The European Commission (EC) has stated in its report on Montenegro that additional measures are needed to stabilize public debt below 60% of GDP, given high mandatory spending and weakened fiscal dynamics following the reduction of pension contributions.
The EC emphasized that Montenegro must limit public spending, increase revenues, and form a Fiscal Council as soon as possible to review the 2026 budget proposal — a step pending for several years.
The report notes structural challenges in employment, with persistently high unemployment, while the banking sector remains well-capitalized and liquid. The EC highlighted the need to strengthen the statistical office Monstat by improving both financial and human resources.
Montenegro’s fiscal deficit reached 3.2% of GDP in 2024, compared to a surplus in 2023, mainly due to an 18% increase in public spending — driven by higher pensions, healthcare transfers, capital expenditures, and a 40% drop in one-off revenues.
While progress has been made in financial supervision and budget planning, the EC pointed out that the Fiscal Strategy is not aligned with fiscal rules requiring the deficit to remain below 3% and public debt under 60% of GDP. Reforms in state-owned enterprise management are only partially implemented, and a comprehensive assessment of fiscal risks related to these enterprises is still needed.
The EC observed an economic slowdown, with GDP growth declining from 6.5% in 2023 to 3.2% in 2024 and 3.1% in early 2025. Growth has been driven mainly by investment, household consumption, wage increases, credit expansion, and government spending, while exports — especially in tourism — have weakened. GDP per capita reached 54% of the EU average in 2024, up from 52% in 2023.
Progress was noted in public financial control and external audit legislation, but the EC urged improvement in internal audit efficiency and stressed that the State Audit Institution (DRI) must be made fully operational, as its Senate still lacks a president and fifth member.
In the area of economic and monetary policy, Montenegro is assessed as moderately prepared. The EC called for economic diversification to reduce reliance on tourism and for stronger institutions to enforce competition rules and state aid control.
The EC also recommended updating public procurement and anti-corruption laws, including the introduction of a “red flag” system in electronic tenders to detect irregularities.
Montenegro must legally prevent any reactivation of the citizenship-by-investment program, which the EC views as incompatible with EU standards due to risks of money laundering, tax evasion, and corruption.
The report further calls on Montenegro to adopt a National Energy and Climate Plan, strengthen energy efficiency laws, and accelerate the green transition.
In agriculture, progress has been made, but the EC urged faster implementation of the IPARD program and alignment with EU agricultural regulations.
Finally, the EC warned that ongoing political deadlock over the appointment of vice governors and Council members of the Central Bank of Montenegro (CBCG) undermines the institution’s independence and violates EU Chapter 17 obligations. The Commission stressed that appointments must be transparent, merit-based, and consistent with the CBCG Law.
