Bulletin of the Ministry of Finance

Transcription

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Ministry of Finance of Montenegro
Bulletin XVI
April - June 2009
www.ministarstvo-finansija.vlada.cg.yu
Administration
TAX ADMINISTRATION: www.poreskauprava.vlada.cg.yu
CUSTOM ADMINISTRATTION: www.upravacarina.vlada.cg.yu
DIRECTORATE FOR ANTI-CORRUPTION INITIATIVE: www.antikorup.vlada.cg.yu
ADMINISTRATION FOR THE PREVENTION OF THEMONEY LONDERY:
www.gom.cg.yu/aspn
DIRECTORATE FOR REAL ESTATES: www.nekretnine.cg.yu
PUBLIC PROCUREMENT DIRECTORATE: www.djn.vlada.cg.yu
Bulletin of the Ministry of Finance of Montenegro / April - June 2009
Table of Contents
4-5
6-12
Introduction
- Mr. Igor Lukšić, PhD, Deputy Prime Minister and Finance Minister
In THE Focus: IMF Arrangements in the Light of Global Economic Crises
- mr Ana Krsmanović, Independent Advisor I
13-14
Security interest in immovable property - mortgage
- Milanka Otović, Independent Advisor III
15-18
Activities of the SPO Unit in Preparation of the Projects for National Multi-beneficiary IPA 2010 Programme
- Ms. Irma Nišić, Advisor
- Ms. Branka Despotović, Advisor
19-24
Realization of the Capital Budget in First Half of 2009 Department for public investment planning
- Ms. Ljiljana Crnčević, Independent Advisor I
- Ms. Snežana Mugoša, Independent Advisor I
25-27
Report on the State Debt of Montenegro as of 30 June 2009
- Mr. Nemanja Pavličić, Asistant minister
- Ms. Ana Banović, Advisor in the Division for Debt and Cash Management
28-29
FROM THE JOURNALIST PERSPECTIVE: Montenegro and Global Economic Crises: Vicious Cycle
- Ms. Dragica Lalatović, TV Montena, Journalist
30-32
First Level Control as a Tool for Reducing Irregularities in the Process of Using EU Funds
- Ms. Bojana Kaluđerović, Independent Advisor I, CFCU
33-34
Accounting and Auditing Reform in Montenegro
- Ms. Ana Krsmanović, Independent Advisor I
- Ms. Aleksandra Popović, Independent Advisor II
35-39
Activities of the DEPUTY PRIME MINISTER AND Finance Minister in the period from 1st April to 30th June 2009
- Ms. Gordana Jovanović, Spokesperson
- Ms. Ivona Mihajlović, Assistant to the Spokesperson
40-43
INFO/WEB Other Activities in the Period from 1st April to 30th June 2009
- Ms. Gordana Jovanović, Spokesperson
- Ms. Ivona Mihajlović, Assistant to the Spokesperson
44-46
IPA Adriatic Cross-Border Programme
- Mr. Milorad Samardžić, Independent Advisor III, CFCU
- Ms. Katarina Živković, Independent Advisor II, CFCU
47-50
Draft Budget Final Account of Montenegro for 2008
- Ms. Stanimirka Mijović, Independent Advisor I
51-53
Commentary: Impact of Global Economic Crises to Labor Market
- Ms. Ana Krsmanović, Independent Advisor
- Ms. Bojana Bošković, Independent Advisor I
2
54-55
Procedures in Printing and Issuing Excise Tax Stamps Sector
for Tax and Customs System
- Ms. Ružica Bajčeta, Independent Advisor II
- Mr. Jovica Petričević, Independent Advisor I
56-58
International Cooperation: International Cooperation of the
Finance Ministry - International Financial Institutions Meetings
- Mr. Dragan Darmanović, International Cooperation Division Head
- Mr. Marko Vukašević, Advisor in the International Cooperation Division
59-60
Elections for the European Parliament
- Ana Ivanović, Independent Advisor
- Nina Vukotić, Advisor
61-63
TRIM MNE FINAL CONFERENCE ROUND TABLE WITHIN THE COMPONENT: State Aid
„State Aid - New Challenges or Obstacles for Montenegro
and Entrepreneurs”
- Ms. Sonja Bećović, Advisor of Minister
- Ms. Šefika Kurtagić, Senior Advisor III
64
Payment of Converted Foreign Exchange Savings Bonds
- Ms. Marina Popović, Independent Advisor I
65-67
Issuing, Withdrawing or Suspension of Accreditation for
Decentralized Management of the European Union Funds
- Ms. Nataša Kovačević, Assistant Minister, CFCU
68-69
Return of Pension and Disability Insurance Contributions
- Ms. Tatjana Bošković, MSc. Independent Advisor in the Sector for Tax
and Customs System
70-72
Fuel Consumption Assessment Based on Collected Excise as the
Economic Activity Indicator
- Mr. Vladislav Karadžić, Independent Advisor I
- Mr. Radovan Živković, Independent Advisor I
73-74
World Bank Project - REPARIS
- Ms. Ana Krsmanović, Independent Advisor I
- Ms. Aleksandra Popović, Independent Advisor II
75-79
Leasing Market in Montenegro - Report for First Quarter of 2009
and Comparative Analysis of Leasing Market Trends in the Region
- Bojana Bošković, Independent Advisor I
- Jelena Vojinović, Independent Advisor III
80-87
88-89
Medium - Term Expenditure Framework 2010-2012
- Ms. Tamara Gačević, Independent Advisor I
- Ms. Slobodanka - Mila Popović, External Advisor
How to Exit Crises - Possible Scenarios and
Repercussions to Montenegrin Economy
90-95
Realization of Public Expenditure on Local
Self - government LevelJanuary - March 2009
- Ms. Radović Gordana, Independent Advisor I in the Sector for Tax and
Customs System
- Ms. Slobodanka Buric, Independent Advisor I, Budget Department
96-99
Consolidated Public Consumption in Montenegro
for the Period from I - VI 2009
- Mr. Stanko Jeknić, Independent Advisor I
- Mr. Iva Vuković, Senior Advisor III
100-102
Removing International Double Taxation
- Mr. Mitar Bajčeta, Independent Advisor I
Ministry of Finance of Montenegro
Bulletin of the
Ministry of Finance
April-June 2009
NUMBER:
16
PUBLISHED:
quartely
PUBLISHER:
Ministry of Finance
FOR PUBLISHER:
Igor Lukšić, Ph.D.
EDITOR-IN-CHIEF:
Gordana Jovanović
EDITORIAL BOARD:
Koviljka Mihailović
MA Milorad Katnić
Krsto Racković
MA Nikola Vukićević
Dušan Perović
Mila Barjaktarović
DESIGN:
Adil Tuzović
TeHnical ASSISTANT:
Ivona Mihajlović
CONTACT:
PR Office of the
Ministry of Finance
TEL:
+382 20 224 581
FAX:
+382 20 224 450
E-MAIL: [email protected]
WEB:
www.mf.gov.me
ADDRESS:
Stanka Dragojevića br 2,
Podgorica
3
ContaCt:
Deputy Prime Minister
and Minister of FInance
Igor Lukšić PhD
phone:
fax:
e-mail:
web:
+382 20 242-835
+382 20 224-450
[email protected]
www.mf.gov.me
Introduction
Dear readers,
After the end of the first half of 2009, we may conclude that Montenegro is struggling with adversities of
the huge financial and economic crises. Financial system deviation, transferring negative consequences into
the real sector, have generated significant weakening
of economic activity in our country. Logically, industrial
production is most affected, accounting for significant
decline, partly but not sufficiently compensated by increased activities in the electricity generation sector.
On the other hand, it looks like that the sector of services, especially tourism, will remain more or less stable,
generating favorable impact on the overall situation.
Generally, apart from unfavorable GDP trends, and
declined budget inflows, we may talk about stabilization in prices, employment, as well as due to significant
decline in imports, strong adjustments in the current
account deficit. Moreover, we can talk about banking
sector stabilization, as well as on certain recovery in
4
capital market, being a consequence of primarily EPCG
recapitalization process, and the Decision on payment
of dividends in few business organizations, prior to all
Telekom.
In my opinion, economic policy measures introduced by the Government are amortizing negative economic trends. As it was expected, immediately after
elections, the new Government continues with activities that will counteract potential consequences of the
crises, both by engaging direct measures, as by implementing measures that in the long run should assist
the economic growth acceleration. In the light of the
above, the first step is the adjustments in budgetary
consumption, both in the revenue and the expenditure
side, through certain corrections in excise tax. It should
be emphasized that in that context, the programme with
IMF still remains an open and realistic option which in
any case should be held active. The Budget rebalance,
provides for rebalancing between tolerated/accepted
level of the budget deficit that is lower than Maastricht
criteria and the level of debt which will remain on sustainable percentage against GDP. At the same time,
the budget deficit is lower than capital budget expenses, which goes in favor of efforts used in maintaining
the budget structure favorable. From January 2008,
wages increased by 30% in all spending units, as well
as the assumption of liability of repayment of debts to
pensioners, which resulted in less room for maneuver
in the time of recession.
However, in the long run, it is necessary to focus
on several plans. The continuation of improvements
in the business environment and creation of conditions for attracting foreign direct investments are certainly priorities. This refers both to further alignment
of the tax policy, as to elimination of business barriers, whereas it is necessary to continue with the strong
investments in infrastructure making the grounds for
future uniform economic growth. Moreover, the forthcoming negotiations with the social partners on General Collective Agreement should result in the balance
between the need to have more flexible system on one
side and fulfillment of social minimum of earnings on
the other side. It is important to understand, that in
times of crises, is crucial to share the burden. Such approach, means the assistance to most vulnerable categories. The essential approach should mean that is
necessary to liberalize the economic system to the full
extend and that the social policy is completed through
budget consumption. Subsequently, it is necessary to
implement programmes for optimizing large business
entities in order to have industrial production on sustainable grounds providing the basis for production
expansion.
Anyway, forthcoming challenges require full commitment, abandoning unrealistic requirements and
populism, as well as the provision of full contribution to
the social dialogue.
Mr. Igor Lukšić, PhD,
Deputy Prime Minister and Finance Minister
5
In the focus
IMF Arrangements in the Light
of Global Economic Crises
International Monetary Fund (IMF) has three basic
activity areas – surveillance, lending and technical assista
nce. Surveillance involves the monitoring of economic
and financial developments, and the provision of policy
advices, especially aimed at crisis-prevention. The IMF also
lends to countries with balance of payments difficulties, to
provide temporary financing and to support policies aimed
at correcting the underlying problems; loans to low-income
countries are also directed to poverty reduction problem.
Third, the IMF provides countries with technical assistanc
and training in its areas of expertise. Activity supporting all
three aforementioned activities, is the economic research
and statistic arrangement.
This article is focusing on credit activities of the IMF,
which became very important in the period of outbreak and
expansion of the crises worldwide. However, these activities
imply surveillance and provision of advisory services and
statistical activities, having in mind conditions under which
IMF’s lending are approved and used.
With the outbreak of global financial crises, the role of
the IMF significantly increased, especially having in mind the
need of countries for financing, as well as the impossibility of
countries with the lower level of national income to access
international financial markets.
IMF Lending
On the request of a country, the IMF lending is usually
provided as arrangement, prescribing obligating policies and
measures with the objective of overcoming the problems. The
economic programme, which is the basis of arrangement, is
formulated in a country requiring lending with the assistance
of the IMF. The programme is than presented to the Executive
Board in a form of the Letter of Intent. Once the Board approves
the loan, the payment is made in tranches, depending on
achieved progress in programme implementation.
1 - The interest rate which is significantelly lower than the market interest rate.
The IMF developed different types of loan, addressing
different needs of its member countries. Low-income cou
ntries may land money through two units of the Fund on the
basis of concessional1, interest rate. They can use the Poverty
Reduction and Growth Facility – PRGF and the Exogenous
Shocks Facility, - ESF). Non-concessional are mostly provided
through the Stand-By Arrangements -SBA), Flexible Credit
Line – FCL for the members with the strong policy and policy
frameworks and Extended Fund Facility –EFF, mostly used by the low – income countries. The IMF is providing the urgent support,
with the objective of providing recovery from natural disasters and conflicts.
With the exception of PRGF and ESF, lending is approved on the basis of the IMF interest rates, based on the SDR (Special
Drawing Rights), determined weekly, linked with the changes on international money marker. The amount which the country may
lend from the Fund (access limit) depends on the type of the loan, and usually represents the multiplication of the quote.
The most important instrument or the most important type of lending which the IMF is providing is the Stand-by arrangement
(SBA). The SBA is intended for overcoming of short term imbalance of payment of the countries. The SBA is usually provided for
the period from 12 to 24 months, while the payment period is from 3 to 5 years.
IMF arrangements as the mechanism for mitigating the consequences of global economic crises in selected countries
Many European countries, even some EU member states, required IMF’s assistance in a form of SBA, in order to overcome
consequences of global financial crises. The most common reasons for these arrangements are in maintaining the currency
exchange rate of the national currency, assistance to the banking sector in crises, as well as in maintaining the fiscal balance.
Commonly, the SBA arrangements are approved as cases of extraordinary access, since the usual amount of SBA may not fulfill
all needs for funding. (Box 1 Indicates the cases of exceptional access criteria).
Hungary was one of the first EU countries to entered stand-by arrangement with the IMF, opting for exceptional access, i.e.
landing which value exceeded the Hungarian quota - per 1000%. The same arrangement was used by Ukraine, Latvia, Iceland,
Serbia, Rumania and Bosnia and Herzegovina.
Table 1. Amounts and availability of SBA for selected countries
Country
Availability data
Purchase
Million SDR
Hungary
November 2008 – February 2010
10.537,5 (12,5 billion €)
1.014,8
Iceland
November 2008 – October 2010
1.400,00
1.1970,5
Ukraine
November 2008 – October 2010
11,000.00
801,7
Latvia
December 2009- February 2011
1.521,6 (1,7 billion €)
1200,0
Belarus
January 2009- February 2010
1,618,12 (2,5 billion $)
418,8
Serbia
January 2009-Februar 2011
2.619.12
560,0
Rumania
May 2009 – March 2011
11.443,0 (12,95 billion €)
1110,8
Bosnia and Herzegovina
May 2009 – March 2011
11.443,0 (12,95 billion €)
1110,8
% quote
Source: MMF, www.imf.org
Depending on the problem with which the country is facing with, the economic programme or conditions to be fulfilled by
the country differentiate; however economic programmes are mostly focused on decrease in public consumption, strengthening
financial sector supervision and assisting the countries facing with the fluctuation in national currency – maintaining the currency.
There are some differences in measures, which in some areas must be implemented, e.g. in the area of fiscal policy, measures
are aimed at decreasing the current expenditures, with the special focus on expenditures for salaries and other transfers, as
well as on decrease in capital expenditures and focusing on priority projects. In the following text is indicated the review of basic
elements of economic programmes for selected countries.
HUNGARY –SBA approved in november 2008
Required funds for:
• Significant fiscal adjustments with the provision of reduction of financing needs of the government;
• Maintaining liquidity and capital in banking sector.
7
Hungary: Exceptional Access Criteria
Staff’s assessment is that Hungary meets all four criteria for exceptional access requiring an evaluation of the case
for exceptional access based on the four substantive criteria under the exceptional access framework:
(1) The member is facing with the exceptional balance of payments pressure in the capital account resulting in a
need for Fund financing that cannot be met within normal limits.
(2) Rigorous and systematic analysis had shown that there is high probability of a sustainable debt position.
(3) The member has good prospects of regaining access to private capital markets in time when the debt is due.
(4) The policy program provides a reasonably strong prospect of success,
including not only Hungary’s adjustment plans but also its institutional and political
capacity to deliver that adjustment.
This framework also established stricter procedures for decision making on exceptional cases, with the objective of
strengthening security and improving accountability. Procedures include:
• Systematic consultations of the Board on programme negotiations, through confidential informal briefings. Directors receive short notes including the following: (i) temporary problem diagnosis; (ii) description of necessary measures;
(iii) the basis for assessment of needs for the exceptional access, being in conformity with the preliminary assessment
of four important criteria; and (iv) discussion timeframe. Directors are also receiving informal letter, providing the assessment on the grounds of exceptional access which is based on further review of the four important criteria.
• The burden is in programm documents. The reports of personnel suggesting exceptional access, must include all
four criteria, in-depth elaboration of the necessary balance of payments, comparison of suggested access with other
indicators except the quota and systematic and comprehensive information on capacity of debt repayment, the Board is
provided with the risk assessment and the liquidity impact to the Fund .
• Ex-post programme evaluation in the period of one year following the finalization of the programme.
Requirements:
Fiscal policy
Decrease in revenues through:
• Maintaining constant level of salaries in the public
sector in 2009;
• Elimination of 13th salary to all public sector
employees;
Elimination 13th pension;
• Postponement of indexation of social protection
benefits;
• Across-the-board cuts in other spending allocations
to ministries;
• Prioritization of capital projects co-financed by the EU
structural funds and programme for the support of SME;
• Prevention of debt accumulation;
• Control over expenditures of local governments and
application of correction measures, if necessary;
• Adoption of the Law on fiscal accountability setting
rules on public debt and primary deficit and medium-term
budgetary framework strengthening.
Fiscal sector policy
Defining strategy for resolving private debts to which the
citizens are exposed; fixing monthly installments, conversion
of foreign currency credit into forint, without additional
8
payments, decrease in monthly installments and extending
the deadline in case payment inability;
• Strengthening the role of the Central Bank and Instit
ution in charged of financial supervision, to evaluate and
react to liquidity problems;
• Rescue package for the banking sector – assistance
for improvements in capital and guarantee fund;
Strengthening financial regulations and supervision
through: introducing credit registry for households, providing
the Central Bank to obtain individual, unidentified data and
to analyze credit risk, implementing maximum ratio of loan/
value for new housing loans, monitoring the exposition of the
banks to foreign currencies.
Monetary policy and currency
• Since the currency exchange rate is fluctuating,
monetary policy is focusing on maintaining the inflator level.
