State Department Report: Corruption Remains the Major Problem of Montenegro

By , 12 Sep 2020, 22:31 PM Politics
State Department Report: Corruption Remains the Major Problem of Montenegro State Department logo, Source: SafeJournalists

September 12, 2020 - "Corruption and the perception of corruption are significant problems in the Montenegrin public and private sector. Citizens' concerns about corruption are usually significant in opinion polls, and corruption is also cited as a risk by foreign investors. Despite legal improvements, corruption remains a major problem in the Montenegrin economy, according to the annual State Department reports designed to help US companies make business decisions.

"Corruption and the perception of corruption are significant problems in the Montenegrin public and private sector. The level of citizens' concern about corruption is usually high in public opinion polls, and foreign investors also cite corruption as a risk, "the part of the report dedicated to the prevention of corruption points out, RFE reports.

It is highlighted that since gaining independence in 2006, Montenegro has adopted a legal framework that encourages privatization, employment, and exports.

"The implementation of the framework, however, lags far behind the legislation," the report says, noting that Montenegro is still in the process of establishing a liberal business climate that encourages foreign investment and local production.

"The country remains dependent on imports from neighboring countries, despite significant potential in some areas of agriculture and food production," the report states.

It adds that, although the political transition has not yet eliminated all structural barriers, the government generally recognizes the need to remove obstacles in order to reform the business environment and attract foreign investment.

The ratio of public debt and gross domestic product in Montenegro is one of the largest in the region - notes the State Department.

"Public debt is currently at 76.9 percent of GDP, with the forecast that it will increase to over 80 percent after the repayment of the loan to the Chinese Exim Bank, for the construction of a billion-dollar highway," it is noted.

As government priorities, the State Department singles out infrastructure development, "including another highway section that will better connect the developed southern part of the country with the underdeveloped north."

It is noted that the World Bank and the International Monetary Fund (IMF) are assisting the government in implementing debt control measures.

"The economic growth rate in 2019 was one of the highest in Europe at 3.5 percent, while the unemployment rate rose slightly from 15.2 to 15.3 percent. However, the COVID-19 pandemic is expected to have a significant economic impact on the Montenegrin economy in 2020," the report highlights.

There is a reminder of the IMF forecast from April this year, according to which Montenegro will face a nine percent decline in the economy.

The economic downturn is said to stem from the Montenegrin economy's heavy dependence on tourism.

The tourism sector accounts for a quarter of gross domestic product (GDP).

As a candidate country on its path to joining the European Union (EU), Montenegro has opened 32 of 33 negotiation chapters. Three have been temporarily closed, the State Department says, noting that the Montenegrin government hopes to open the last chapter on competition in 2020.

It is added that Montenegro has been a member of NATO since 2017.

"On January 1, 2019, Montenegro began implementing its economic citizenship program. The program will last for three years and will be available for up to 2,000 applicants," the State Department's report highlights.

The Montenegrin economy is focused on three sectors, with the government mainly focusing its efforts on developing tourism, energy, and agriculture.

"Due to its 300-kilometer-long coastline and spectacular mountain region in the north of the country, a successful tourism sector accounts for almost 25 percent of GDP."

No country dominates foreign direct investment, the most significant being investments from Italy, Hungary, Russia, and Serbia. At the same time, the State Department notes that new interest in investing comes from the United Arab Emirates, Azerbaijan, China, Turkey, and the United States.

Projects in the energy sector include a submarine cable to Italy for electricity transmission and the Montenegrin government's intention to consider importing US liquefied natural gas through the port at Bar.

"Also, there are several ongoing conventional energy projects across the country, including the controversial environmental reconstruction of the existing block of coal-fired thermal power plants in Pljevlja and a series of projects to build small hydropower plants," the report said.

Mention is also made of the concession agreements for offshore oil and gas exploration, which the Government of Montenegro signed with two consortia - the Italian-Russian consortium Eni / Novatek and the Greek-British consortium Energean Oil / Mediterranean Oil and Gas.

Source: PCNEN

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