The financial stability in Montenegro is steadier when compared to its neighbors in the Balkans. It is also growing on a faster scale. Financial statements for the last 15 years clearly indicate that the total volume of money in the country is expanding. The main contributors of this expansion are tourism revenues due to the increasing number of tourists, the Montenegrin construction sector which is growing through developed infrastructure services, and the agricultural production and energy market supported by numerous incentives.
The data from the Central Bank of Montenegro demonstrates that the incentive and monetary policies implemented have been successful thanks to the convenient bureaucratic system in the country which initiates increased investment by foreign firms. Plus, the additional contribution of real estate income to the economy by immigrants from Europe and the Middle East has been noteworthy in recent years.
Montenegro Current Inflation Data
Since the global crisis in 2008 and 2009 affected almost all regions, abstaining of foreign actors who invested in the country slowed down Montenegro's real economical targets for a short time. However, Montenegro, which was less affected by the global crisis than other countries, implemented effective economical policies to mitigate the negative effects of the post-crisis period and continued its way by increasing its financial development.
The successful results of long and short term monetary plan policies are clearly observed with Montenegro's single digit inflation rate.
Montenegro Banking System and Credit Options
The commercial banking system in Montenegro is well developed. Most banks offer free services for all types of online banking transactions and money transfers abroad. According to the data of the Central Bank of Montenegro (CBCG), the required reserve ratio of the banks was 251.9 million Euros as of December 2018.
In accordance with applicable regulations, Montenegrin banks have the right to use up to half of the designated reserve to maintain the daily rate without paying any interest provided that the amount is deposited back on the same day. Mandatory reserve requirement is introduced for the average amount of total bank deposits.
Montenegrin banks also provide real estate loans to foreigners, the maximum amount of credit is 400,000 Euro and the maximum term amount is 25 years.
Montenegro Foreign Investor Profile
Montenegro is receiving large scale investments from many regions including Europe, Middle East, Russia and all developing countries but no single country is dominating the Montenegrin market as the main investor. The country imports food products, precious gems, domestic appliances and other items at high rates from Turkey and Russia along the million euro investments in tourism facilities and construction projects by foreign conutries.
Montenegro Tax System
The Montenegrin tax system has the lowest rates in Europe. There are incentive schemes such as exemption from corporate tax for undeveloped regions (for a maximum of 3 years). In addition, Montenegro provides special tax credits for companies in certain regions. If income from investment capital is invested in new securities then the gain is not taxed.
Agricultural Economics and Livestock in Montenegro
The agricultural budget, which is increased every year, is determined as 52.4 million Euros by the Montenegro Ministry of Agriculture and Rural Development for 2019. The country emphasizes great importance to agriculture and domestic animal breeding (especially for dairy products) and provides many incentives for its development. Support funds are prepared by both local government and European Union countries. The Ministry also intends to make direct contact with landowners and producers in order to make the funds available for efficient use.
Montenegro's Contribution to Tourism and Economy
The tourism sector is an effective means of economic stability for Montenegro. The country attracts more tourists than it can serve as a result of the competitive marketing of the most beautiful beaches of the Adriatic coast in comparison to surrounding countries. Southern Montenegro cities receive 3-4 times as many tourists as the country's population (630 + thousand) during summer.
With a new regulation enacted in June 2019, the Montenegrin Ministry of Tourism announced that it would provide an additional incentive of € 800,000 for the development of tourism in the country. Montenegrin Ministry of Tourism will add € 350,000, and the National Tourism Organization of Montenegro will add € 200,000 to this state funded € 550,000. The goal is to infuse additional interest in the tourism sector through innovative initiatives and introduce Montenegro with its history, geography and ethnic cuisine.
Thanks to its mild Mediterranean climate, Montenegro has geographical and climatic opportunities that cannot be found in other Balkan countries and Europe. The northern section of the country also provides quality accommodation for winter sports. In addition, the ecological system between Lake Skadar and its surroundings is of great interest to tourists and the development of the region.
Montenegro Import and Export Comparison
Montenegro has a young labor force and its population is around 630,000. Since the industrial branches in the country are still in the development stage, many products are supplied through imports from abroad.
Montenegro Infrastructure Investments
Developments in infrastructure initiates the advancements in tourism and construction sectors. In order to improve all types of commercial investment in the country, the Montenegrin government is consciously keeping its infrastructure development very active. Several new highways and regional road plans have been approved for the Montenegrin north-south line, and many others are already being built. In 2019, the European Union has allocated € 3.6 million to contribute to the development of digital infrastructure and railways in Montenegro. The additional funds will be used for the reconstruction of the Bar-Golubovci and Bar-Vrbnica railways and for the establishment of infrastructure to provide better internet service in rural areas.
Montenegro is Growing Steadily
Maintaining a consistently positive balance in terms of growth, increase in employment, balance of payments, price stability, and Montenegro's economic success lead many global investors to compete with each other to participate in the Montenegrin market. You can contact us for detailed Montenegro economic reports and detailed market analysis covering all sectors.