Apart from IMF (12, 5 billion Euros), Hungary is receiving
the EU assistance – 6, 5 billion Euros, from the World Bank 1 billion or total of 20 billion Euros.
iceland – SBA approved in november 2008
Required funds for:
• Restoring confidence and stabilization of the currency
through strong macroeconomic policy;
• Limiting losses in failed banks and implementation
of multi - annual programme of fiscal consolidation directed
to feasibility in mid-term through gradual decline in public
debt;
• Design and implementation of the comprehensive,
sound and nondiscriminatory strategy for the banking sector,
with the objective of promoting domestic banking sector and
preservation of international financial relations.
Requirements:
Banking sector restructuring and insolvency frame
work reform
• Extending authorization of the inspection body;
• Splitting banking sector – three biggest banks to be
divided each into the new and the old bank;
• Adoption of the organizational structure providing
the possibility to resolve problems of banking sector and
transparent renewal of property;
• Appraising new and old banks to provide that the
recovery of creditors is not jeopardize by splitting;
• Following the appraisal, new banks will be recapitalized
up to the ratio of capital adequacy of at least 10%;
• Implementation of a sound and transparent process
related to creditors in banks where the intervention is made;
• Revision of the regulatory framework for banks and
supervision to strengthen security in case of new crises;
• Insolvency framework must be changed to lower the
leverage and to provide the recovery in the banking, corpo
rative and households sector.
Fiscal policy:
• Overcoming the banking crises will represent huge
overburden to the public sector – of around 80% GDP, will
represent the gross expense for the payment of liabilities insuring deposits and recapitalization of commercial banks
and the Central Bank;
• Allowing for full application of fiscal stabilizers in 2009,
increase in need for funding and its pressure on financial
markets will be limited by purchase of state pension bonds.
The functioning of the central government will be limited by
quarterly limits of net lending;
• It is planned to implement ambitious medium-term
fiscal consolidation plan. The fall of structural primary deficit
by 2 to 3% annually, with the objective of obtaining low
structural surplus up to 2011, and primary structural surplus
of 3 - 4% GDP 2012;
• Fiscal framework strengthening – for the first time
the four-year medium – term is sent to Parliament for
adoption at the same time when the budget was sent, the
fiscal framework will be analyzed and debt strategy will be
developed, and both documents will be analyzed to provide
better alignment of the national finance with the fiscal plans
of the central government.
• Public sector will not assume additional obligations
related to the financial crises – losses of the pension fund,
domestic financial funds and foreign creditors will not be
socialized.
Monetary and currency policy
• Stabilization of koruna and preparation for slow
currency appreciation;
• Slowing/preventing the capital outflow will be fulfilled
through:
• increase in interest rate to 18%;
• strong credit control of the Central Bank over the
commercial banks;
• use of currency reserves for the prevention of
excessive volatility of koruna;
• fixed restrictions on a temporary basis for capital
account transactions;
• temporary control of the currency rate as a response
to the strict worsening in the value of koruna and pressure on
reserves will be removed during the programme.
Income policy
• Reaching national agreement on programme for
salaries adjustment.
Belaruss –SBA approved in january 2009
Required funds for:
• Adjusting to extreme shocks ;
• Addressing current economy vulnerability.
Requirements:
Fiscal policy
• Targeting balanced budget of the central government
in 2008 and 2009, excluding recapitalization of banks;
• Measures for targeting the central government bala
nce in 2009, are:
• Limiting the growth of salaries in the public sector to
10%, which is less than planned inflation level;
• Increase in salaries in companies where the state has
a controlling stake mustn’t exceed 5%;
• Limiting capital expenditures – decrease in capital
expenditures realized in 2008;
• Increase in the fee for public utility services;
• Targeted social consumption will be increased in
order to protect the most impoverished categories up to the
adjusting measures;
• Additional external funding for the budget, in order to
accelerate economic growth by implementing fiscal stimulus
in the second half of 2009;
• Accelerating privatization process focusing on large
companies;
• Establishing the agency which will allow for leasing of
equipment for exporters.
Financial sector policy
• Strengthening confidence in banks, with the full
9
guarantee in household deposits;
• Uncollateralized support to the banks liquidity must
represent the exception and support to liquidity may be
provided only on the basis of qualitative collateral;
• In order of providing adequate capitalization of the
state banks, additional funds are allocated from the budget;
• Institutionalization of the framework for reacting to
potential financial crises;
• Prohibition to central and local governments to transfer
additional funds to deposit accounts with the commercial
banks;
• The Central Bank will suspend direct lending to nonfinancial institutions;
• Privatization of large state owned banks.
Monetary and currency policy
• Implementation of the stronger currency regime,
linking the currency to the basket of currencies and allow for
fluctuation ±5%;
• Monetary policy will support new currency regime and
it will be directed to achieving targeted inflation of 11,5%.
Policies for improving business environment
• Liberalization of salaries, the state will not interfere in
salary policy of companies having minority stake;
• Monthly increase prices limitation will be abolished;
• The number of products whose prices are controlled
will be significantly decreased;
• Decreasing the tax burden – decrease in half the
sales tax, local sales taxes and decreasing effective tax rate
on income.
Ukraine – SBA appoved in december 2008
Required funds for:
Stabilization of the domestic financial system jeopardized
by the global crises and domestic confidentiality crises;
Economy adjusting to extreme shocks in terms of
trade.
Requirements:
Monetary policy
• Implementation of the flexible currency rate;
• Activities of the Central Bank and regulations related
to the foreign currency markets will be revised with the
objective of improving market mechanisms;
• Main objective of the monetary policy is the increase
in inflation to 17%, up to the end of 2009;
• Medium-term objective – directing monetary policy to
reaching inflation objectives.
Financial sector policies
• Restoring stability and confidence in the banking
sector, by supporting well designed liquidity targeted to
increase in guaranty of deposits, banking monitoring system,
10
addressing problems of the Prominvest Bank, improvements
in financial reporting;
• Development of comprehensive strategy for resolving
problems, including diagnostic strategies and banking sector
research, financial support to sustainable banks, adoption
of regulations allowing the Central Bank to engage in the
process of addressing problems.
Fiscal policy
• Maintaining low-level general government deficit to
the low level;
• Decelerating salary growth in the public sector;
• Maintaining the budget for 2009, to the budget level
from 2008, in nominal amounts;
• Limiting salaries growth, pensions and other social
transfers in accordance with projected inflation. Salary of
public servants will remain at the same level, postponing
the increase in minimum wage for two years and revising
indexation of the social benefits with past inflation and their
indexation with forecasted inflation;
• Ensuring higher transparency and financial stability in
extended public sector – Naftogas. Balancing the prices of
domestic and imported gas up to 2011.
Support to the private sector policies
• Facilitation of the solution for corporative sector
debts;
• Creation of the functional market for agricultural land;
• Agreement on list of companies to be privatized.
Latvia – SBA approved in december 2008
Required funds for:
Banking sector liquidity improvement (Parex Bank,
second in size national bankis facing with huge withdraw
in foreign deposits and at the beginning of 2009, debts are
maturing);
Support to the currency rata.
Requirements:
Monetary policy
• Maintaining currency rate, fiscal policy and income
policy will provide for adjustments;
• Partly nationalization and control of Parex Bank,
already implemented;
• Testing the banking system solvency – external
international audit;
• Sustainable banks which need increase in capital
are requiring private restructuring through selecting foreign
investors or support of the domicile banks;
• Use all supervisory limitations in accordance with the
pillar II Basel standards and require increase in capital and
liquidity of banks;
• Improve capacities of the crises management, inclu
ding all individual banks (property and liabilities) providing
urgent liquidity support;
• Laws on banks will be improved and provide for
institutions to undertake timely and efficient actions in order
to restore financial stability and to improve special solvency
regime;
• Private debts restructuring: - defining the strategy by
the end of June 2009;
• Fixed currency rate policy will represent a support to
monetary policy up to adopting Euro.
Fiscal policy
• Medium – term fiscal framework will decrease the
deficit to 3% GDP up to 2011.
• Increase in revenues through:
• VAT increase by 3% to 21%, and decrease in rates
from 5% to 10%, in 2009;
• Increase in excise tax for fuel, alcohol, non – alcohol
beverages and coffee (2009);
• Reincrease recently decreased non-taxable part of
income for income taxes of physical persons and decrease
the tax rate on income by 2 % to 23% (2009);
• To introduce from 2010, the tax rate on all capital
revenues by 10%;
• From 2010, increase property and immovable property
taxes;
• Increase non-tax revenues, increase in dividends paid
by the state owned companies to 50%;
• Expenditures will decrease by:
• Decreasing compensation to employees in the public
sector by 15% (compensations include salaries and all other
personal earnings of employees);
• Pensions freeze;
• Subsidies rationalization (including social transfers)
• Decrease in consumption of goods and services;
• Amendments to the Budget Law and request to all
agencies and ministries to maje prioritizations of their
activities and further savings plan by March 2009;
• Decrease in local self – government expenditures –
decrease in salaries by 15%;
• Introducing the obligation for weekly forecasts of cash
flow, for all budgetary users and local self governments;
• Structural reforms
• Stricter control over consumption by the Ministry of
finance;
• Application of the medium-term budget framework;
• Increase budget transparency.
Salary policy
• Decrease in compensations (salaries and bonuses)
for 15%, compared to planned budget for 2009.
• Establishment of the Committee for promotion of
limiting of salaries, mechanism for calculating salaries must be
in accordance with limitations imposed by fixed currency rata.
Apart form IMF (1,7 billion Euros), Latvia is receiving
assistance from the EU – 3,1 billion Euros, Nordic countries –
11
1,8 billion Euros, Czech, Poland and Estonia 0,4 billion Euros,
the World Bank and the EBRD - 0,5 billion Euros, or in total
amount of 7,5 billion Euros.
Serbia –SBA approved in january 2009
Funds required for:
• In the arrangement agreed in January – as a precaut
ion measure in case of global crises overflow as well as the
platform for possible (higher access case);
• Revised arrangement from May 2009, directed to the
maintaining of macroeconomic and financial stability in light
of stronger negative impact of global economic crises than
anticipated.
Requirements:
Fiscal policy
• Limiting general government deficit to GDP;
• As for expenditures, measures are as follows: public
sector salaries freeze (including public companies) in the
nominal amount in 2009 and 2010; nominal freeze of pension
benefits up to the end of 2009; suspending employment on
all levels of the government, including contracts on temporary
period; decrease in funds allocated to ministries; return of
40% of own funds of budget institutions in 2009; decrease
in transfers to local self governments; decrease in transfers
to health fund.
• As for revenues, measures are as follows: increase in
excise tax on fuel and diesel fuel; implementation of excise
tax on mobile telephony services; increase in duties for cars;
increase in collection of property tax.
• Administrative capacity building with the objective of
increasing tax legislation compliance;
• Coordination of all levels of the government and
strengthening public sector financial management;
• As back-up measures, in case of worse financial posit
ion of the government, it is planned to increase VAT and to
decrease nominal wages;
• For 2010, is planned to decrease general government
deficit to o 1,75% GDP.
• Monetary and currency policy
• Monetary policy will be focused on maintaining lower
inflation, instruments – interest rate;
• The Central Bank will not increase loans to the public
sector, directly or through primer market by purchasing
debtors securities;
• Amendments to the Law on Central Bank and
application of the EU acquis and full prohibiting of lending to
the public sector.
Financial sector policies
• Continuous monitoring of liquidity, deposits and
foreign currency reserved of banks;
• Development of bonds market in Dinars;
12
• Withdrawal of the state from the ownership in banks
and insurance companies.
Structural policies
• Privatization, restructuring and elimination of the
large number of state owned enterprises;
• Modernization of public enterprises enabling particip
ation of public sector;
• Privatization plan for 480 state owned enterprises;
• Insuring discipline in salaries in public enterprises as
well as on the central government level.
Apart form SBA arrangement, the IMF was providing
Flexible Credit Lines (FCL). First countries to require this type
of assistance in the time of economic crises were Poland and
Mexico.
FCL arrangement is much favorable because it is not
anticipating conditioning and gradual access as it is the case
in other programmes. FLC flexibility includes:
• provision of significant funds without ex-post
requirements;
• renewable credit lines, to six or twelve months;
• Extended repayment period (three to five years);
• The absence of limitations in the sense of ratio
between required funds and quote;
• Flexibility to withdraw funds at any time or to treat it
as caution measure.
FLC requirements are (a) strong economic fundaments
and institutional framework; (b) application and existence of
sustainable record of implementation of strong policies and
commitment in implementation of such policies in future.
These requirements are assess by the IMF team based on
following criteria:
Sustainable external position;
Private flows are dominant in capital account;
Holds permanent independent access to foreign capital
markets under favorable conditions;
Reserves position is relatively conform when the FLC is
required as caution measure;
Sound public finance, including sustainable debt
position;
Low and stable inflation;
Absence of insolvency problem in the banks representing
the threat to the system crises of the banking sector; efficient
supervision over financial sector;
Date transparency and integrity.
Ms. Ana Krsmanović, M.Sc.
Independent Advisor I
Security interest in
immovable property - mortgage
Security interest, as the right of a creditor (mortgagee
or pledgeholder) to demand satisfaction of his claim by fore
closing the pledged property with priority over creditors who
do not have a pledge created on that particular property,
is regulated by the new Law on Ownership Rights (Official
Gazette of Montenegro, No. 19/09).
Security interest in immovable property, i.e. mortgage,
authorizes a creditor to foreclose the mortgaged property if a
debtor does not pay his debts when due.
A mortgage can be created on an individual property that has
the capacity to be monetarily valued, as well as on a percentage
(aliquot part) of that property, building under construction, as well
as a separate part of the building under construction (apartment,
business premises, garage, etc.), regardless of whether it has
already been built, provided that a building permit has been
issued in accordance with the Law regulating construction of
buildings; land that can be freely disposed of, land parcel having
a building permit issued, or land parcel in the State ownership
that can be disposed of by legal entities.
A mortgage cannot be separated from the encumbered
immovable property even when a third party acquires owne
rship of the property. A mortgage cannot be transferred from
one immovable property to the other unless the mortgagee
and mortgagor agree otherwise. The mortgage shall secure
the entire claim, interests and other ancillary claims and
enforced collection costs. A mortgage can be created to se
cure conditional or future claims. A mortgage shall be used
to secure the satisfaction of an obligation based on the value
of the encumbered property which obligation must be a
financial obligation or an obligation that can be monetarily
valued.
A claim is specific enough if the creditor and debtor, the
legal grounds and the amount, i.e. the maximum secured
amount, are determined.
A mortgage shall be created by registration in the
cadastre of immovables on the basis of contract (agreement)
between the parties (contractual mortgage), statement of
pledge (unilateral mortgage), law (statutory mortgage), and
court decision (judicial mortgage).
A mortgage agreement shall oblige a debtor or a third
party (mortgagor) to register his security interest in the
cadastre of immovables in order to secure creditor’ s claims,
whereas a creditor shall be obliged to issue a certificate to
delete the mortgage upon satisfaction of his claims.
A mortgage agreement must be concluded in writing
and authenticated by a competent body, and it must contain
Milanka Otović
all elements prescribed by the Law and necessary for its
conclusion.
A change introduced by the Law on Ownership Rights
is the possibility to register mortgage on the building under
construction. In case of contractual mortgage on the building
under construction, the registration procedure is as follows: on
the land where the building is constructed, a mortgage shall
be registered on the building under construction, and upon
registration of the building in the cadastre of immovables,
a mortgage shall be registered ex officio on the constructed
building or separate part of the building.
If the building during construction changes its owner, a
new owner shall have the rights and obligations of the former
owner against the mortgagees.
This change enables the persons, who do not own alre
ady constructed residential or business units that can be
used as security or that may be mortgaged, to obtain loans
from banks.
13
To secure a claim, a mortgage can be created on several
immovable properties, regardless of whether they belong
to one or several owners. If a debt is not paid when due, a
mortgagee can choose from where to satisfy his claim. Such
a mortgage is called a joint mortgage.
In the cadastre of immovables, a mortgage securing
a claim that does not have to occur can be registered - the
so-called conditional mortgage. In addition to conditional
mortgage, the Law on Ownership Rights regulates credit and
continuing mortgage (continuing security clause).
In the case there are several mortgages on the same
immovable property, the priority of a mortgage shall be
established according to the moment of submission of
the request for its registration, and creditors shall satisfy
their claims in the order of priority that cannot be changed
without the agreement of all persons whose rights may be
affected by the change.
A mortgagor shall have the right to keep and use the
mortgaged property, to lease it or divest of it without the
consent of the mortgagee, but the right of a mortgagee shall
not be diminished. A mortgagor shall be obliged to maintain
the mortgaged property, and he shall be obliged to inform the
mortgagee of all changes in the property, and especially on
deterioration of its condition or loss in value.
A mortgagee shall be authorized to protect his right
(mortgage) against all third persons, as well as mortgagor.
A mortgagee shall be entitled to demand the satisfaction of his claims from the value of the mortgaged property
regardless of whether the mortgagor or a third party owns it.
The notice of commencement of foreclosure must be
registered in the cadastre of immovables in which the mortgage agreement was registered. In case the claim secured by
the mortgage agreement is not satisfied, the mortgagee may
satisfy his claim by judicial or extra-judicial sale.
The mortgagor may contest the right of the mortgagee
14
to foreclose the mortgage using the extra-judicial sale procedure, by submitting a complaint to the competent court
within the deadline prescribed by the Law. Submission of
the complaint does not postpone the foreclosure, except
if the mortgagor submits evidence that secured claim has
been fulfilled or is not due, that there has been a breach of
the procedure prescribed by the Law on Ownership Rights,
or that the mortgage has not been registered in accordance
with the Law.
Security interest in immovable property, i.e. mortgage
shall terminate, when the mortgagee renounces the mortgage
in writing; the claim secured by the mortgage ceases to exist
or is satisfied together with interests and other subsidiary
claims; the mortgaged property is sold at a judicial or extrajudicial sale to fulfill the secured claim; the mortgaged
property is destroyed; a decision ordering termination of the
mortgage becomes final and binding; the same person is
both mortgagee and mortgagor; a mortgagee acquires the
ownership right on the mortgaged property; and when the
mortgage is deleted from the cadastre of immovables.
