Montenegro Public Finance Synthesis Report : Restoring Sustainability and Strengthening Efficiency of Public Finance
Benefiting from successful economic transformation after independence and the start of EU accession negotiations, economic activity in Montenegro has been solid, supporting the rise in incomes their convergence with the ones in the European Union....
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| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/108101559640817785/Montenegro-Public-Finance-Synthesis-Report-Restoring-Sustainability-and-Strengthening-Efficiency-of-Public-Finance http://hdl.handle.net/10986/31840 |
| Summary: | Benefiting from successful economic
transformation after independence and the start of EU
accession negotiations, economic activity in Montenegro has
been solid, supporting the rise in incomes their convergence
with the ones in the European Union. Inflation has been
modest and kept in check. However, the import dependence of
the growth model and the excessive reliance on the state to
stimulate the economy have contributed to widening of
external and internalimbalances as well as indebtedness.
There have been recent efforts at fiscal tightening, but
more needs to be done to address structural rigidities and
boost the commitment to the objectives of economic policies.
This is particularly the case with respect to the
medium-term budget plans, public sector restructuring,
pension and health reforms, improvements of market
competition, and the labor market. Montenegro confronts
today the need for further fiscal adjustment to turn the
deficit into surplus and bring public debt below the
Maastricht level. This would help creating the fiscal space
for strengthening its convergence prospects with the EU and
with the alignment with the rules in the eurozone, given the
country’s use of euro as the local currency. Fiscal and
structural policies in an economy without monetary policy
levers are of paramount importance to protect stability and
competitiveness. This Public Finance Synthesis Report is a
summary of policy discussions over the last few years
carried out under the various World Bank activities,
including the Policy-Based Guarantee, the analytical work
under the topic of Jobs and Growth and on pharmaceutical
reform issues). While the Government has already taken major
efforts to address some of the critical bottlenecks in the
economy, this synthesis report summarizes and outlines
pathways to further strengthen the sustainability,
efficiency, and effectiveness of public finances in Montenegro. |
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