Since regaining its independence in 2006, Montenegro has adopted a legal framework that encourages privatization, employment, and exports. Implementation, however, lags well behind the legal structure, and the Montenegrin economy continues to flounder on a very narrow tax base and a band of three developing sectors: tourism, energy, and to a lesser extent, agriculture. Montenegro has one of the highest public debt to GDP ratios in the region, currently at 76.9 percent, with a forecast, absent fiscal consolidation, to increase to over 80 percent once the repayment to China’s Ex/Im Bank of a USD 1 billion highway loan begins. One of the Government’s priorities is to continue developing the infrastructure, including the second section of the highway that will better connect the developed southern part of the country with the undeveloped north. The World Bank and the IMF have been assisting the government in implementing measures to control the debt. 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 Montenegro’s economy in 2020. In April 2020, the International Monetary Fund (IMF) announced an anticipated 9% contraction in the economy, stemming primarily from Montenegro’s overreliance on the tourism sector, which currently accounts for 25% of GDP. Despite regulatory improvements, official corruption remains a major concern.
As a candidate country on its path to joining the European Union (EU), Montenegro has opened 32 of 33 negotiating chapters, with three provisionally closed. The government hopes to open the final chapter on competition in 2020. Montenegro joined NATO in June 2017.
On January 1, 2019, Montenegro started implementation of its economic citizenship program. The program will last for three years and will be available for up to 2,000 applicants.
Montenegro’s economy centers on three sectors, with the government largely focusing its efforts on developing tourism, energy, and agriculture. Due in large part to its 300 km-long coastline and a spectacular mountainous region in the country’s north, the thriving tourism sector accounts for almost 25 percent of GDP. No one country dominates foreign direct investments, and the most significant investments have come from Italy, Hungary, Russia and Serbia with new interest coming from the United Arab Emirates, Azerbaijan, China, Turkey and the U.S.
In the energy sector, the government began operation of the recently completed underwater electric transmission cable to Italy in December 2019. In March 2020, Minister of Economy Dragica Sekulic announced the government’s intention to consider importing U.S. liquefied natural gas (LNG) via the Port of Bar. Additionally, there are several ongoing conventional energy projects around the country, including the controversial Chinese-financed ecological reconstruction of the existing block of the coal-fired thermal plant in Pljevlja and a number of small-scale hydroelectric projects. The Montenegrin government has signed concession agreements for offshore oil and gas exploration with two consortiums: the Italian-Russian consortium Eni/Novatek for four blocks and the Greek-British consortium Energean Oil/Mediterranean Oil and Gas for one block. Exploration is expected to start in 2020, and several more licensing rounds are foreseen during the year for additional exploration blocks.
The Government sees as one of its priorities the development of Montenegro’s digital economy.
|Measure||Year||Index /Rank||Website Address|
|TI Corruption Perceptions Index||2019||66 of 180||http://www.transparency.org/
|World Bank’s Doing Business Report||2019||50 of 190||http://www.doingbusiness.org/rankings|
|Global Innovation Index||2019||45 of 129||https://www.globalinnovationindex.org/
|U.S. FDI in partner country (M USD , stock positions)||2019||NA||https://apps.bea.gov/international/
|World Bank GNI per capita||2018||USD 8,430||http://data.worldbank.org/indicator/