Milanka Otović,
Independent Advisor III
Activities of the SPO Unit in
Preparation of the Projects for
National Multi-beneficiary
IPA 2010 Programme
The use of IPA funds is one of the instrument for obtaining
the EU candidate status aimed at providing support in facing
in the European integration challenges, implementation
of reforms enabling the fulfillment of the EU requirements,
progress in stabilization and accession process, as well as
creating the grounds for meeting the Copenhagen criteria for
the EU membership. Namely, IPA instruments differ according
to the possibility of beneficiary countries in using funds.
Unlike candidate countries, having accredited decentralized
management system of the European Union Funds (DIS)
pursuant to which the assistance is provided through all five
components, not accredited potential candidate countries
and candidate counties for DIS – such as Montenegro, receive
the assistance only through the first two components.
The first IPA component (Transition Assistance and
Institution Building) is divided into the national and multibeneficiary IPA funds (hereinafter referred to as: MB IPA),
while the second component is designed for the cross-border
and regional cooperation strengthening. On the basis of the
Article 72, of the IPA Implementing Regulation (Commission
Regulation (EC) No 718/2007)), the first IPA component is
divided into two components, i.e. into national, regional
and horizontal programmes - MB IPA. The main difference
between the national and the MB IPA is in the fact that one
project from MB IPA is at the same time realized in several EU
accession countries, while national IPA programmes provides
direct assistance to a certain country.
Irma Nišić
Branka Despotović
National IPA 2010 Programme
As already known, national IPA programme is focused
on priorities set by the IPA beneficiary countries. Montenegro,
as potential candidate country for joining the EU and the
IPA beneficiary, is currently preparing projects for IPA 2010,
which is developed on the basis of standard programming
process composed of six phases, such as: programming,
identification, formulation, financing, implementation, evalua
tion and audit.
Namely, the IPA programming of funds requires that the
identification and preparation process of projects is based on
15
relevant strategic and programming documents. The programming process, is a long-term process requiring strategic approach,
inter-sectorial consultations, coordination between institutions and appropriate public administration capacities enabled identific
ation of priorities and preparation of project proposals.
The IPA 2010 programming process starter at the end of January 2009 when the Secretariat for European Integration
submitted the information to the line ministries on initiation of the IPA annual programming process. Line ministries are informing
relevant institutions, from their area of competency, on the beginning of the programming process. Namely, every ministry
appointed Senior Programming Officer comprising the Project Implementation Units (SPO Units), participating in the IPA funds
programming phases within their respective ministry and providing coordination between the Secretariat for European Integration
and relevant institutions under the authority of certain ministry.
Following the submission of information by the Project Implementation Units (SPO Units), on the start of the programming
of the IPA 2010 programme and submission of the basic strategic documents and guidelines necessary for the identification of
projects, administrations and agencies under the authority of a ministry have submitted their project ideas in prescribed deadline.
The obligation of the Project Implementation Units (SPO Units) is to check whether the project ideas are prepared in accordance
with determined pattern, as well as to insure the absence of overlapping between the donors projects, as well as that the project
ideas are submitted to the Secretariat for European Integration.
The MIPD (Multi-annual Indicative Planning Document) is the main documents used in the programming of IPA projects, providing strategic
framework for multi-beneficiary IPA funds for candidate and potential candidate countries. The MIPD is a three year document and is updated annually.
The MIPD relies on the MIFF (Multi-annual Indicative Financial Framework) setting forth indicative review of distribution of the EU funds on a yearly basis
and by components for each country which is entitled to use IPA funds.
In accordance to the MIFF, in 2010 Montenegro is entitled to use the total of 34 million Euros for the first and the second
component, which may be seen in the following Chart:
Table 1: Montenegro: Multi-annual indicative financial framework, in million Euros.
Component
[2007]
2008.
2009.
2010.
2008-2010
I. Transition Assistance and Institution Building
II. Cross-border cooperation
Total
[27.5]
[3.9]
[31.4]
28.1
4.5
32.6
28.6
4.7
33.3
29.2
4.8
34.0
85.9
14.0
99.9
It should be emphasized that SPO Units are in charge only for the first IPA component, thus all aforementioned projects may
be financed from this component, i.e. available funds for Montenegro amount to 29.2 million Euros for the Transition Assistance
and Institution Building, ensuring proportional distribution of funds.
Following the review of strategic documents, the Ministry of finance, or institutions from the area of its competency, proposed
following project ideas for the IPA 2010:
Title
Tax Administration
Public procurement
directorate
Customs Administration
Anticorruption Initiative
Administration
Ministry of finance (state
aid, budget department
and sector for tax and
customs system)
MONSTAT
Project purpose
Support to the Tax Administration with the objective of achieving legal, procedural, human resources and IT
objectives, as set forth in the strategic plans of the Tax Administration, complying with the EU criteria.
Provision of effectiveness, efficiency, transparency and information on public procurement procedures and
provision of value for money.
Improvements in the customs system in accordance with the EU standards and support to trade facilitation.
The objective of the Project is to ensure continuous application of obligations, set forth in the National
anticorruption strategy and organized crime; implementation of the integrity law in the public sector.
Improvement of financial transparency and achievement of enhanced policy by creating efficiency – based
on knowledge and experience – budgeting process, tax policy, customs and state aid system in order to
achieve more efficient allocation of government resources.
Harmonization with the EU standards in the area of agro-monetary statistics; development of the Registry
which will contain data on legal entities (companies and cooperatives), as well as the data on family
agricultural holdings used in statistical purposes; Harmonization of the educational and science system
with international standards and recommendations.
By the end of February 2009, the Secretariat for European Integration, as the coordinator of the donors assistance, organ
ized a donors meeting. The suggestion was that similar smaller projects should be merged and described as activities of a
bigger project in order to improve the quality of proposed projects, which is the recommendation of the European Commission
with the objective of achieving more efficient project implementation. As for the Ministry of finance, it was suggested that the
16
Customs Administration and the Tax Administration merge
their projects into one, MONSTAT – should align components
with the components of the Ministry of agriculture, forestry
and water management, Administration for anticorruption
initiative – should merge the project in the area of fight
against corruption with the Police Administration and Police
Academy projects. The Project of the Ministry of finance was
assessed as priority in the finance area, while the project of
the Public procurement directorate was postponed, due to
the fact that is overlapping with the project from IPA 2007
programme. After corrections, project proposals of the Mini
stry of finance were finalized and sent to the Delegation of the
European Commission for review, and it includes following
project ideas:
1. ,,Modernization of the customs and tax system in
Montenegro in accordance with the EU standards’’, benefi
ciaries: Customs Administration and Tax Administration.
2. "Harmonization of the statistical system of Monten
egro with the European statistical system’, beneficiary Mo
nstat.
3. ,,Administrative capacity building in budgeting, mac
roeconomic projections and analysis, tax and customs system
and state aid assistance’, beneficiary Ministry of finance.
Delegation of the European Commission is developing
the short list of project ideas, after which the institution
in charge is expected to develop the project ideas into the
Project Fiche, as well as in the format prescribed by the
European Commission. Project Fiche is developed during the
third and the forth quarter of the current year.
We are now expecting the final decision of the European
Commission, setting forth which projects will be financed
through IPA funds. After the European Commission approves
Project Fiche, preparations for approval and signing of the
Financial agreement on national annual IPA programme
are made. The Financial agreement on national annual IPA
programme sets the obligations of the institutions/bene
ficiaries. Next step in the programming process is the pre
paration and implementation of tenders.
Multi-beneficiary IPA 2010 programme
The importance of the multi-beneficiary regional and
horizontal programmes is in supplementing and increasing
the value of the programmes planned under national IPA
programmes. Multi-beneficiary MIPD means the cooperation
and dedication of the beneficiaries of the European and
Accession partnership. Apart form aforementioned, this
programme prescribes active participation of national bodies
in beneficiary countries in programming.
Programmes that are realized within the MB IPA are de
fined by the Multi-Beneficiary Multi-annual Indicative Plann
ing Document - MB MIPD in which development are parti
cipating the beneficiary countries of the MB IPA - Albania,
Bosnia and Herzegovina, Macedonia, Croatia, Montenegro,
Serbia and Turkey.
Projects included in the MB IPA programme are prepared
on centralized level, i.e. by the European Commission, with
the objective of promoting regional cooperation. MB IPA
programming is based on preparation of project forms and
financial proposals by the European Commission. The Eu
ropean Commission initiates and prepares draft project
ideas, on the basis of the needs of countries in the region
and priorities set forth in the MB MIPD. Prepared proposals
are submitted to beneficiaries for comments followed by
inter-sectoral consultations within General Directorates of
the European Commission. Final decision on approving /di
sapproving the Project Fiche is passed by the IPA Committee
composed of the representatives of the member states. The
decision of the IPA Committee on proposed projects is fo
llowed by signing the Financial agreement between the Eu
ropean Commission and the beneficiary countries.
As for the regional support to the Multi-beneficiary MIPD
for the period 2009-2011, it focuses on regional cooperation
activities providing the support in reconciliation and political
dialogue within the Stabilization and association process of
Southeastern Europe. As for the horizontal programming, it
focuses on the activities related to the economic development
in cooperation with the international financial institutions, as
well as participation of beneficiary countries in programme of
the Community open for the Western Balkan.
In accordance with the aforementioned, in 2010, Mon
tenegro was offered around 50 project ideas from the multibeneficiary programme. In principle, the Ministry of finance
provided consent for the following project ideas:
1. Fight against money laundering, terrorism financing,
assets confiscation
This project will be financed through GRANT not impo
sing financial obligation to Montenegro. It relates to the
structures directly involved in fight against money laundering
in the following countries: Albania, Bosnia and Herzegovina,
Croatia, Macedonia, Serbia, Montenegro, Moldova, Turkey
and UNMIK Kosovo.
The purpose of the Project is to strengthen regional level
of inter-agency cooperation and administrative capacities
for reveling and prevention of money laundering operations
and terrorism financing. The second objective of the Project
is the harmonization of national legislation in the area of
money laundering with the EU legislation system, policies,
procedures and standards with the special focus on linkage
between the money laundering and illegal migrations and
human trafficking, money laundering trends and indicators
and terrorism financing, non-profit organizations in the light of
their possible connections in terrorism financing. Additional
purpose of this project is the improvement of operational
structures, implementation of laws and improvements of the
judicial system.
Expected outputs are as follows: creation of more efficient
mechanism for fight against cross-border money laundering
17
and terrorism financing and strengthening the cooperation
between the bodies responsible for implementation of laws,
as well as creation of capacities for fulfilling the requirements
prescribed by the EU legislation related to the fight against
money laundering.
Project activities will include the following: support to
bodies in charge for implementation of the law and crimi
nal prosecution in creating procedures for international co
operation and for adoption of legislation making differentia
tions in competences of the police and prosecution;
determining characteristics of money laundering on the
regional level, as well as emphasizing differences between
the countries if any; identification of obstacles in successful
prevention and repressive judicial policies on national and
regional level; development of recommendations related to
the regional policy and practice.
Activities related to the implementation of this Project
will be focused on technical support to beneficiary countries
aimed at realization of this Project, provision of the support
for the purchase of equipment and software licenses.
Technical support will refer to coordination of activities of the
administrations of beneficiary countries providing support in
programming, project design and consulting services, as well
as the training to the users. Support in the procurement of
equipment will rely on technical expertise for the purchase of
server hardware and software licenses, as well as devices in
order to insure sound functioning of the system.
4. Statistical cooperation between the beneficiary cou
ntries
3. Electronic data exchange and automatic connection
to the customs information lists
The allocation of funds for this Project started in 2003
(CARDS program), and it was intended for the Balkan count
ries and Turkey. Since this is not an investment project, Mon
tenegro does not have the financing obligation.
The purpose of this Project is to improve and strengthen
statistical system in beneficiary countries related to availa
bility, quality, comparability and accuracy of statistical data.
The expected outcome of the Project is the improvement
in productivity of the statistics, sustainability, transfer of
knowledge, quality and compatibility; preparation of bene
ficiary countries for the application of the acquis commu
nautaire, to improve coordination between beneficiary cou
ntries and national statistical system, as well as to improve
provision of statistical data to EUROSTAT.
Activities necessary for the fulfillment of aforementioned
objectives, relate to the provision of technical support in the
light of sending experts missions in beneficiary counties,
organizing seminars and workshops, functioning of the help
desks in order to provide continuous support. Generally,
these activities will help in integrating statistical personnel in
international network and therefore it should be focused on
motivating the personnel.
This project will include following statistical areas: ma
croeconomic statistics, statistics of prices, foreign policy st
atistics, demographic statistics, labor market statistics, agr
icultural statistics, business statistics, statistics in the area of
science and technique, information society statistics, energy
and transport statistics, environmental protection statistics,
tourism statistics.
The Project does not prescribe financing obligation.
The users of the Project are Customs Administrations in the
Western Balkan countries and Turkey.
General objective of the Project is administrative capa
cities building in the structures of customs administration
related to the creation of efficient system of electronic
data exchange. Specific objective of this Project is the imp
lementation of the procedures and technical realization of
the system for electronic data exchange improving the fight
against frauds and elimination of irregularities, regional
cooperation, as well as the question on status of administ
rations.
Ms. Irma Nišić, Advisor
Ms. Branka Despotović, Advisor
2. Development of regional mechanism for direct
exchange of data between the agencies responsible for the
return of assets in Southeastern Europe.
Beneficiaries of the Project are the countries that establ
ished agencies for the return of assets: Albania, Bosnia and
Herzegovina, Croatia, Macedonia, Serbia, Montenegro, Mol
dova, Turkey and UNMIK Kosovo.
The purpose of the Project is strengthening of activities
of relevant state bodies related to determining of cross-border
criminal groups and evaluation of the cooperation level
between the agencies for return of assets, establishment of
foundation for determination of mechanisms for improvement
of the data basis and its further development in the system
for direct exchange of operational information.
Activities that need to be undertaken for the fulfillment
of these objectives relate to the analysis of the existing
legal framework in the area of the return of assets, revising
the best international practice in the area of international
cooperation and identification of the cooperation grounds, as
well as signing the contract on establishing the mechanism
for the direct exchange of information between the bodies
responsible for return of assets.
18
Realization of the Capital
Budget in First Half of 2009
On the basis of the Budget Law of Montenegro for 2009
(“Official Gazette of Montenegro”, No. 82/08), funds for the
capital budget are planned in the amount 217.212.715, 00
€. The amount of planned funds for the Directorate of public
works is 122.612.715, 00 € and for the Directorate of traffic
94.600.000,00 €.
The Directorate of public works, within planned capital
projects in the first half of the current year, continued with
the realization of already initiated projects and started the
preparation of the project documentation related to following
projects:
• Construction and reconstruction of pre-school edu
cation facilities
- Kindergarten in Golubovci
Following the public bidding procedure, the Directorate
of public works contracted works aimed at construction of
facilities, the obligation of city municipality Golubovci is the
cleaning up of the construction location, and the obligation of
the Ministry of education and science is to obtain construction
license. Realization of this project will improve conditions for
the conduct of pre-school education programme.
Ljilana Crnčević
• Construction and reconstruction of secondary
school facilities
- Elementary School “Risto Manojlović” and Eleme
ntary music school in Kolašin
Snežana Mugoša
construction of the facility is planned to be finalized in 2010.
The total space of the facility is cca 6.300 m2. One part of
the facility will be used for the needs of Elementary school,
in total space of 5.750 m2, designed for the needs of 1200 –
1300 pupils, for the work in two shifts, and the second part of
the facility will be used by the Music school, space of 550 m2.
Realization of this project will create teaching conditions.
The works related to the realization of the first cons
truction phase of this facility were finalized during 2008.
During 2009, is planned to continue with the works, and the
- Elementary School “Ante Đedović” in Bar
During 2008, project documentation was developed
19
and works initiated, while in 2009, after the end of the tourist
season, is planned to continue with works.
and it is planned to finish the construction by the end of the
current year. This facility will provide working conditions for
350 – 400 students in accordance with normative for this
type of facility.
- Building complex of music arts and drama academy
in Cetinje
In the first half of 2009, the tendering procedure was
completed for the selection of the best architect concept
design. After adopting planning documents by the municipality
Cetinje, is planned the development of the project documents
and creating the conditions for development. The objective
of the project is to create adequate conditions for normal
functioning of teaching.
The realization of this Project, provided the construction
of the facility of approximately 5.900 m2 with multi use
halls, capacity of 1.200 sits. The building counts 26 rooms
for general purpose, hall for physical education and other
supporting administrative and technical premises.
- Student Campuses in Podgorica and Nikšić
In 2009, was planned the reconstruction of students
campuses in Podgorica and Nikšić. In the first half of 2009,
activities related to the redemption of land for the construction
of the Students campus in Nikšić were completed.
• Construction and reconstruction of secondary
school facilities:
- Reconstruction and adaptation of secondary
schools
On the basis of the reports on inspection supervision
of educational institutions and public institutions carried out
by sanitary inspectors, reconstruction of facilities started in
order of creating better working conditions for pupils and
teachers in the following cities: Podgorica, Bar, Berane,
Plav, Rožaje, Bijelo Polje, Kotor, Herceg-Novi, Nikšić, Pljevlja,
Budva, Tivat.
• Construction and reconstruction of administrative
space for the work of public bodies:
- New building of the Government of Montenegro in
Podgorica.
• Construction and reconstruction of high education
facilities:
- University center – Berane.
During 2007 and 2008, project documentation was
developed and works initiated, in 2009 it is planned to finish
construction and furnishing of the facility.
- Business building of the Police branch unit in Podg
orica
During 2008, project documentation was developed
and works initiated, in the first half of 2009 works continued
20
During 2009, the continuation and finalization of all
contracted works by the end of the current year is planned.
By construction this facility working conditions for police
prescribed by the new Law on criminal procedure and the
Law on police. Moreover, required European standards will be
fulfilled related to the premises for retaining and recognition
of perpetrators.
