Europe

Montenegro

(formerly part of the State Union of Serbia and Montenegro)

Last reviewed: 26 January 2009

Country information

See entire profile

ECONOMY

Basic Economic Facts

(Source CIA World Factbook and Government of Montenegro)

GDP: € 1.644 billion (2005)
GDP real growth rate: 7.1% (2007)
GDP per capita: € 3800 (2005 est)
Population below poverty line: 12.2% (2003)
Unemployment rate: 11.35% (2008)
Inflation: 6.2% (2007)
Official Currency: Euro
Major industries: Tourism, aluminium production, steel production, agricultural processing.
Major trading partners: Switzerland, Italy, Germany, Bosnia and Herzegovina, Greece, Serbia.

The Republic of Montenegro severed its economy from the former Yugoslavia's federal control and from Serbia during the Milosevic (pre-2000) era and maintained its own central bank, collected customs tariffs, and managed its own budget. They replaced the Yugoslav Dinar with the German Mark on 2 November 1999, and then adopted the Euro on1 January 2002, as their official currency. This was in response to rising inflation across Serbia and Montenegro. Inflation has since reduced significantly.

Following the dissolution of the State Union with Serbia in May 2006, Montenegro has become a member of several international financial institutions, including the IMF, World Bank, and the European Bank for Reconstruction and Development. Montenegro is also pursuing its own membership to the World Trade Organisation.

Reform of the financial sector in 2005 helped improve growth across all sectors of the economy. Tourism is becoming a major strength in the Montenegrin economy and continues to grow. Visitor numbers were up 39% in 2007 over the previous year. Unemployment has been a key political and economicissue, though this has reduced significantly over recent years from 16.4% in 2006 to 11.35% in 2008, according to Government of Montenegro figures.

International Assistance

Since 2007, the EU has provided pre-accession financial assistance to Montenegro under the Instrument for Pre-Accession Assistance (IPA). The 2007-2009 Multi-Annual Indicative Planning Document (MIPD) for Montenegro was adopted in June 2007. In 2007 a total of €31.4 million was allocated to Montenegro. The main focus is on the institutional changes required for the continuation of the transition process and EU intengration and priority areas will include public administration reform and rule of law, the business environment, transport, the environment, agriculture and food safety.

During the last 3 years, € 1.6 million was earmarked for financial support to civil society and € 3.1 million for minorities and refugee return. For 2007, € 1 million has been allocated from the IPA to support the development of civil society. Ongoing CARDS assistance is implemented by the European Agency for Reconstruction, but preparations are being made to transfer that responsibility to the new EC Delegation in Podgorica. IPA assistance will be implemented by the EC Delegation. Decentralised management of aid is a medium-term objective for Montenegro.

The UK supports the Government of Montenegro through the IPA programme and through our share of World Bank and EBRD lending to Montenegro. For further information, please consult the following websites:

Europa
European Bank