The growth of the Montenegrin economy is expected to be at a moderate level this year, according to the assessment of the International Monetary Fund (IMF), following a strong performance last year, while inflation trends will depend on the international environment.
The head of the IMF mission to Montenegro, Shrikant Seshadri, stated that the Montenegrin economy grew strongly by six percent last year and is expected to reach 3.7 percent this year.
“Inflationary pressures will continue to decrease, while prudent management of capital expenditure will aid medium-term growth,” Seshadri said at a press conference presenting the IMF Mission’s Concluding Statement after its regular annual visit.
He noted that Montenegro will have high external financing needs over the next five years and added that the IMF is ready to assist in developing fiscal strategy.
According to the IMF’s projections, inflation has decreased from its peak of 17.2 percent in 2022 to 4.3 percent in December last year, leading to a significant reduction in the gap compared to inflation in the eurozone.
Whether this trend will continue depends on the international commodity price environment and domestic wage pressures.
The IMF also assessed that social transfers should be managed by better targeting entitlements to those most vulnerable, while the growth of the wage bill in the public sector should be contained in the medium term.
Prime Minister Milojko Spajic stated that the government considers all conclusions from the IMF’s statement as a basis for shaping future fiscal strategy.
“If we consider that Montenegro has not adopted a fiscal strategy since 2021 and a public debt management strategy since 2018, it is clear that this issue is one of the top priorities of this government,” Spajic emphasized.
According to him, the government is committed to implementing measures aimed at increasing the standards of living for citizens in a fiscally responsible manner, initiating a new investment cycle by attracting investors and building infrastructure.
“The measures aimed at increasing fiscal resilience, diversifying the economy, and ensuring the sustainability of public finances largely align with the IMF’s recommendations,” Spajic stated.
The Governor of the Central Bank of Montenegro (CBCG), Irena Radovic, assessed that the banking system is healthy and highly liquid.
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