- Administrative facility of the Ministry of interior and
public administration in Pljevlja
In the first half of 2009 works started in 2008 were
continued. By the end 2009, is planned to continue and to
finalize the building. This projects will provide the building
of total space cca 7.000 m2 and the working space for 250
employees, permanently resolving the issue of working
conditions important for the states, providing institutional
strengthening in the environmental protection area and
urban planning.
- New building for the Defense Command and barrack
»Milovan Šaranović« in Danilovgrad
The development of project documentation started in
the first half of 2009. it is planned to finish the development
and technical control over the projects documentation.
- Construction, reconstruction and adaptation of the
cultural facilities:
- Music center – Reconstruction and adaptation of he
facility “Dom vojske” in Podgorica.
Following public tender procedure, works were contra
cted and initiated related to the construction of boiler facility
connected to newly constructed building. By the end of the
year is planned to finish the construction of the boiler facility
in order to put in operation the building.
- New building of the Defense Ministry, Army Headqua
rters, Ministry of internal affairs and Montenegrin Academy
of Arts and Science
Following the finalization of the tendering procedure, the
development of the project documents was contracted. By the
end of 2009, is planned to finalize project documentation,
acquire necessary licenses and consents and to start with
the construction of the building for aforementioned institu
tions, on location DUP Nova Varoš II, being property of Monte
negro, whereas the Defense Ministry us the user. Planned
construction of the building is conditioned by the need to
provide working capacities for the Defense Ministry, Army
Headquarters of Montenegro, Ministry of internal affairs and
Montenegrin Academy of arts and science.
- State Agency’s Building – II phase
During 2007, was finished the public bidding for the
development of the main project and realization of the project
have started. During 2008, finished project documents and
the construction will start. In 2009, reconstructions works
will continue on the facility with 4.800 m2 of space, with
constructing additional 450 m2. Realization of this project
will create modern technical – technological conditions,
primarily for the development of the music art and music
activity and protection and presentation of the film fund, as
well as the development of other missing cultural content.
- Reconstruction and adaptation of the cultural facilit
ies on the north of Montenegro
Following the tendering procedure, started the instal
lation of the missing equipment in the cultural centers in:
Andrijevica, Berane, Bijelo Polje, Plav, Gusinje, Murino, Pluži
ne, Pljevlja, Rožaje. It is planned to continue works related
to furnishing of facilities, as well as the beginning and
finalization of adaptation and reconstruction works in the
following cultural centers: Andrijevica, Berane, Bijelo Polje,
Žabljak, Plav, Gusinje, Murino, Plužine, Pljevlja, Rožaje.
• Apartments construction
- Apartments for the needs of the Defense Ministry
21
During 2008, project documentation was developed.
Following the tendering procedure in 2009, construction
works were initiated. On the basis of this project, the const
ructed building in gross space of 8.966 m2 with 76 apartment
units and approximately 890 m2 business space.
• Construction and reconstruction of cross-border
passes
- Cross-border passes (Dobrakovo, Dračenovac, Božaj,
Šćepan Polje and Debeli Brijeg)
It is planned to continue with the works aimed at mo
dernization of the cross border points. A part of project do
cumentation was developed for the cross-border points
Dobrakovo and Dračenovac at the level of design concept.
Planned activities to be completed by the end of 2009, relate
to the development and technical control of the project
documents for cross border points Dobrakovo, Dračenovac
and Sitnica, as well as expropriation of land for cross-border
points Dobrakovo and Dračenovac.
• Local infrastructure construction
- Street »13 jul« - Nikšić
of this mini bypass with all supporting infrastructure will be
finished, length of 1.100 m. This project will create conditions
for better inflow and safer traffic in urban zone.
- Reconstruction of the main road in Žabljak
Reconstruction started following finalized tendering pro
cedure. The project includes the reconstruction of the road,
length 550 m. until the end of 2009, it is planned to finalize
works related to the reconstruction of this part of the road
including the reconstruction of complete road.
- Caravan road - Rožaje
During 2008, reconstruction works were contracted and
initiated for 2.250 m of the road. Reconstruction works will
be finished by the end of 2009.
- Support to local administrations in resolving
infrastructure-related problems
In 2009, planned works on modernization of local roads
and reconstruction of city traffic roads will finish by the end
of the year.
At the beginning of 2009, following finalized public tend
ering procedure, works were contracted and initiated on one
part of the road length 950 m. total length of the road which is
planned for reconstruction amounts 4.700 m. Reconstruction
of the road, along with all necessary infrastructure, will create
conditions for safe traffic in both directions.
- Construction of mini bypass in Plav
Local road in Danilovgrad
Moreover, during 2009, is planned to start with the
works for cleaning up the riverbed of the river Ćehotina in
Pljevlja and drainage collector in Berane.
During 2008, project documentation was developed and
the construction works were initiated. In 2009, construction
22
• Environmental protection Projects:
- Sanitary dumps
For the Project for sanitary dumps, during 2008 act
ivities initiated. In 2009, started the development of pro
ject documentation for dumps in Nikšić, Bijelo Polje and
Berane. Until the end of year, it is planned to finish with the
development of technical documentation and contro, as well
as to create conditions for the construction of dumps.
- Facilities for filtering waste waters
Feasibility studies are under development as well as
the elaborate of evaluating the impact in environment for the
facility of filtering waste waters in following municipalities:
Plav, Ulcinj and Cetinje.
• Project for “Integral governance over the eco system
of Skadarsko Lake “
The Project is being realized in Montenegro and
Albania, and the funds are provided by the Global fund for
environmental protection in the form of donation, whicle
the project is being implemented by the World Bank. The
obligation of the Governemnt of Montenegro is to use
planned funds for construction of filtering waste water facility
in Vranjina.
• Tourism Projects:
- Creating conditions for the development of »Hiking
and biking «
The realization of aforementioned project started in
2008. In 2009, activities were completed related to the
development of promotional material and participation in
funding with the UNPD for strengthening capacities of hiking
and biking association of Montenegro.
• Regional water supply system construction:
- Regional water supply system
The construction of this system will improve the quality
of water supply services in Montenegrin coast and remove
the deficit in water supply during the tourist season. Following
institutions will participate in the financing of this Project:
the World Bank, the European Bank for reconstruction and
development, Public Company »Regionalni vodovod Crnogo
rsko primorje« and the government of Montenegro.
Funds planned by the Capital budget for 2009, relate
to the participation of the Government of Montenegro in this
Project.
Oncology department of the Clinical Center of Mon
tenegro in Podgorica
During 2008 was finished the development of project
documents and works had started. In 2009, planned first con
struction phase was finished. Following completed tendering
procedure, the second construction phase was initiated.
- Institute for public health in Podgorica
documents and works had started. During 2008, construction
and reconstruction of the building was dome. By completing
this Project, conditions will be created aimed at the control,
prevention and elimination of contagious and chronically
noncontiguous diseases.
- Transfusion Centers
• Construction and reconstruction of the Health cen
ters:
- Health Centers in Podgorica
documents and works had started related to the 1st phase,
reconstruction and construction of the Health Centers “Nova
Varoš” and “Pobrežje” in Podgorica is in process. The first
phase is planned to be finished by the end of 2009.
During 2007 works were finished in Bijelo Polje and
Pljevlja and the construction of the new facility in Berane
23
started. During 2008 continued the rough construction works
for transfusion center in Berane were finished. For 2009 was
planned to continue and finalize works for the construction of
aforementioned project.
• Construction and reconstruction of social care
facilities
- Nursing home in Bijelo Polje
• Road Risan – Grahovo – Žabljak
The construction of the road Risan – Grahovo – Nikšić –
Žabljak is realized through several projects, and the financing
model for these projects is provided by the contractor in
the long – term period. In 2009, is planned to reconstruct
a part of the road from Kruševica to Jasenovo polje, and
reconstruction of the part of the road from Risan up to Niksic
is planned to be finished by the end of the year and it will be
put into operation.
• Maintenance of the state roads
This programme comprises regular and investment
maintenance of state roads.
The investment maintenance programme comprises
the supervision works, projecting, rehabilitation of the sliding
spots, walls, slopes, bridges, tunnels, reconstruction of roads
and the road Slijepač most – Tomasevo.
• Third road bars on highways
On the basis of the Programme for the construction of
the third bars, the problem of bottle necks on high slopes
and in places of great traffic peak will be resolved. The
construction of the third bar was planned for 2009 in the
length of 9,6 km:
Funds planned by the capital budget for 2009, will
provide complete finalization of the facility, of cca 5.100
m2, providing the space for 180 elderly persons creating co
nditions for lodging and nursing of elderly persons for the
northern region of Montenegro.
• Purchase of fire extinguishing airplane and equi
pment
- The purchase of this type of plain improved equipment
capacities for fire protection of the Ministry of internal affairs
and public administration and municipal fire protection
units.
- Third road bar on the highway Podgorica-Nikšić,
- Third road bar on the highway Podgorica-Cetinje, and
- Third road bar on the highway Cetinje-Budva.
• Railway infrastructure maintenance
The Project comprises the current and investment mai
ntenance of the Railway infrastructure as well as regulating
the railway transport.
Department for public investment planning
Moreover, the Directorate of traffic within planned capit
al projects, in the first half of this year will continue with the
realization of the following capital projects:
24
Ms. Ljiljana Crnčević,
Ms. Snežana Mugoša,
Report on the
State Debt of Montenegro
as of 30 June 2009
The state debt of Montenegro as of 30th June 2009 amo
unts to EUR 1,003,6 mil or 28,4% of gross domestic product
(GDP). Internal debt amounts to EUR 450.0 mil or 12.7% GDP,
while external debt amounts to EUR 553,3 mil or 15,5% GDP.
Guarantees of Montenegro amount to about EUR 65,8 mil, or
1.9% GDP, or 6,6 0% of the state debt. The state debt makes
about 62.2% of totally generated budget revenues in 2008 (not
including privatization receipts, loans or donations).
External Debt Trends in the first quarter of 2009
In the first half of 2009, the external debt increased by EUR
71,6 mil in comparison to the end of 2008. The external debt
amount increased due to assuming the debt of the Railway Infrastructure A.D. (Joint Stock Company) with the Czech Export Bank
(CEB) in the amount of EUR 48,1 mil, with the European Investment Bank (EIB) in the amount of EUR 7,0 mil €, the European
Bank for Reconstruction and Financing (EBRD) in the amount of
11,0 mil €, and assuming the debt of the Railway Transport AD
with the EUROFIMI in the amount of CHF 34,5 mil. The stock of
debt has been reduced based on regular repayments of the principal in the amount of about EUR 11,9 mil €.
The external debt amount does not include the obligations
in respect of unresolved debt-related issues to Libya, Kuwait,
Czech Republic and Slovakia and UBS Bank in respect of bonds
issued within the London Club. Montenegro inherited this debt
towards the governments of these four countries based on the
division of non-allocated debt (5.88% out of 38% for Serbia and
Montenegro) and in accordance with the Agreement on Succession Issues from Vienna 29th June 2001, it has been resolved
through positions agreed within the Committee for Division of
Financial Assets and Liabilities of the former SFRY. The Committee has not had sessions for the period of over two years. As to
API bonds, it is expected that at the beginning of the next year
the negotiations will take place with the UBS Bank representatives, for the purpose of finding the options for bilateral resolution of this issue. The total amount of the obligation in respect
of unresolved debt issues will most likely equal to about 1% GDP
and it is included in the projections of debt trend for the period
2009-2012.
The mentioned information on the stock of foreign debt implies the amounts of disbursed loan funds in respect of individual
loans. Out of the total available credit funds, around SDR 10,4 mil
€ in respect of IDA loan, EUR 28.3 mil of KfW loan (water-supply
phases II and III), about EUR 1,4 mil of EBRD loan for the project
of rehabilitation of roads, about EUR 0,3 mil of the Polish loan,
about EUR 3.2 mil of the Hungarian loan and EUR1.9 mil of the
French loan for EPCG about 0,2 mil €, as well as assumed loans
Nemanja Pavličić
Ana Banović
of the Railway with the EIB in the amount of EUR 6,8 mil and with
EBRD in the amount of EUR 4,0 mil. Also, in the future period it
is expected that the following will be disbursed: the funds of the
commodity loan of the Government of Spain for the recycle center in Podgorica amounting to EUR 5.0 mil, where the condition
for disbursement is the signing of a special Agreement between
the Ministry of Finance of Montenegro and the Spanish side, the
funds of the Austrian Erste Bank loan amounting to EUR 6.0 mil,
the loan of the International Bank for Reconstruction and Development (IBRD) for the project “Cadastre“ amounting to EUR 11.0
mil, “Energy Efficiency“ amounting to EUR 6.5 mil, as well as EUR
4.0 mil from the European Investment Bank (EIB) signed during
the time of the Union of Serbia and Montenegro for the project
25
of rehabilitation of roads and EUR 5.0 mil for the waste waters
project, and for the financing of the Project “Purchase of special
fire protection vehicles” with the Austrian Bank – Steirmarkisiche
und Sparkassen AG in the amount of EUR 16,9 mil., as well the
funds of IBRD for financing the Project for institutional development and agriculture strengthening in the amount of 11,0 mil. €.
In accordance with the above, the total amount of available and
non-disbursed funds is about EUR 121,5 mil €.
During the first quarter of 2009, the Loan Agreement for
the financing of the project “Purchase of special fire protection
vehicles” with the Austrian Bank – Steirmarkisiche und Sparkassen AG in the amount of EUR 22,0 mil., Loan Agreement for the
financing of the “Project for institutional development and agriculture strengthening” in the amount of EUR 11,0 mil € and the
Contract of Guarantee withe the European Bank for Reconstruction and Development (EBRD) for the realization of the Project for
Railway, phase III in teh amount of 4,0 mil €.
On 30th June 2009, deposits of the Ministry of Finance
amount to about EUR 72.7 mil, including 38,477 ounces of gold,
which is by about EUR 18.0 mil more than at the end of 2008, while
the deposits of state funds which are not fully integrated in the
Treasury system – Pension Insurance Fund, Health Insurance Fund
and Development Fund of Montenegro, according to the data of the
Central Bank of MNE as of 31st May 2009 amount to EUR 51.1 mil
€, so the net amount of state debt is about 24.9% GDP.
amounts to EUR 1.102,8 mil or 31.2% GDP. The amount of obligations of enterprises under majority state ownership was calculated based on guarantees by the Government, the data of the
Central Bank and data provided by enterprises.
During the first half of 2009, around EUR 10,2 mil were repaid in respect of interest to nonresidents, and around EUR 11,9
mil. in respect of principal to nonresidents, while around EUR 0,4
mil. were paid in respect to interest to residents and EUR 22,1
mil in respect of principal, while around EUR 32,2 were paid in
respect to repayment of debt from previous years. On the basis
of the Budget Law for 2009, it is planned that on the basis of
the principal will be paid around EUR 127,74 mil, including the
liabilities on the basis of early redemption and liabilities of the
Compensation Fund, while the payment of liabilities on the basis
of interest will amount around EUR 24,0 mil.
riod
Table 2. - Amount of public debt and GDP percentage in the
period from 2003 – 2008
Year
2003
2004
2005
2006
2007
2008
Internal debt trend during the first quarter of 2009
During the first quarter of 2009, the internal debt increased
by EUR 37,3 mil. The growth of internal debt in 2009 was caused
by the continuation of the realization of the projects of the Directorate of traffic in order to resolve bottle necks in traffic, assuming the debt of the Railway transport of Montenegro and Railway
infrastructure of Montenegro towards commercial banks in the
amount of around EUR 3,0 mil and assuming the debt of the
Radio and TV Station of Montenegro in the amount of EUR 4,1
mil, treasury bills issuance in the amount of EUR 34,7 and by
increasing the indebtedness amount of municipalities.
It is expected that the internal debt will grow in the subsequent period due to the increase in liabilities on the basis of
restitution.
The total liability in respect of restitution amounts to EUR
106.5 mil, which is by EUR 10,3 mil less than at the end of 2008.
The decrease of the debt in respect of restitution is caused by
payment of liabilities in cash and redemption of bonds FO01
and FO02 by the State in the stock exchange. The Government
of MNE, for the purpose of reducing the internal debt, made the
decision on redemption of restitution bonds in respect of the
compensation of former owners prior to maturity, and up to now
redemption was made for EUR 11,2 mil value of bonds which is
EUR 3,5 mil.
In 2008, the Government adopted the Decision on redemption of foreign exchange savings of the citizens for 2016 and
2017, and up to now the total value of redemption was EUR 1,1
mil out of which EUR 0,3 mil in 2009.
The debt of municipalities amounts to EUR 61,7 mil, according to data provided by municipalities. In November 2008
the Ministry of Finance adopted the Instruction on the content
of the request for borrowings of municipalities and fulfillment of
financial requirements for their borrowings, which in details determines the procedure of borrowing for local self-governments.
The State debt of Montenegro including public enterprises
26
Trend and sustainability of state debt in the following pe
Public Debt
711,2
742,4
700,4
701,1
737,2
894,7
Public debt /GDP
49,6%
48,4%
42,7%
38,3%
32,4%
26,8%
Table 3. Amount and structure of state debt of Montenegro
in the period end 2009-2012.
Foreign debt
(in mil €)
Foreign debt
(in % GDP)
Internal debt
(in mil €)
Internal debt
(in % GDP)
Total debt (in
mil €)
Total debt (in
% GDP)
2009
2010
2011
2012
Projection Projection Projection Projection
882,0
1.128,7
1.341,7
1.344,9
24,9
29,6
32,7
31,3
469,5
456,3
461,4
448,1
13,3
12,0
11,3
10,4
1.351,9
1.585,0
1.803,1
1.793,0
38,2
41,6
44,0
41,7
note: estimated GDP in 2009 is €3,538 mil, € 3,807 mil in
2010, € 4.098 mil. in 2011, and € 4.303 mil. in 2012 - Source:
Ministry of Finance
Table 3 shows the projected amount of state debt, based on
undertaken legal and contracting obligations of the State, for the
purpose of debt sustainability.
