Zugic’s recommendations for overcoming weaknesses of Montenegro economy

#RadojeŽugić #Tag1 #EconomyPolicy #Recommendations

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Central Bank of Montenegro (CBCG) recommended to the government defining social policy according to real social needs.

“It is necessary to revise the Law on Social and Child Protection, in terms of redefining provisions relating to allowance for mothers with three or more children, in order to reduce the expenditures on that basis and the pressure on the budget and to contribute to ensuring fiscal sustainability”, said the CBCG governor Radoje Zugic in his article titled “Priorities of Economic Policy”.

In this sense, he explained, social welfare should be provided only to individuals who are really in need.

“It is necessary to prevent a situation in which social laws lead to labour force deactivation, ie acquired rights are replaced by social benefits”, Zugic said.

He said that the recommendations were particularly focused on all aspects of the system vulnerability, primarily in the fiscal and real sector.

“CBCG measures are aimed at increasing competitiveness, fostering entrepreneurship, solving the problem of illiquidity and bringing fiscal parameters at sustainable level in accordance with the Law on Budget and Fiscal Responsibility”, Zugic said.

The programme of solving the fiscal deficit and public debt should contain a set of measures related to the revenue and expenditure side of the budget, as well as measures which will ensure bringing the public debt within the limits of sustainability and reduce the fiscal risks accumulation that could expose the country to the crisis of public finances.

“In order to achieve these measures, CBCG proposes potential revision of the deadlines for remediation, in order to provide a sufficiently real deadlines for the proposed activities implementation”, said Zugic.

CBCG also supports the adoption and implementation of measures in the fiscal area, which will ensure fiscal sustainability and preserve the stability of the fiscal system through a series of recommendations.

Some of the recommendations include planning and applying the level of salaries and employees number in the public sector in accordance with current revenues and fiscal sustainability.

He also said that salary reduction was not recommended in the ​health and education sectors, as well as among public sector employees with the lowest wages in order to preserve living standard and service quality level.

One of the CBCG’s recommendations is increasing excise duties on mineral oils, in order to generate additional budget revenues, as well as continued intense non-selective fight against the gray economy.

Intensifying tax debt collection is also recommended. However, it is necessary to keep in mind to save companies that are solvent, but currently not liquid.

CBCG also recommended increasing regularity in settling social insurance contributions debts through amendments to the Criminal Code.

Zugic also said that CBCG supported the government in implementing its economic policy, to the extent which does not jeopardise achieving objectives, constitutional responsibilities and independence of the supreme monetary institution.

Zugic also said that CBCG supported the implementation of economic policy in order to eliminate vulnerabilities in the real sector, particularly in the area of ​​structural reforms, which will ensure increased competitiveness.

CBCG believes that the key problems of the real sector were constraints on the demand side because of the small, geographically distant and open economy and high operating costs, particularly in the field of para-fiscal levies, due to high bureaucratisation at all levels.

“In the future it is necessary to create a stable business environment, boldly start reducing bureaucracy and implementing structural reforms to increase the availability of Montenegrin products and services, as well as to work on promoting the quality and international standards, in order to widen the market for Montenegrin businessmen and increase competitiveness”, said Zugic.

Source: Cafe Del Montenegro