Wednesday, September 14, 2011

Montenegro's economy faces serious problems

Montenegro's economy grew at a rate of 2% in the first half of the year, but experts warn the country must immediately curb borrowing to avoid the crushing weight of a debt crisis.

"We are concerned about the pace of increasing public debt … More powerful economies in the EU have experienced major problems because of it," Central Bank Governor Radoje Zugic said.

At 1.25 billion euros, or 45% of GDP, Montenegro's projected total debt is second only to Albania in the region. Public debt rapidly increased after the government issued 380m euros in bonds around the start of the year in order to pay salaries and pensions. With interest, the bond obligation will total 524m euros when it comes due in 2016.

Meanwhile, the government took an additional World Bank loan in the amount of 59m euros earlier this month.

Central Bank data shows that the operations of one in four enterprises are blocked due to their inability to pay debts. As of June, 14,754 companies -- out of 55,602 -- with a combined debt of 302m euros were unable to function.

Similarly alarming is the data on private debt. Of 2 billion euros in total bank loans -- a quarter, or 523m euros -- will likely not be repaid.

Parliamentary Committee for Economy President Aleksandar Damjanovic warns that continually increasing the public debt has not improved the economy's performance or standard of living.

"The fact that the national debt, which in 2006 was about 700m euro, rose more than twice in five years, indicates there is a policy [at work] which can push Montenegro into debt slavery. There is a legitimate concern that we are coming into the danger zone of state bankruptcy," Damjanovic told to SETimes.

Experts agree that to avoid a worsening debt situation, foreign investment -- rather than borrowing -- should be the engine of growth.

"In Montenegro, there is stagnation when it comes to foreign direct investment. In the first seven months, compared to the same period last year, foreign direct investment decreased 38%," Zugic said.

"We believe that tourism pushed up the other sectors," he concluded. Experts say Montenegro needs 300m euros in annual foreign investment to reach a sustainable budget.

One of the ruling Social Democratic Party (SDP) members insists that Montenegro take urgent measures, including a new law to encourage foreign investors.

"They include tax, financial and customs incentives, infrastructure and free use of land," SDP's Damir Shehovic told SETimes.

According to analyst Vasilije Kostic, Montenegro's high dependence on imports, pension fund deficit and social benefits expenditures, coupled with a large state administration, will put constant pressure on the sustainability of public finances.

"The reality is public debt will still increase due to the slowdown of the world's economic recovery, especially in the developed European economies, which affects the development of small economies like ours," Kostic told SETimes.

"It is clear that the problem of debt growth is complex and troubling. We should not forget that the credibility of a state depends largely on the ability to service its debt, especially now," Kostic said.



Anonymous said...

WHo gives a flyin' shit about Montenegro's ailing economy. This is no news in Malesia where the economy has been shit for decades.

Anonymous said...


Anonymous said...

The economy? Sure it's in God-damn shambles, did anyone see the recent issues surrounding teh schools in Tuz? There is a health hazard in most institutions, floors are warped, water is tainted, and toilets are in ruins. Its no wonder why parents are keeping their children at home.

Why isn't hell raised over this????

studentëve të dëshpëruar said...

Yea, I see it every day. It is normal now because all students got use to it. If we want to go to tualet, we go outside. if we want to wash hands, we go across street to cafe tualet. if we want to drink water, we bring our own. nuk ka problem. kjo eshte jeta ne Malesi

Anonymous said...

Sorry, but malesort are not aggressively striving for their basic rights; If they want to be equal with other citizens in Montenegro, they need to do much more, organize themselves, demand their civic rights, and not just complaining and wasting their time in those cafes in Tuz.

Anonymous said...

Where are the parents of those deprived students? Student in Malesia, k-12, are stripped from the most important life tool/experience: education! And, malsort do nothing about it. Shame on them!

Anonymous said...

Parents are actually the ones that have stood up and refused to allow their kids to attend classes while the contaminated waters are running amuck! They are crying foul that the schools are dangerous.

But where are the community leaders, those sons-of-bitches!

Anonymous said...

The Right to education is a natural right that no government can take it away from you. It’s not good enough for those parents to boycott the school; they need to go and protest in front of the Ministry of Education in Podgorica with this slogan: Montenegro how many more time you want to fuck us!

Anonymous said... many times as they want too

Anonymous said...

What? Albanians in Montenegro protest for more rights? Are you being serious?

The only time Albanians in Montenegro will protest is if the cafes in Tuz would shut down.

Anonymous said...

Hahahha. God forbid the cafes shut down. Then what will they do ... work? That is a four-letter word, you know.

Anonymous said...

And for those of ya'll that say, "there is no work" for Albanians in Montenegro. All I have to say to you is bullshit!

If people want to work, they can work; be it working in cafes, restaurants, construction work, vineyards, farms, etc. There is work for them, HOWEVER they feel too damn good for that kind of labor. They'd rather sit on their lazy-asses and talk shit about one another than pick up shovel and earn their wages. Moreover, their families in the Diaspora keep sending them money and cars, so they think, "the hell with work, I have enough for gas, coffee, and the knock-off sunglasses that I wear even when it rains outside."

Anonymous said...

There is no market for them (Malesore)?

Anonymous said...

Yea, no market for those that sit all day and watch cars pass by on Tuzi boulevard.

It's also hard to swallow that many Albanians from the Diaspora who have built 2nd homes in Malesia hire Slavs to do the work.

For the past five years that I visited Malesia, several homes were builty, and I have heard the same story over and over. Montenegrins build all of them, and do all the wiring, interior and plumbing.

And I know for a fact that there are Albanians out there that would kill for the work, but we ignore them.

Why is that?

Anonymous said...

I know some of my relatives and friends that built their houses in Malesi. All their workers were Malesor, every single one!

Anonymous said...

That's what u think. Or that's what they tell u.

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