The projection of the internal debt trend in the period from
2009 to 2012 from Table 1 is based on the assumptions that the
debt in respect of restitution will reach .50,0 mil € up to 2012,
while the repayment of obligations in this respect will amount to
about 0.5% GDP. The amount of repayment of the obligation in
respect of over due pensions will be EUR 34.0 mil. annually and
it will be repaid fully by the end of 2011. New borrowings are also
envisaged in 2009 for the purpose of financing the projects of the
STOCK OF STATE DEBT OF MONTENEGRO AS OF 30th June 2009
EURO (million)
Foreign Debt
Foreign
% foreign
debt/GDP
debt
% public debt
(2/3)
1
2
3
4
5
6
International Bank for Reconstruction and Developmen
183,6
3.538,0
5,2%
33,2%
18,3%
International Financial Organization (IFC)
7,4
3.538,0
0,2%
1,3%
0,7%
Countries members of the Paris Club Creditors *
127,8
3.538,0
3,6%
23,1%
12,7%
International Development Association (IDA)**
53,8
3.538,0
1,5%
9,7%
5,4%
European Investment Bank (EIB)
36,0
3.538,0
1,0%
6,5%
3,6%
EBRD
16,4
3.538,0
0,5%
3,0%
1,6%
Council of Europe Development Bank
1,2
3.538,0
0,0%
0,2%
0,1%
European Community
5,5
3.538,0
0,2%
1,0%
0,5%
German Development Bank (KFW)
10,8
3.538,0
0,3%
2,0%
1,1%
Austrian loan
4,1
3.538,0
0,1%
0,7%
0,4%
Hungarian loan
11,8
3.538,0
0,3%
2,1%
1,2%
Polish loan
11,8
3.538,0
0,3%
2,1%
1,2%
Societe General - Education IT
1,8
3.538,0
0,1%
0,3%
0,2%
French loan***
8,3
3.538,0
0,2%
1,5%
0,8%
EUROFIMA - debt of Railway*****
22,9
3.538,0
0,6%
4,1%
2,3%
Czech EXIM - Debt of Railway
45,0
3.538,0
1,3%
8,1%
4,5%
Steirmarkische Bank und Sparkassen AG*****
5,1
3.538,0
0,1%
0,9%
TOTAL
553,3
3.538,0
15,6%
100,0%
55,1%
* Amount of original debt in EUR is 71%, American dollars 26% and 3% in other currencies.
**Original amount is in special drawing rights (SDR). Exchange rate XDR/EUR = 1.1101 is used.
***Commodity loan - EPCG
**** EIB loans in the total amount of EUR 47.0 mil serviced by public enterprises (Monteput, Aerodromi CG and EPCG) are not
included in external debt amount, but are treated as guarantees.
***Debt towards EUROFIMA is CHF34,5, and used currency exchange rate is 0,6636
vehicles for the Ministry of Interior
State Debt
Creditor
Debt stock
GDP est
Creditor
Debt stock
GDP
Dom debt/GDP % dom debt
(2/3)
4
5
3,3%
25,8%
1,7%
13,7%
3,0%
23,7%
1,5%
12,0%
0,3%
2,7%
1,8%
14,5%
1,0%
7,7%
12,7%
100,0%
28,4%
% public debt
1
2
3
6
Old FX savings
116,2
3.538,0
11,6%
Local self-government debt
61,7
3.538,0
6,1%
Obligations in respect of compensation
106,5
3.538,0
10,6%
Loans with commercial banks
54,0
3.538,0
5,4%
Non-financial institutions loans
12,1
3.538,0
1,2%
Over due pensions
65,1
3.538,0
6,5%
Treasury Bills
34,7
3.538,0
3,5%
TOTAL
450,3
3.538,0
44,9%
TOTAL STATE DEBT
1.003,6
3.538,0
Notes:
1) The loans from German KfW bank for the needs of water supply are used by municipalities but it is presented in the summary
table of foreign debt.
2) Bonds acquired in respect of the Law on compensation of beneficiaries of rights from pension and disability insurance were issued
on 15th September 2008 in the total amount of EUR 105.0 million
Directorate for Transport, for resolving the bottlenecks in transport, in the total amount of about EUR 5,0 mil. The assumption
is that the amount of debt of local self-governments will remain
on the current level. The repayment of the obligation in respect
of FX savings will amount to about EUR 14.0 mil. annually. The
redemption of old FX savings bonds OB16 and OB17 and DO16
and DO7 is not taken into consideration, or the redemption of
restitution bonds.
With regard to the projection of foreign debt, new borrowings and on-lending are projected in accordance with the agreed
framework of cooperation with international and bilateral creditors, and funds will be used for projects from the area of waste
waters, regional water-supply, road and railway infrastructure
and energy. Foreign debt trend is projected, with the assumption
of average three-year disbursement of the loan funds, as well as
that available and non-disbursed funds in the amount of 121,5
mil € will be disbursed during 2009. in 2009, additional 200,0
mil € were added for financing budget deficit and repayment of
loan, 2010 additional 180, mil € and in 2011, 150 mil €. It is
expected that the financing will be provided from foreign sources.
The Division for Debt and Cash Management has already contacted potential creditors and our view is that there are realistic
odds for the projected amount of € 200.0 mil in 2009 for deficit
financing to be provided for. However, the development of the financial crisis and its impact on liquidity and lack of confidence in
the credit market, particularly towards the creditors with speculative rating, disable the availability of reliable sources of funding.
The projection does not include the obligations that are to
arise in respect of the construction of the high road Bar-Boljare,
or other infrastructure projects which are not defined through the
cooperation with international financial institutions and bilateral
creditors. Also, potential growth of obligations of the Pension
Fund and Health Fund due to negative demographic trends in
the structure of population was not taken into consideration.
Mr. Nemanja Pavličić,
Asistant minister
Ms. Ana Banović,
Adviser in the Division for Debt and Cash Management
27
From the journalist perspective: Montenegro and Global Economic Crises
Vicious Cycle
Apart from recession, global economic crises caused disagreements on causes and the tools for resolving the crises
between the main two entities managing the crises: the Government and the Central Bank of Montenegro.
Dragica Lalatović
28
It wasn’t too long ago when the highest Government officials of Montenegro »admitted« that our country is entering
recession. The economy entered illiquidity, the production in
the biggest industrial capacities was cut in half, and the tourist season according to some prognoses, primarily in hotel industry, will be realized at the level of 70% compared to the
last year. More concretely, the Aluminum Plant cut the production in half, Bauxite Mines are closed, the Coal Mine in Pljevlja
will decrease its capacities in half because the Thermal Power Plan Pljevlja is out of operations for six months, while the
Hydro Power Plant Perućica will be out of operations for three
months. If we know that the share of EPCG in GDP is between
18 to 20% in GDP, it is realistic to expect that the most realistic
prognoses on null growth will fail. It is rather to expect that we
will have minus and it is only the question how big it will be.
The problem persists due to the shortfall of money, and
due to the global financial crises and increasing lack of confidence in banks. At the end of last year, Montenegrin citizens
withdrew savings in amount of around half billion Euros, despite adopted Law on the basis of which the government guarantees the deposits. Due to aforementioned, banks impoverished and foreign inflows significantly declined whereas foreign
investments are far from the amount reached in last two years
following the independence.
The Government, primarily the Ministry of finance and the
Central Bank are disagreeing on both the causes of the crises
and on how to exit the viscous cycle. The Government is not
satisfied with the measures undertaken by the monetary agent,
thinking that by »untightening of monetary mechanisms« would
improve the liquidity of the economy. The argument is on the
level of compulsory reserve which commercial banks are holding with the Central Bank of Montenegro, amounting approximately 160 million €, being compulsory in accordance with the
regulations in force in the country and in abroad, as well as
reserves for invested loans.
The opinion of the Central Bank Montenegro is that they
are safeguarding the stability of the banking sector within its
competency, while the Government’s opinion is that the stability must be in favor of the development of Montenegro.
Therefore, the Government’s opinion is that the compulsory
reserves of commercial banks with the Central Bank of Montenegro, should be decreased, as well as the provisions for potential losses jeopardizing the capital. Most bankers agree with
Government’s opinion, and their reaction to the remark of the
Central Bank of Montenegro that the reservations for potential
losses are quite low, is that they are higher than in Serbia, Austria or Croatia. Their example that goes in favor of their opinion
is that if a company, facing global economic crises problem or
operating at a loss, would be approved a loan of 1 million €, the
bank would have to allocate reservations of 20 to 30%. In their
opinion, these are immobilized funds increasing loan costs.
Namely, in the situation of high provisions, banks are mostly
reacting by applying higher effective interest rate.
Just to remind: the Central Bank of Montenegro is not the
issuing agent and its competences are therefore limited. Apart
from its important role in banking supervision, it has the competency of regulating the quantity of cash in circulation. This
instrument is called compulsory reserve. In situation of too
much cash, compulsory reserve increases and vice-verse when
is lacking it increases. On the website of the Central Bank of
Montenegro it is written that this instrument is not used up
to this year, because of the sound banking system and stable
macroeconomic situation. At the beginning of this year, in order
to improve the liquidity of the budget, banks were entitled to
purchase treasury bills engaging a part of funds from compulsory reserves, while the Central Bank of Montenegro recently
announced that in June two banks used compulsory reserves
fund, which means that they had liquidity problem. We have
the situation now that the economy is in cash shortfall, compelling the Central Bank of Montenegro to pass the Decision on
decrease in compulsory reserves and decrease in provisions/
reservations for potential looses. So far there aren’t announcements that Montenegrin authority is going to go for it, which
are the expectations of both the Government and majority of
bankers.
Even if the Central Bank of Montenegro would opt for it,
the results may lack since only two banks have over 60% in
market share. The biggest banks in Montenegro - Crnogorska
komercijalna Banka and Prva banka Crne Gore participate with
over 60% in investments in the economy and due to different
reasons neither of up to now is issuing loans. The question is
how other nine banks that are issuing loans will improve the
inflow of money into economy. Aren’t the expectations of the
economy which are on a daily basis requiring the banks to provide more favorable conditions to some industry or company
unrealistic? And there are already delays in payment of loans
and payment of income to employees, and on time payments
are mostly paid without taxes and contributions which forced
the Ministry of finance to decrease expenditures. Not to mention that adequate health protection to insurers, regular payment of pensions and salaries for state employees has to be
provided.
Mechanisms introduced by the Government are well
known, but it looks like they are not going to be enough. The
Government still needs to face with the challenges of introducing new interventions, while most citizens will face the time
that could be called »in pursuit for food«. The Government with
Erste Bank concluded the contract on budget support in the
amount of 30 million Euros, and it is negotiating with the Swiss
Bank on additional loan. Montenegro is not still insolvent and
therefore the loans will be approved, but the question is what
will happen with the economy. The support of German KFW
Bank of 50 million Euros for small and medium-sized enterprises is announced, but from Crnogorska Komercijalna Banka are
saying that the signing of contract is pending, which means 30
million Euros less. With regard to the support of the European
Investment Bank of around 100 million Euros, there is again
a question on when this funds will be released. The following
possible source of new money is announced recapitalization of
the part of EPCG. But expectations are that the tender will be
finalized by the end of autumn. Till than. stick with the people
and with the quote: »don’t worry, you’ll see no good«.
Ms. Dragica Lalatović,
TV Montena Journalist
29
First Level Control as a Tool for
Reducing Irregularities in the
Process of Using EU Funds
The new European Commission’s financial instrument
- IPA (Pre-accession Instrument) which entered into force in
2007, did not represent the only new thing that occurred
in the programming period from 2007.-2013. Apart from
the candidate and potential candidate countries being
beneficiaries of the IPA funds, also the member states of the
European Union had to face once again with the changes and
challenges as beneficiaries of structural funds.
Montenegro, as potential candidate country, exercising
the right to use the funds from I and II component of this
pre-accession instrument1, within II component participates
in four neighboring bilateral programmes (Montenegro –
Croatia, Montenegro - Bosnia and Herzegovina, Montenegro
– Albania), and in Adriatic cross-border programme and in
two transnational programmes (Mediterranean programme
and Programme for transnational cooperation for the area
of Southeastern Europe). Every aforementioned programme
comprises priorities, managing bodies, joint structures for
individual programmes represented by all countries, as well
as the rules that are in force.
Having in mind the fact that partners of Montenegro out
from the first four neighboring programmes are candidate/
potential candidate counties for joining the EU, these pro
grammes are implemented under the EU centralized2, or
decentralized3 management system. For programmes where
cooperation is achieved between one or several member
states and one or several candidate/potential candidate
countries for joining the EU (IPA funds beneficiaries),
the implementation is done on the basis of the shared
management principle, which is making the programme
management very similar to the management over structural
funds, including financial management and control, i.e.
First Level Control applied in the same manner as to other
cross border programmes financed from structural funds.
These are characteristics has only the Adriatic programme.
The other two programmes are distinctive, because they
represent transnational programmes in which, unlike the
EU member state, apply different principles to IPA funds
beneficiary country.
Within the cross-border programme, in which the EU
member states are participating, it is necessary to appoint
Managing Authority, Certifying Authority, as well as Audit
Authority which by the rule are located in the EU member state
participating in the programme. Apart from aforementioned
authorities, it is necessary to establish Joint Monitoring
Committee, Joint Steering Committee and Joint Technical
Secretariat.
The overall responsibility of the Managing Authority,
supported by the Joint Technical Secretariat, is the implem
entation of the programme in accordance with the sound
1 - I Component – Transition Assistance and Institution Building, II Component – Cross-border cooperation
2 - Montenegro, Serbia, Bosnia and Herzegovina and Albania
3 - Croatia
30
financial management principle. The Joint Monitoring Com
mittee has the final word in selecting the projects and reports on
implementation. The Certifying Authority checks the statements
on expenses and certifies that they comprise only expenses
which are in accordance with the rules in force. The Audit
Authority provides opinion on regular functioning of the system
and legality and regularity of stated expenses, annually.
However, established structures, as for the stated ex
penses of beneficiary countries, are not responsible for
expenses compliance against the rules on expenses acce
ptability, legality and regularity. None of the mentioned
structure represents the 100% filter in checking all expenses
stated by beneficiary countries that would subsequently
annul irregularly stated amounts. On the other hand, due
to the lack of knowledge of beneficiary countries, there is
always a risk from stating expense that cannot be accepted
for financing from the EU funds. And this situation is bringing
us to the definition of control which became the burning
issue in this programme period, becoming especially through
the obligation of the member states to appoint a body that
will perform the First Level Control for each programme.
Definition and Legal Basis
Programme period 2007-2013, provided new interpr
etation to the definition of control, differentiating it from
the audit. The control means the check carried out by the
first instance-level controllers in accordance with the IPA
Implementing Regulation (Commission Regulation (EC) No
718/2007)), which at the same time represents the basis for
the establishment of the First Level Control over beneficiary
countries IPA funds, or Regulation (EC) No. 1080/2006 of the
European Parliament and Council regulating the European
Fund for regional development, more precisely articles 108
(IPA Implementing Regulation), or (ERDF Regulation where is
stated that „each participating country (or the EU member
state) shall designate the controllers responsible for verifying
the legality and regularity of the expenditure declared by each
final beneficiary participating in the operation. Participating
countries may decide to designate a single controller for the
whole programme area“.
Unlike control, the audit represents the second level
control, i.e. additional verification of expenses applied on
certain sample.
In principle, First Level Control, represents the verifi
cation of the project expenses, carried out during its imple
mentation prior to submitting progress report, including fo
llowing verifications:
• Supply of goods and services financed from cofinancing funds, in accordance with approved application for
distribution of funds;
• Regularity of declared expenses;
• Expenses compliance with the programme rules, EC
and national rules.
Bojana Kaluđerović
In order to achieve the objectives of the First Level
Control, it focuses on the following two activities:
• Administrative check - desk based check over every
request for compensation;
• on – the – spot - check.
Desk based check is based on 100% review of all
expenses paied by the user of funds. Apart from the request
submitted by the user of funds, all supporting documents,
such as copies of invoices, packing lists, tender documents,
contracts, etc.. with regard to the on – the – spot – checks,
it related to the situation in which the controller is visiting
the place of the project in order to insure himself: in certain
activities, in provision of services, supply of products, in
accordance with approved application for the EU funds. Co
ntrollers, apart from checks, have to insure that all costs
are properly documented, confirmed and accepted. It is
important to emphasize that the rules on acceptability of are
not the same for all countries. The percentage of identified
and unaccepted costs in the previous period ranged from 3%
to 25% against total amount of compensation requests. The
purpose of the control on which controllers are basing the
certificate of expenses acceptability, is to insure that the user
has appropriate management and control system, as well as
that the declared costs are indeed in compliance with the
European, national and programme rules.
Verification of expenses aroused on the basis of activities
of one partner in project (user of funds), may be carried out
only by external bodies increasing the independence of
first instance controller against project partners, higher tra
nsparency in the control process, as well as providing stimulus
to the development of expertise in the area of control.
How can be organized First Level Control?
The literature addresses following four possible ways of
organizing First Level Control:
31
1. Centralized control on national level through a public
administration body;
2. Centralized control on national level through auditing
company;
3. Decentralized control through some internal or
external controller proposed by project partner, approved on
national level;
4. Decentralized control through a controller selected
by a project partner on the basis of the short list for the
selection of candidates (centralized/joint body publishes the
list of authorized controllers), so called. Mixed system.
One of the features of centralized systems is that bene
ficiaries of the programme are appointing joint central body
performing the task of the First Control Level. Unlike this
system, the feature of decentralized system is that a user of
funds is free to suggest the controller with the objective of
certifying for the conduct of First Control Level over expenses
declared by a project organization that suggested him/her.
Unfortunately, the current experience is not adequate
for selecting the system with the biggest advantages / lowest
disadvantages. However, since the basic requirement for
the controllers – the absence of conflict of interest, as well
as independence against project partners – is the system
where an auditing company is carrying out the control, the
practice had proved that this is the biggest disadvantages
since it is very difficult to find an auditor who is not in conflict
of interest.
biggest problems make the expenses for employees and
general expenses. These problems concern errors in calcu
lation of the number of working hours, unfilled timesheets,
or calculation of general expenses related to the project or
the absence of clear traces / evidence on the manner of
calculation. Very often controllers face with the problems in
procurement, thus one of the requirements is a good kno
wledge of procurement procedures.
