elections are held this month and that it expects the new government to pass midterm strategy of fiscal consolidation that should decrease public debt to 60% of national product BDP in the next five years.

“However, rising salaries in public sector, pensions and welfare and new public investments make this less likely to happen in this deadline”, WB stated.

WB said that if the construction of Bar Boljare highway continues in the second half of the year, credits will continue in Chinese Exim Bank.

“As a result, public debt and public guarantees can reach the level of 82,6% BDP by the end of this year”, they added.

They reminded that the budget needs to be reconstructed to account for lack of 40 million EUR related to public sector salaries and reimbursements for mother with three or more children.

Southeastern Europe, region JIE in the Report, entails Montenegro, Albania, BiH, Kosovo, Macedonia and Serbia.

Source: Cafe Del Montenegro