Conclusion
Incomparable number of errors identified in the First
Control Level is not the result of frauds, but more the re
sult of the lack of knowledge or information. In order to
eliminate this negative factor, should provide information
on requirements for both the concrete programme and
for the First Level Control. In this way the error rate of 17%
would decrease. What would the world of implementing IPA
funds and structural funds look like without control? The
assumption is that this rate would be 25%.
First Level Control within Adriatic Programme
Having in mind the fact that the First Level Control
is required for the Adriatic programme, it is necessary to
emphasize that it is planned to establish the FLCO – First
Level Control Office and decentralized offices for the FLO
within the administration of the member states and can
didate/potential candidate countries participating in the
programme, in order to develop control organization in
supporting Managing Authority. The First Level Control Office
is competent for every country in the programme, checking
documents for all activities (100%) for which users declare
expenses. Following the verification of documentations,
the Office issues certificate on acceptability of expenses,
or if necessary, requires additional documentation to be
submitted in prescribed deadline for explanation purposes.
The certificate of acceptability of expenses is submitted to: 1)
user subject to control; 2) First Level Control Office; 3) Lead
Beneficiary.4
Up-today experience
Up to date experience of the member state countries
participating in territorial cooperation is showing that the
Ms. Bojana Kaluđerović,
Independent Advisor I, CFCU
4 - Article 96, of the IPA IPA Implementing Regulation prescribes the designation of the Lead Beneficiary prior to submitting activity proposal within the project
and prescribes its activities.
32
Accounting and Auditing
Reform in Montenegro
Accounting and auditing area was very dynamic in the
last. The Strategy and the Action Plan for financial reporting improvement in Montenegro was adopted, as well as the
Law on amendments to the Law on Accounting and Auditing
(“Official Gazette of Montenegro“, No. 80/08), subordinate
legislation was published, and the control of regularity of
submission of financial statements by the business organizations was conducted for 2007, and the REPARIS Program
implementation initiated, etc..
The Government adopted the Strategy and the Action
Plan for financial reporting improvements in Montenegro on
30th October 2008. The document represents a clear and
systematic programme of measures for improvement of legal framework, institutions and accounting profession, especially in the part related to the accounting and auditing
and business culture with the overall objective to reach the
high quality in financial reporting. Moreover, the objective of
the Strategy is to recognize and define activities and instruments leading to the harmonization of the financial reporting
with the acquis, including the preparation of consolidated
financial statements, auditing companies regulations and
electronic publication of financial statements, as well as to
define proportional requirements for financial reporting of
small and medium-sized enterprises.
The implementation of the document will result in increase in reliability of all stakeholders in financial statements
of business organizations in Montenegro. In that light, the
World Bank on the initiative of the Ministry of finance and
through the Center for the reform of financial reporting, mobilized certain donor funds within the Project FIRST Initiative.
Based on the requirement of the Ministry of finance, the main
objective of the Project is the support to the development of
the Strategy and the Action Plan for financial reporting improvements in Montenegro , as well as the provision of funds
for the implementation of the Strategy.
The main objectives of the FIRST Initiative Project are
as follows:
Task 1: Provision of technical assistance to the Government of Montenegro in setting priorities within the Action
Plan for financial reporting improvements in Montenegro for
the period from 2009 - 2011.
Task 2: Provision of technical assistance to the Accounting and Auditing Council in expanding the Action Plan in mid
and medium term.
The result of the activities set forth in the first task, sho
uld represent the concrete Project proposals enabling mobilization of donors funds for the implementation of certain
activities set forth in the strategic documents. The procedure
on selection of the consultant is in process and activities related to setting of priorities should start in mid June 2009.
The Law on changes and amendments to the Law on
accounting and auditing was adopted by the Parliament at
33
the end of December 2008. Previous Law on accounting and
auditing (“Official Gazette of Montenegro“, No. 69/05) went
through significant redesigning and changes related to the
electronic reporting, submission of quarterly reports, consolidated financial statements, changed deadlines in submissi
on of financial statements, introduction of inspection supervision, categorization of legal entities, establishment of the
Accounting and auditing Council.
On the basis of Law on accounting and auditing (“Official
Gazette of the RoM No. 69/05 and the “Official Gazette of
Montenegro“, No. 80/08) the Ministry of finance prescribed
the obligation of issuing licenses to the auditing companies.
Up to now, 13 licenses were issued to existing and newly
established auditing companies.
The Law introduces the obligation of maintaining the
registry of authorized auditors and auditing companies which
a competent body is maintaining in a form of a public book.
In that light, developed registries are published on the website of the Ministry of finance1.
The Law introduces the Inspection supervision, as a
new institute being the obligation of the Ministry of finance.
In this manner, the preconditions were created to reduce misuse and increase the quality of financial statements through
the inspection supervision and application of sanctions prescribed by the Law. At the same time, the Law sets forth more
severe penalties which should motivate the users of the law
to proceed in accordance with prescribed provisions.
Moreover, the Government of Montenegro established
the Accounting and Auditing Council (“Official Gazette of Montenegro“, No. 32/09), from 12th May 2009. The Accounting
and Auditing Council Is composed of multidisciplinary group of
public sector composed of the following institutions: Ministry
of finance, Commercial Court, Central Bank of Montenegro,
Securities Commission, Insurance supervision agency and
institutions which are authorized by the public administration body in charged for accounting and auditing to perform
these operations and which have the knowledge in the area
of accountancy, finance and audit. The task of the Council is
to support the implementation of the Strategy and the Action
Plan for financial reporting improvements in Montenegro with
the objective of harmonizing the requirements with the acquis communautaire related to the accounting and auditing,
as well as the provision of advices to persons in charged for
policy creation, regulators and other stakeholders, creation
of the environment for the improvement of accounting and
auditing regulations and practice in Montenegro, with the
overall objective to improve the financial reporting quality.
Following subsidiary regulations were adopted2:
and types of registry of the auditing companies and authorized auditors (“Official Gazette of Montenegro“, No. 30/09),
published on 28th April 2009;
The Rulebook on the manner of maintaining the registry
and forms of registry of auditing companies and authorized
auditors (“Official Gazette of Montenegro“, No. 30/09), published on 28th April 2009;
Decision on establishment of the Accounting and Auditing Council (“Official Gazette of Montenegro“, No. 32/09),
published on 12th May 2009;
The Rulebook on requirements for issuing and revoking
the license for authorized auditor (“Official Gazette of Montenegro“, No. 33/09), published on 20th May 2009;
The Rulebook on the manner and deadlines in development of inventory list and harmonization of the bookkeeping
balance with the actual one (“Official Gazette of Montenegro“, No. 34/09), published on 29th May 2009;
The Rulebook on amendments to the Rulebook on more
detailed conditions for obtaining the license for authorized
auditor (“Official Gazette of Montenegro“, No. 41/09), published on 26th June 2009.
The adoption of the Rulebook on validation of the certificate and Instruction on requirements for the issuance and
revoking the working license from auditing companies is in
procedure. Moreover, the Rulebook will be the subject of the
public debate which will be organized from 15th June to 15th
July 2009. The draft Decision on the amount of insurance for
compulsory insurance related to the accountability of the auditing companies and authorized auditors for possible damage which may be caused to a person for whom the audit is
being performed and following the review of comments and
opinions the final version of the Decision will be sent for further procedure.
Conclusion:
In the forthcoming period, in cooperation with the relevant institutions the Ministry of finance will continue with
the implementation of the accounting and auditing system
reform process in Montenegro, which will further improve accounting and auditing practice, financial reporting, increase
corporative culture, transparency, faster and easier access
to required data and information necessary to both to the
shareholders and investors and to other stakeholders/ The
implementation of aforementioned measures will get us closer to more developed market economies, full implementation
of the acquis communautaire and compliance with international standards.
The Rulebook on the content of the statistical annex
(“Official Gazette of Montenegro“, No. 17/09), published on
6th March 2009;
The Rulebook on the manner of maintaining registry
1 - Registries of the auditing companies and authorized auditors are updated on the regular basis (source: www.mf.gov.me).
2 - The text of subordinate legislation may be downloaded on the website of the Ministry of finance (www.mf.gov.me).
34
Ms. Ana Krsmanović,
Independent advisor I
Ms. Aleksandra Popović,
independent advisor II
Activities of the Deputy Prime
Minister and Finance Minister
in the period from
1st April to 30th June 2009
2nd April 2009 – Mr. Igor Lukšić,
PhD, the Deputy Prime Minister and
Finance Minister tool part in the
Round Table “The Other Side of Surge:
Fiscal Policies Effective in Pro-cyclic
Environment”
“Montenegrin Government would
be satisfied if the economic growth
in this year would range from 0 to
2%. This would provide for stability in
economic circumstances. Around 90%
of Montenegrin commercial activities
are undertaken in the region and the
EU. If these countries enter recession,
it will be very difficult to struggle with
the challenges in Montenegro. We
believe, that the measures of the
Government and credit lines from
international institutions, will be more
effective and evident in the next period.
Our task is to implement measures
which will not extinguish fire in a short
run, generating expenses for future
generations. Decline in taxes provided
and still provides good effects, resu
lting in increase in liquidity, consu
mption, salaries. This is the way to
mitigate the consequences of the
crises. It is true that the decrease
in tax rates has a limit set forth by
national legislation. The biggest gap
is in the VAT revenues from import
and customs. This is understandable,
because in the first quarter the gap
trend was reduced to 30 and 40%.
This is not the consequence of the
taxation manner, but directly the
economic crises. The Government of
Montenegro is not considering the
possibility of introducing progressive
taxation which is creating the habit
to plan public consumption against
expenditures, and not against reve
nues. Proportional taxation of emplo
yees wages in the previous period gave
positive effects. The new Government
will make the decision on budget
rebalance and possible arrangement
with the IMF. For now, there aren’t any
special delays in budget execution.
Montenegro is not running from the
cooperation with the IMF, but the new
Government will be opting for it. Our
job is to define possible cooperation
model with the IMF, which would be
immediately activated, if necessary.
In the previous period we led cautious
policy avoiding the situation of urgent
support packages. In the absence of
banking crises, in this moment the
consequences of global economic
crises would be at minimum. Therefore
it is clear how crucial is that we jointly
provide for banking sector stability …”
6th April 2009 - Mr. Igor Lukšić,
Finance Minister, signed Guarantee
Agreement for the third loan tranche
of the Project “Urgent Railway Infra
structure rehabilitation”
Mr. Igor Lukšić, PhD, the Deputy
Prime Minister and Finance Minister
and Mr. Marek Lorinc, the Head of
the EBRD Office in Podgorica, signed
the Guarantee Agreement for the
third loan tranche for the Project
“Urgent Rehabilitation of Railway
Infrastructure”. The signing of this Ag
reement, was preceded by the Lo
an Agreement for the Project “Urgent
Rehabilitation of Railway Infrastructure“
in the amount of 4.000.000,00 Euros,
signed by executive director of the
Public Company Railway Infrastructure
of Montenegro JSC Podgorica (JP
Željeznička infrastruktura Crne Gore
A.D. Podgorica), Mr. Vladimir Šaulić,
and representative of EBRD. In the
previous period, contracts were signed
for the first two tranches of the Project
(in 2007 - 6.000.000 Euros, in 2008 5.000.000 Euros), while the realization
of the third tranche is in the amount of
4.000.000 Euros for 2009. Contracted
variable interest rate amounts to sixmonth EURIBOR plus 1%, and the
contract prescribes the possibility of
transferring to the fixed interest rate
depending on financial market trends.
The Contract also prescribes that the
third tranche funds will be used for
35
financing urgent construction works for
rehabilitation of railroads.
13th April 2009 - Mr. Igor Lukšić,
PhD, the Deputy Prime Minister
and Finance Minister, met with Mr.
Simeon Djankov, the creator of the
Doing Business Report
met with the World Bank delegation –
IFC/FIAS, led by Mr. Simeon Djankov,
Chief Economist of the Finance and
Private Sector vice – presidency in
the World Bank, creator of the Doing
Business Report (“Ease of Doing Bu
siness“). Mr. Lukšić presented the
activities of the Government of Mo
ntenegro aimed at improving doing
business institutional framework of
Montenegro, and subsequently the
ranking in this year’s Doing Busi
ness Report. The Report is based on
determined indicators, ranking a co
untry with regard to starting a business,
issuing licenses, employment, property
registering, possibility of obtaining lo
an, investors protection, payment of
taxes, cross-border trade, contracts re
alization and closing of business.
14th April 2009 – Signed Mem
orandum on Development of the Do
cument “Montenegro in XXI Century
– in Competitiveness Era“ – Statem
ent of Mr. Igor Lukšić, PhD, the Deputy
Prime Minister and Finance Minister:
“It necessary to complete the do
cument in the following 15 months.
36
A competent team will develop the
Project, and planned expenses will
amount to around 920, 000 Euros,
provided through three tranches. Th
is Project becomes more important
in the time of economic crises. We
now have a possibility of using local
experts, because we are no longer
depending on external knowledge and
expertise outside Montenegro. The
project team will have available cap
acities of the Government, and the
Ministry of Finance will be responsible
for coordination...“
28th April 2009 –Interview of Mr.
Igor Lukšić, PhD, the Deputy Prime
Minister and Finance Minister for
Voice of America, on the occasion of
regular spring meetings with the IMF
and the World Bank.
29th April 2009 – Presentation
of Mr. Igor Lukšić, PhD, the Deputy
Prime Minister and Finance Minister,
at Johns Hopkins University
held the presentation at prominent
Johns Hopkins University in Washington
“Global economic crises effects to
Southeastern Europe“. The Deputy
Minister acquainted the students with
the Euro - Atlantic integration process,
WTO accession and other important
political and economic topics in Mont
enegro. When talking about the eco
nomic and financial crises effects to
Montenegro, Mr. Lukšić presented the
package of social-economic measures
aimed at overcoming the consequences
of the crises, related to the support to
economy, small and medium-sized
enterprises, banking sector, citizens,
etc. The EU and the World Bank credit
support was emphasized as potential
crises absorbers. To the question
why Montenegro did not borrow from
the IMF, the Deputy Prime Minister
explained that up to now, Montenegro
didn’t need the IMF arrangements,
and the new Government will decide
on this issue. As for economic reforms,
the Deputy Prime Minister stressed the
importance of introducing Euro since it
proven to be crucial in stabilization of
monetary system, free inflow of capital
and policy of single digit taxes, as well
as on the concept of creating open
economic system for new investments.
4th May 2009 – the Interwie
for Reuters
5th May 2009 – Interview of Mr.
Minister and Finance Minister, for Ec
onomic Portal - Montenegrowing.me
12th May 2009 - Mr. Igor Lukšić,
Finance Minister took part in Round
Table “Impact of Economic Crises
on European Integration“ organized
by weekly magazine “Monitor“ and
German Embassy to Montenegro, wi
thin “Montenegro and European In
tegration“ Project.
cooperation with the Hayek Institute
from Vienna, within the Programme
“Free Market Road Show“
“Extraordinary economic circum
stances failed in delaying the impl
ementation of activities and priorities
defined by the National Programme
of European Integration. This may be
the best indicator of our committed
work in the process of joining the
EU, as well as the awareness of Eu
rope of best endeavors used by Mo
ntenegro. Global economic crises,
will not essentially affect steps and
endeavors of Montenegro towards
the European family. The crises will
affect the management of more fle
xible economy and monetary poli
cy, creating certain changes in fiscal
policy of the EU member states and
stagnation of economic development
on the road to Europe. However, noting
aforementioned will affect the European
integration process of Montenegro.
Montenegro is independently fighting
with the challenges of the crises,
providing regular payment of state
liabilities, despite declined realization
of revenues in the amount of 18%,
which is less than planed. Regardless
the economic momentum, requiring
additional engagement in overcoming
the consequences of the crises, the
Government is fully committed in
fulfillment of objectives and obligations
set forth in the Stabilization and
Association Act. The process of
joining Montenegro, shouldn’t be the
harvest of economic crises, committed
application of European legislation
will surge further strengthening of
institutions and rule of law, which
along with economic freedoms, is the
best combination of foster economic
development...”
Finance Minister, took part in the
Conference “Financial Crises: State or
Markets Failure” organized by UDG in
“If Montenegro wants to achieve
consistent economic growth and pro
ductivity, it is necessary to focus on
infrastructure-related projects. All this
does not mean that we will not end
ure the negative impact of the crises.
We are neither immune nor isolated.
To the certain extent it is inevitable
that consumers will adjust their prefe
rences. No governmental action can
prevent that. But there are no mar
ket failures, either – market is a me
re mirror, reflection of what we are
doing as participants in the market
interaction. On the other hand, there is
plenty of examples how state policies
fail. The more state interference the
more distorted markets and the impli
cation is that price structure can not
tell of real profit chances. Actually, the
real question is whether economies
are able to bear the social cost of the
turbulence....”
Finance Minister, took part in the
Meeting of the EBRD Governors
Board in London
„... It is very important to emphasize
the role of the European Bank for Res
tructuring and Development, in the
previous period, not only from the
aspect of economic and development
priorities of Montenegro, but also of
almost whole region of Southeast
Europe. By fulfilling its objectives, the
Bank is meritorious for the achieved
progress and reforms in all countries,
which certainly has had positive polit
ical and economic implications for the
development of Montenegro.
However, in last few months
most countries have postponed the
finalization of the transition process
for a post-crisis period. The need to
preserve the social and economic
balance worldwide resulted in a tacitly
reached ecumenical priority. All world
economies, including the Montenegrin
one, are committed to creating new
ways and models to overcome the
crisis. It seems however that smaller
countries like Montenegro have experi
enced the advantages of the small
and open economy, as well as good
economic policies dating from the precrisis period. Due to the positive public
finance performances – surplus in the
last three years, decrease in the public
debt amount - Montenegro generated a
small advantage over other countries,
thus it easily buffered the first attack
of the crisis...”
Finance Minister, participated to
Presentation organized by the Real
Estate Directorate for the Project of
developing digital map of topographic
maps, in proportion 1:25 000 and
GIS Data Base, as well as activity for
development of Immovable Property
Cadastre of Montenegro
“Production of digital maps in
Montenegro, represents an important
prerequisite for fast and successful
economic development and qualitative
37
investments. Digital maps will not be
only useful to the Real Estate Dire
ctorate, they will be used as a basis
for the provision of users service to
all interested companies, as well as
to national and foreign investors. Mo
ntenegrin Government with the World
Bank signed the Contract on financing
several projects, which will be realized
in the following period providing the
survey of around 340 thousand acres
of space. Our objective is after 2013,
to have as less possible unsurveyed
areas. In the forthcoming period, the
Ministry of finance and the Real Estate
Directorate will continue to invest
significant funds in similar projects,
focusing special attention on human
resources and technical capacity
building of the Directorate in order to
be fully trained for the provision of most
complex operations. The first big step
was done few days ago, by adopting
the Rulebook on Internal Organization
and Systematization of the Real Estate
Directorate. Last couple of years,
the Ministry of finance and the Real
Estate Directorate are continuously
implementing activities focused on
improving records and measuring
unmeasured part of the country. Two
Projects are in the implementation
phase, including the survey of over
140 thousand acres, in relation to
the highway Bar-Boljare and Adriatic –
Ionic highway..”
27th May 2009 – Signed Loan
Agreement between Montenegro and
IBRD, for the Project for Institutional
Building and Agricultural Strength
ening and the Grant Agreement for
the Global Fund for Environmental
Protection
and Mr. Ian – Peters Olters, the Head of
the World Bank Office in Montenegro,
38
signed the Loan Agreement between
Montenegro and IBRD, for the Project for
Institutional Building and Agricultural
Strengthening and the Grant Agreement
of the Global Fund for Environmental
Protection (GEF Grant), which will be
realized by the Ministry of agriculture,
forestry and water management, Bur
eau of Statistics of Montenegro and
Veterinary Administration, as well as
by institutions responsible for project
implementation in the amount of
2.955.000 €. The Loan Agreement si
gned between Montenegro and IBRD,
for this Project was signed for the period
of 11,5 years, grace period of 5,5 years
and it will be repaid semiannually at
favorable interest rates.
4th June 2009 – Statement of
on the occasion of adopting the Me
morandum on joint cooperation and
general consent between the Gover
nment of Montenegro and En +
Group
“The Government will issue gua
rantees for the part of total credit
indebtedness of the Aluminum Plant
(KAP) – loan of 25 million Euros. The
Government is ready to earmark the
part of money from the budget funds
for realization of the social programme
– up to five million Euros. We are ready
to issue guarantees for indebtedness
of the KAP, worth 20 million Euros. This
money would be used for financing
working capital and for the payment
of outstanding liabilities to CKB. With
the consortium of banks, we will
negotiate the amount of guarantees
which we are ready to provide for the
part of outstanding debt. This is very
important, because it is providing long
term stability of the KAP’s balance and
creating conditions for changes in this
company. We would like to hear what is
the discount that banks ready to offer,
i.e. in which manner will obligations on
the basis of this loan be regulated in
the next period. This implies changes to
the Budget Law, because it is necessary
that everything is in compliance with
the Parliamentary procedure. This
Memorandum is creating conditions
both for Russians and the Government
to abandon court procedures and to
withdraw processed complaints. Ado
pted Memorandum is not the final act
ion, because a number of activities
need to be completed, prior to all ne
gotiations with the consortium of banks
that will start tomorrow, because it is
our objective to resolve the problem as
soon as possible. In this manner, the
Government is addressing the workers
who think that the Government should
take over the ownership over both the
KAP and Bauxite Mines from Russians.
The Government was considering two
options – to cease the production and to
resolve problems and create conditions
for continuation of production. The
analysis have shown that is neither
realistic nor economically justified to
close the KAP and Bauxite Mines. Th
at’s why we decided to give them a
new change, whereas the Government
will have its member in the Board of
Directors of KAP, who will have the right
to veto which will be prescribed by the
new purchase and sale agreement –
including the Decision on production
levels. Comparing with the bankruptcy
proceeding, this option proved to be
cheaper for the state...”
16th June 2009 - Mr. Igor Lukšić,
Finance Minister, was a host of Ne
therlands Constituency IMF and the
World Bank, organized from 14 – 16
June in Budva – Welcome Speech
“...I won’t hide my personal
pleasure with the fact that Montenegro
hosts the Dutch Constituency meeting in
times of the global economic downturn.
I hope that this meeting will be the pla
ce for a quality, constructive and fruitful
exchange of opinions and experiences.
First and foremost, it is an opportunity
for the constituency members to pre
sent their experiences and thus co
ntribute to our joint fight in the upc
oming period for better, more flexible
and innovative solutions, which will
help us overcome the global economic
turmoil with minimum consequences.
But, I also hope that this will be a
good opportunity, in the year when all
the destinations are fighting for their
place in the tourism calendar, for You
to contribute to our package of anticrisis measures and to spread further
Your positive views of Montenegro.
I am pleased that You will have the
possibility to discover, experience and
enjoy the beauties of Montenegro that
we are so proud of. And I also hope
that through the programs we have
prepared, we will manage to present
part of our youth, creativeness, art and
cultural diversity...”
18th June 2009 –Interview of Mr.
Minister and Finance Minister to
Press Agency Beta
18th June 2009 – Speech of Mr.
Minister and Finance Minister, on the
occasion of passing the Draft Budget
Law Final Account of Montenegro for
2008.
“Total receipts of the budget
were by 0,74% higher than planned,
generating the surplus of around 0,4%
GDP. GDP real growth is 8,1%, and
nominal 18,8%, indicating dynamic
growth of Montenegrin economy in
last year. Crises effects was postponed
to the certain extend. Montenegro
has low level of public debt, the pu
blic debt in last year amounted to
26,8% GDP, unemployment fell to
10,8%. Consolidated public consu
mption amounts 46,6% GDP or 1,55
billion Euros. Consolidated public ex
penditures reduced by total capital
expenditures amounted to 37,32%.
This is a confirmation that the stru
cture is recovering against infrastr
ucture-related investments. In last
year consolidated expenditures of the
budget amounted to 38,1% GDP, and
current expenditures amounted to
33,6%. This is undoubtedly favorable
public expenditure structure. The amo
unt of deposits at the end of last year
was 96,58 million Euros. The State
disposed of around 23,6 million Euros
in gold. The Parliament should decide
on budget rebalance by the end of July
of the current year.”
25th June 2009 – Statement
on the occasion of adopting the
Report on macro - fiscal trends for
the first three months of 2009;
Report on realization of macro - fiscal
policy for the first three months of
2009, and Proposal of objectives
and fiscal policy guidelines used as
a basis for planning the receipts and
expenditures, with the projection
for the next three years, capital
budget projection for 2010, and
financial ceilings and medium term
expenditure framework for 2010 –
2012.
“The public consumption should
be at the level of 41,3% GDP, in next
three years. This years expected pu
blic consumption deficit amounted
to 2,89%. In the next three years, the
decrease should balance the budget.
With regard to the central budget
and state-owned funds budget, public
consumption should be kept between
35 and 36%, and capital budget sho
uld amount to 3,5% GDP. The budget
deficit corresponds to the level of
capital expenditures – although it sh
ould be lowered against it. In the foll
owing period, activities will be focused
on amendments to the Budget Law
for this year. The Government should
pass the proposal in the mid of July. It
implies corrections to the current and
capital budget, answers to company’s
restructuring comprising budget appr
opriation. This is one of the measures
correcting medium – term plan...
26th June 2009 – Mr. Igor Lukšić,
Finance Minister, met with the DG
Budget representatives of the Eu
ropean Commission.
In period 24 - 25 June 2009, the
European Union DG Budget Represe
ntatives, Mr. Robert Gielisse and Mr.
Raymond Hill visited the Ministry of
finance and met with Mr. Igor Luksic,
the Deputy Prime Minister and Finance
Minister, and his assistants Ms. Mila
Barjaktarović and Mr. Dušan Perović.
The topic of the meeting was the
achieved progress in the public internal
financial control. The representatives
of the DG Budget of the EC, were pre
sented with undertaken activities of
the Ministry of finance related to the
development and adoption of the
subordinate legislation necessary for
the implementation of the Public inte
rnal financial control Law, as well as
planned activities with the objective
of establishing and strengthening the
public internal financial control, both in
the area of financial management and
control as in the internal audit area.
Ms. Gordana Jovanović,
Spokesperson,
Ms. Ivona Mihajlović,
Assistant to the Spokesperson
39
INFO/WEB Other Activities
in the Period from
1st April to 30th June 2009
Gordana Jovanović
Ivona Mihajlović
40
1st April 2009 – Workshop on » Objectives System« in
cooperation with the GTZ
The first day of the Workshop was focused on the
following: presentations and discussions on the objectives
system and experience of the Federal Republic Hessen,
as well as discussions on open issues related to the pro
gramme budgeting in Montenegro aimed at defining mission
statements. During the first day of the Workshop, further
steps in implementation of the programme budgeting in
spending units were analyzed with the objective of su
ccessful implementation of the programme budgeting in Mo
ntenegro.
3rd April 2009 – Mr. Milorad Katnić, Assistant Minister,
took part in the Round Table of the Closing Conference of
TRIM MNE Project
The Round Table addressed main issues related to the
accession of Montenegro into WTO, regional trade, measures,
trends, consequences, economic crises and other current
economic and financial issues.
10th April 2009 – Steering Committee Meeting – “First
Steps for a Decentralized Implementation System (DIS) in
Montenegro“, Podgorica
The second Steering Committee Meeting – SC of the
Project “First Steps for a Decentralized Implementation Sy
stem (DIS) in Montenegro“, was organized on 6th April 2009,
in Podgorica. The objective of the meeting was to review
implemented activities and achieved results in decentralized
management of the EU pre-accession funds, during the period
from December 2008 to February 2009, as well as planned
activities in next six months period. The Quarterly Report
of the Project which was reviewed, comprises comparative
analysis of planned activities against achieved results. The
Report addresses the situation at the expiry of the first
quarter following the inception period and clarifies progress
of project activities which have been carried out after the end
of the first quarter, conclusions and recommendations to be
reviewed by the beneficiary aimed at successful finalization
of the Project. During the first quarter, the work was focuses
on the Component 0 – Horizontal activities of the DIS pro
cess, Component 2 - National Fund, Component 3 - CFCU,
as well as the Component 5 – Senior Programming Officers
(SPO). Activities related to the Component 1 (National IPA
Coordinator – NIPAC) and the Component 4 (Internal Audit
Unit of the Ministry of finance – IAU – MF) are planned for the
next period. The general conclusion was that the action plan
of the Project is fully monitored which is supported by 35%
of spent budget.
Commission at the end of January. The Economic and Fiscal
Programme, represents the preparation for the development
of the Pre-accession economic programme, that a candidate
country for the EU membership is obliged to develop. The
main benefit of the program, is to enable the countries with
much easier creation of consistent economic policy, since it
is updated on annual basis, providing explanation for possible
deviations from established parameters in the previous year.
On the other hand, benefit for the European Commission is
much easier fulfillment of economic and fiscal criteria of the
European Union. The head of the delegation, Mr. Milorad Kat
nić, M.Sc, briefed the attendees on the current progress in the
public finance areas, financial sector and other commercial
sectors. Moreover, Assistant Minister presented set objectives
on recently organized annual spring meetings of the IMF and
the World Bank.
21st April 2009 – Compensation bonds with maturity
date started
In accordance with the Law on compensation to the
holders of pension and disability insurance rights (“Official
Gazette of the Republic of Montenegro”, number 40/08
and 42/08), started the payment of the second installment
of compensation bonds with maturity date to the holders of
bonds who acquired rights on the basis of compensation for
the period July 2002 to December 2003. Prva banka Crne
Gore, Crnogorska komercijalna banka and NLB Montenegro
banka will realize payment through their branch units.
30th April 2009 – Bulletin No. XV
The Ministry of finance published the Bulletin No.
XV, containing the review of activities of the Ministry of
finance for the period from January - March, the overview
of the current economic and financial topics, as well as the
following articles: Law on ownership rights, experience of
the Republic of Ireland in the situation of global financial
crises, VAT trend analysis and structure, repercussions
of measures of G20 meeting to the financial position of
Montenegro, as well as quarterly reports on the public debt,
public expenditure realization on the local self-government
level, public expenditures, etc.
27th April 2009 – Montenegrin delegation took part in
the experts meeting devoted to the preliminary assessment
of Economic and Fiscal Programme
Montenegrin delegation, led by Mr. Milorad Katnić, M.Sc,
Assistant minister, took part in the experts meeting devoted to
the presentation and preliminary assessment of the Economic
and Fiscal Programme 2008 – 2011, submitted to the General
Directorate for economic and financial affairs of the European
6th May 2009 – Implementing Agreement signed
In accordance with the European Union requirements
in the area of the conferral of management powers of preaccession funds instrument (IPA) from the European Com
mission (EC) to Montenegro, i.e. requirements related to
the establishment of decentralized implementation system
(DIS), the Implementing Agreement was signed between the
National Authorizing Officer (NAO) and Programme Authorizing
Officer (PAO). In the light of the above, contracting parties
are authorized representatives of the Ministry of finance, Mr.
Dušan Perović (NAO) and Ms. Nataša Kovačević (PAO). The
Agreement related exclusively to the Decentralized implem
entation System of management of programmes of IPA co
mponent – Transition assistance and institution building. It is
important to emphasize that the Implementing Agreement is
41
very important for the activities of the Project “First steps for
a Decentralized Implementation System (DIS) in Montenegro“
providing technical assistance to the Ministry of finance
and the Secretariat for European integration, as well as to
other DIS players, with the objective of strengthening of the
administrative and managerial capacities and compliance
with the accreditation criteria by the IPA bodies. The Implem
enting Agreement is of extreme importance, being the basis
for formal defining of responsibilities and functions of the
National Accrediting Officer (NAO), the National Fund (NF),
and Programme Authorizing Officer (PAO) being the Head of
the Sector for financing and contracting the EU funds (CFCU)
as a part of Operating structure (OS) for the programmes
financed through the IPA Component I.
8th May 2009 – Board of Directors of the European
Investment Bank approved the initiation of negotiations
with Montenegrin banks
Pursuant to the initiative of the Ministry of finance for
the provision of the credit support for the improvement of
Montenegrin banking sector liquidity, the Board of Directors
of the European Investment Bank approved the issuance of
loan to Montenegrin banks for funding small and mediumsized enterprises projects, worth 100 million Euros, for which
the Government of Montenegro will issue guarantees.
On the basis of data submitted to the European Investment
Bank and on the basis of analysis produced by the representatives
of the EIB in recent months, the Board of Directors approved
the initiation of negotiations with the Crnogorska komercijalna
banka, Hypo Alpe Adria Bank, NLB Montenegro Bank, Podgorička
Bank, Societe General, Opportunity Bank, Komercijalna banka
Budva and First Financial Bank. The European Investment Bank
is considering the possibility to start negotiations with the Atlas
Mont Bank, Invest Bank Montenegro and Hipotekarna Bank,
provided that the banks submit information previously requested
by the European Investment Bank.
11th May 2009 – Mission of General – Directorate
for enlargement (DG ELARG) of the European Commission
(EC) with the objective of determining facts
In accordance with the common practice of the Euro
pean Commission related to the determining which phase
the country reached in the process of transferring to Decen
tralized Implementation System of management of the
European Union pre-accession funds, the mission of the
General – Directorate for enlargement (DG ELARG), with
the objective of determining facts, visited Montenegro in
the period from 12th to 14th May 2009. During the visit, the
representatives of the European Commission reviewed the
following phases: preparation, programming and future impl
ementation of the Component III – Regional development,
Component IV – Human resources development, as well as
the Component V – Rural development of the pre-accession
instrument (IPA) and visited all relevant ministries. Review
of the DIS accreditation status, was scheduled for 13th and
14th May, focusing on completed activities prescribed by
the Action plan for the conferral of management powers of
42
IPA funds, adopted on the Government’s session held on
15th January 2009, along with appropriate activities requi
red to be completed in 2009, primarily with regard to the
establishment of relevant DIS bodies, development and
signing of Implementing and Operational Agreements rep
resenting the basis of the legal framework for the DIS
establishment, as well as the development of procedures
thereto. Namely, all issues important for the overall process
will be subject to discussions, as well as the process of pre
paring supporting/accompanying accreditation package.
19th May 2009 - Application for the payment of
citizens foreign exchange currency savings deposited with
authorized banks headquartered outside Montenegro will
last up to 30th May
The Ministry of finance of Montenegro, reminded the
citizens residing in Montenegro, who deposited foreign ex
change savings with authorized banks headquartered ou
tside Montenegro, to apply for payment of savings, in acc
ordance with the amendments to Law on payment of foreign
exchange currency savings deposited with authorized banks
headquartered outside Montenegro. Payments are sche
duled up to 30th May 2009. Applications for the payment of
foreign exchange savings deposited with authorized banks
headquartered outside Montenegro should be submitted to
Crnogorska komercijalna banka, and this right may exercise
citizens residing in Montenegro.
25th May 2009 – Meeting of Enhanced permanent di
alogue between Montenegro and the European Commission
The second meeting of the Interim Subcommittee for
the follow up of the application of the Interim agreement
on trade and trade related matters in the area of economic
and financial issues and statistics, as well as the meeting
of Enhanced permanent dialogue between Montenegro
and the European Commission, took place in Podgorica,
on 25th May 2009. The meeting was the opportunity for
the representatives of Montenegrin institutions to present
achieved progress in aforementioned areas. As for comme
rcial area, macroeconomic stability and progress achieved
by Montenegro, with the special focus on economic growth,
labor marker and balance of payments was subject to
discussions. As for financial policy, it was discussed about
budgetary policy and developments, fiscal framework and
public debt management, and banking and non-banking
sector. Capital flows and business environment were also
subject to discussion. In the area of statistics, the discussion
was focused on review of the national statistical system of
Montenegro, national accounts, as well as the preparation
for making of census and agricultural census.
2nd June 2009 – First negotiations round on concluding
the Contract on avoiding double taxation between Mon
tenegro and the Republic of Ireland
First round of negotiations related to the conclusion of
the Contract on avoiding double taxation between Monte
negro and the Republic of Ireland. Ms. Koviljka Mihailović,
Assistant Minister of Finance, represented the Government
of Montenegro, and Ms. Helen O’Graidy, Director of the Div
ision for corporative and international business, was rep
resenting the Republic of Ireland. The Contract will regulate
the issue of removing double taxation against income taxes
of legal and physical persons and corporative profit tax
(employees earnings, revenues from independent activities,
interests, dividends, authorial fees, revenues from capital,
pensions…...), as well as other issues related to avoiding
double taxation and eliminating tax evasion.
26th June 2009 – DIS Experts visit
On the basis of the European Union technical assistance
provided to the Government of Montenegro, through the Proj
ect “First steps for a Decentralized Implementation System
(DIS) in Montenegro“, apart from three long term experts,
following three short term experts visited the Ministry of
finance in the period from 15th June to 3rd July 2009: Rasa
Surauciene, Viktoras Sirvydis and Jovita Ramanauskaite. The
objective of the short term experts visit was the provision of
the support in development of the IPA Manual, representing
the basis for the work of all individual institutions involved in
decentralized implementation system of management of the
EU funds. The Manual of Procedures in the IPA accreditation
process, will provide detailed explanation of all phases of
the project cycles: programming, identification, evaluation,
financing, implementation, project evaluation, including irreg
ularities against prescribed procedures, as well as deviations
from established procedures for both components. The
Manual of Procedures, will cover all managerial structures
including the units of the Senior Programming Officer (SPO)
in all line ministries, internal audit units (IA), National Fund
(NF), Sector for financing and contracting EU funds (CFCU)
and the Ministry of European integration. Special attention
was focused on more precise defining of the following te
rms: DIS accreditation criteria, segregation of functions in
decentralized management system of EU funds at the level
of the system and organization, on-spot-checks, managing
irregularities, communication and reporting, supervision and
evaluation process, and so called statement of Assurance.
29th June 2009 – Information on payment of sixth instal
lment of converted citizen’s foreign exchange savings bonds
The payment of the sixth installment of converted foreign
exchange savings bonds will be made from 1st July 2009, to
the owners of bonds, in accordance with the Law on regulating
obligations and claims in respect of foreign debt and citizens’
foreign exchange savings (“Official Gazette of the Republic
of Montenegro”, number 55/03 and 11/04). Installment
amount is determined in the certificate (amortization plan).
The payment will be made by commercial banks, or regional
centers of the Central Bank of Montenegro. Citizens who
after 1st July 2004, registered with their banks where they
held deposits, and whose bonds are registered on individual
account with the Central Depositary Agency, may withdraw
the sixth installment in regional centers of the Central Bank
of Montenegro and in Atlasmont Bank AD Podgorica, branch
unit Pljevlja, depending on the place of residence, on the
basis of identification document (ID, or passport).
29th June 2009 - Information on payment of the third
installment of converted citizens’ foreign exchange savings
bonds deposited with authorized banks headquartered
outside Montenegro
In accordance with the Law on payment of foreign
exchange currency savings deposited with authorized banks
headquartered outside Montenegro (“Official Gazette of
the Montenegro”, number 81/06 and 20/09), owners of
converted citizen’s foreign exchange savings will be paid the
third installment in branch units of Crnogorske komercijalne
banka AD Podgorica (CKB) from 1st July 2009. Citizens who
failed to withdraw the second installment, or whose claims
are not registered with the Central Depositary Agency, should
register with the branch office of CKB where they submitted
the payment request for foreign exchange deposits, where
they will receive the certificate of conversion of savings into
bonds. After reconciliation of the foreign currency account
balance, the bank will record the amount of converted foreign
exchange savings into bonds in the booklet.
29th June 2009 – Signed Loan Agreement between
KfW and Opportunity Bank
The German Development Bank (KfW) and the Opportu
nity Bank have signed the Loan Agreement in the amount
of 15 million Euros. Out form aforementioned amount, 13
million are earmarked for financing small and medium-sized
enterprises projects, while 2 million Euros are earmarked for
the energy efficiency projects. The duration of the loan is seven
years, with the grace period of two years. In accordance with
the credit requirements, the Ministry of finance, on behalf
of the Government of Montenegro, signed the guarantee for
aforementioned Loan Agreement to the KfW-u. If all formal
requirements for the validity of the contract are met, the
Opportunity Bank may have available funds by 15th July 2009.
Ms. Gordana Jovanović,
Spokesperson
Ms. Ivona Mihajlović,
Assistant to the Spokesperson
43
IPA Adriatic Cross-Border
Programme
Cross-border cooperation, represents traditional tool of
the European Union segregating joint activities and achieving
common objectives important to all beneficiary countries in
the programme. In that light, the European Union is distr
ibuting funds aimed at cooperation strengthening in the
area of economic and social development, environmental
protection, natural and cultural heritage, fight against orga
nized crime, provision of security and efficiency of border,
etc. Those activities are completed in accordance with the
„joint interest principle“according to which the neighboring
countries have joint programmes, managing structures, as
well as joint participation in project co-financing.
As for the number of participants, cross-border progra
mmes may be bilateral or multilateral. In Montenegro, crossborder activities are covered by the second component ot the
Pre-accession Instrument support (IPA), through the following
four bilateral programmes (Montenegro – Serbia, Montenegro
– Croatia, Montenegro – Bosnia and Herzegovina and Monte
negro - Albania); two transnational programmes (South East
European Space (SEES) and Mediterranean programme), as
well as through the IPA Adriatic cross-border program. IPA
Adriatic cross-border program is a special program against
other programmes, because eits implementation is done
differently, i.e., shared management principle.
IPA Adriatic cross-border program 2007-2013 (hereina
fter referred to as: the „Program“) was approved by the Euro
pean Commission on 25th March 2008, as the follow up of the
New Adriatic Neighboring Programme INTERREG IIIA and its
financed through the IPA funds, with the objective of supporting
accession process of candidate and potential candidate
countries for the European Union membership. The basic
objective of this programme is to improve cooperation between
Adriatic countries, enabling them to define joint objectives and
to undertake joint activities aimed at promoting sustainable
development of their territories. Apart from aforementioned, the
objective of the programme is to enable candidate and potential
candidate countries to become more familiar with the rules of
the Community, as well as application procedures.
The programme includes three member states (Italy,
Greece and Slovenia); one candidate country (Croatia), as
well as potential candidate countries (Montenegro, Albania
and Bosnia and Herzegovina. Aforementioned countries are
fulfilling the territorial acceptability criteria, since each of
them is exiting the Adriatic sea.
44
Milorad Samardžić
Katarina Živković
Objectives, priorities and measures of the IPA Adriatic
Programme
The Strategy is foreseen in the general objective of the
programme which is defined in the following manner:
Strengthening sustainable development possibilities
of the Adriatic region through harmonized activity strategy
among partners of acceptable territory.
The general objective is defined in a manner providing
assistance to countries which are in the accession process,
in the area of institutional building and ability to manage
the European Union instruments. Moreover, through the
programme strategy, objectives of the cohesion and regional
policy of the EU are met, as well as creation of new types
of integration and creating links between territories that will
contribute the increase in competitiveness of the whole Adr
iatic region.
There are specific goals originating from general objec
tive of the programme, so called priorities. The Adriatic pro
gramme has four following priorities:
Table 1. Review of priorities and measures within the
Programme
IPA Adriatic Cross-border programme
Priority 1
Economic,
social and
cultural
cooperation
Priority 2
Priority 3
Priority 4
Natural and
Accessibility and Technical
cultural resources
network
assistance
and risk prevention
Measure 2.1 –
Measure 1.1 –
Protection and
Research and
improvement of
innovation
sea and costal
area
Measure 3.1Physical
infrastructure
Measure 1.2 –
Financial
support for
innovative
small and
medium-sized
enterprises
Measure 2.2 –
Natural and
Measure 3.2 –
cultural resources
Sustainable
management
mobility system
and prevention
of natural and
technological risks
Measure 1.3 Social, health
and labor
networks
Measure 2.3 –
Measure 3.3 –
Energy saving and
Communication
renewable energy
network
sources
Measure 4.1 –
Administration
and
management
Measure 4.2 –
Information,
publicity and
evaluation
Measure 1.4 – Measure 2.4 –
Institutional Sustainable
cooperation tourism
IPA Adriatic programme management structures
In the IPA Adriatic programme, following bodies have the
leading role: Managing Authority - MA, Certifying Authority –
CA and Audit Authority - AA. These bodies, established on the
basis of the requirements set forth in the IPA Implementing
Regulation (hereinafter referred to as: the “IPA IR“), are funct
ioning on the principle of segregation of functions and they
are haven’t hierarchal links in implementation of activities.
Apart from aforementioned bodies, having segregated
functions there are following structures in the programme:
Joint Monitoring Committee - JMC, Joint Steering Committee –
JSC and Joint Technical Secretariat - JTS, carrying out activities
on the different accountability level under the coordination of
Managing Authority.
Managing Authority- MA is responsible for the programme
management and implementation, while the Certifying
Authority –CA is responsible for approval of implementation
expenses and payments. Certifying Authority is responsible
for receiving funds by the European Commission and further
transfer to end users, through the lead partner. The Audit
Authority – AA, is responsible for the functioning of the
management and control system. The place of business of
these three most important bodies of the programme is in
Italy in Aquila.
Joint Monitoring Committee - JMC, together with the
MA, is conducting evaluation of project effectiveness and
implementation quality. Pursuant to the articles 110 and 111.
IPA IR, the responsibility of the JMC includes, primarily: review
and approval of criteria for the selection of activity to be
finances, approval of the call for the submission of the bids,
periodic checks over the progress in realizing specific objectives
of the programme, verification of the implementation results
against set objectives, review and approval of the report
on implementation, approval of strategic project proposals,
review and approval of the proposal on amendments to the
programme, development of the draft rulebook on procedures
of its work in accordance with institutional, legal and financial
frameworks of beneficiary countries, etc.
JMC is composed of the representatives of central,
i.e. local authority of beneficiary countries. Apart from
these countries, the JMC member, on advisory basis, is the
representative of the European Commission. Moreover, the
representatives if the partnership for the environmental
protection, as well as economic and social partnership,
participate as observes in the work of JMC.
Joint Steering Committee-JSC, carries out evaluation of
the project proposals submitted by the JMC in its report, in
the form of project list, ranked in accordance with previously
set criteria. In conduct of operation, prescribed by the article
110. IPA IR, JSC is using the support of the JTS. As already
mentioned, project evaluation is carried out on the basis of
determined criteria that may be presented in the following
manner: objectivity, transparency, professionalism, analysis
and review of information submitted in the application.
The selection and appointing of the members of the JSC is
done by the JMC. However, JSC may be composed of the JMC
members, with the help of external experts, if necessary.
Joint Technical Secretariat-JTS, with the place of busi
ness in Aquila, was established by the MA, with the agreement
of the countries participating the programme. Its main task is
to provide the support to other bodies in the programme, in
conduct of operations for its area of competence.
Financial Plan
The following Table indicates the Financial Plan, showing
the allocation of funds available up to 200, according to prio
rities:
Table 2. Financial allocation and funding sources accor
ding to priorities (2007-2009)1
Priority
Community
contribution
(85%)
I
II
III
IV
27.132.341
27.132.341
27.132.341
9.044.114
National financing
(15%)
Total financing
4.788.060
4.788.060
4.788.060
1.596.020
Ukupno
31.920.401,33
31.920.401,33
31.920.401,33
10.640.134,00
106.401.338
45
The contribution of the European Union for financing of
each project within the first three priorities, will amount to
85% of total value of the project, while the amount of 15%
will be covered from national public funds, win relation to the
member states, or by beneficiary in relation to the candidate/
potential candidate countries.
The exception to the rule is the forth priority related to the
technical assistance to the structures performing programme
implementation and programme monitoring. For this priority
should provide 15% of co-financing, originating exclusively
from public funds, excluding the possibility of private sources
co-financing.
Preparation, selection and project implementation
Acceptable projects in the Adriatic programme are consi
dered projects which include at least one partner from the
member state and at least one partner from the candidate
country, or potential candidate country. The programme is
implemented through two types of projects, i.e. common and
strategic projects.
Common projects, represent the most important type
for cooperation implementation. Each common project re
lated to strictly defined measure within a priority. Unlike
strategic projects where the amount of funds is significantly
higher, common projects are allocated with lower amounts.
The value of common projects usually ranges from 0.5 to 5
million €, whereas the longest implementation period may
be 36. when using allocated funds, beneficiaries must bear
in mind that the maximum amount for which they are entitled
to, is in the amount of 60% of the total value of the project,
while the minimum amount which can be available amounts
to 100.000 €.
Strategic projects differ form common ones, because
they can cover several measures and priorities, this type of
projects are featured by the high level of co-financing and the
intention to upgrade and generate the networks of participants
conducting activities of general interest, long implementation
deadline with active participation of highly – qualitative part
ners. The value of strategic projects, ranges from 5 to 12,5
million €. However, in order to provide adequate funds for
realization of certain project, maximum value for strategic
projects may increase on the basis of the Decision adopted
by the Joint Monitoring Committee.
As for common projects, Managing Authority is publishing
the call for the submission of financial bids. The call for the
submission of proposals for common projects is done on the
basis of priorities and comprises higher number of boxes
related to one or several measures. Following the gathering
of project proposals, on the basis of evaluation results, the
ranking list is generated on the basis of which projects will be
financed up to allocating total amounts of funds distributed
for concrete call.
The procedure of selecting strategic partner is somewhat
different. On the basis of the programme and appropriate
1 - EC Regulation No. 1085/2006 as of 17th July 2006.
46
legal solutions, strategic projects are divided into strategic
projects selected on the basis of the call for the submission of
bids and projects described in the article 95, IPA IR, providing
possibility for finding joint activities for funding, regardless the
call for the submission of bids.
Beneficiaries, partnerships and expenditure accepta
bility
In order to be eligible for the funds prescribed by the Adr
iatic programme, potential beneficiaries must have the legal
status of public or private entity. Apart from aforementioned,
it is necessary that they have signed partnership agree
ment, to appoint project leaders, as well as to have
registered office on acceptable territory of the programme,
during the whole duration of the programme. Apart from
aforementioned, potential beneficiaries must fullfil conditions
on the absebnce of conflict of interest, the absence of
criminal proceedings against them, that they are not charged
of submitting incorrect or uncompleted information required
by the European Commission, etc.
In order to accept the partnership, each project must have
at least one partner form the candidate country, or potential
candidate country, and one partner from the member state,
the exception to this rule is the cooperation between Greece
and Albania and Slovenia and Croatia which are covered by
other cooperation programmes.
Ob the basis of the rules set forth in the IPA IR, acceptable
revenues are revenues paid between 1st January 2007 and
31st December of the third year following the last budgetary
liability, for activities or part of activities implemented in the
member states, which were realized following the signing of
Financial Agreement for activities or part of activities imple
mented in beneficiary countries.
As already mentioned in the introduction part of the
document, the IPA Adriatic programme is a continuation of the
New Adriatic Neighboring programme INTERREG IIIA, through
which Montenegro completed 11 projects.
Development of instruction for potential beneficiaries
within the IPA Adriatic programme 2007-2013 is under imp
lementation, and the publication of the first call for the su
bmission of proposals of common projects is planned by the
end of July of the current year. Following the development of
aforementioned instruction, potential beneficiaries on the te
rritory of Montenegro, will have more information and guidel
ines for their project proposals and selection of partners.
Mr. Milorad Samardžić,
Ms. Katarina Živković,
Independent Advisor II
CFCU
Draft Budget Final Account
of Montenegro for 2008
Public expenditure policy in 2008, was focused on increasing source revenues of the Budget of Montenegro and
local self-governments budgets, increase in public sector
earnings, increase in capital expenditures for infrastructure
financing and purchase of equipment, deepening of reforms
in the area of public administration, judiciary and education,
stable functioning of budgetary users and decrease in public
debt.
The Ministry of finance – state Treasury, in accordance
with the provisions of articles 49 and 54, of the Budget Law
(“Official Gazette of the RoM ″, No. 40/01, 71/05 and “Official Gazette of Montenegro ″, No. 12/07 ), is obliged to prepare the Draft Budget Final Account and to submit it to the
Government by 1 June.
In accordance with aforementioned provisions of the
Law, the Ministry of finance – State Treasury, on 29th May
2009, submitted the Draft Budget Final Account for 2008, to
the Government.
The Government on its session held on 18th June 2009,
adopted the Draft Law on Budget Account of Montenegro for
2008, which is to be submitted to the Parliament by 31st June
2009 (Article 50, of the Law).
Draft Budget Final Account of Montenegro for 2009,
can be found on the website of the Ministry of finance: www.
mf.gov.me, and the following text is providing the basic content of the document:
In 2008, Montenegrin economy marked dynamic growth.
Estimated GDP in 2008, amounts to 3.338,00 million €.
Nominal GDP growth rate was 18,88%, and the real GDP is
8,10%, inflation rate was higher than projected amounting to
6,90%, total amount of public debt amounted only 26,80%
GDP, while unemployment rate was low amounting 10,80%.
Total consolidated public consumption in 2008, amou
nts to 1.556,55 mil €, or 46,63 % GDP.
Following consolidation of contributions charged to
employers, public expenditure (second consolidation level)
amounts to 1.510,64 million €, or 45,26% GDP.
Current public consumption (consolidated public consumption reduced by total capital expenditures) amounts to
1245,66 million €, or 37,32 % GDP, implying that the public
Stanimirka Mijović
consumption structure is favorable and recovering against
infrastructure-related investments.
In 2008, implementation of the capital budget process continues, whose objective is clearer defining of Governments activities related to the realization of strategic
projects accounted for in the capital budget and projects
financial sources, more efficient control over project realization and activities, as well as continuity of information
on implementation phases and per years. Capital budget
is implemented through centralized system, i.e. preparation
and implementation of capital projects is done through two
institutions: Directorate of public works and Directorate of
traffic. In 2008, for realization of capital projects was spent
the total of 73,37 million €, whereas 39 projects were implemented through the Directorate of public works and 7
projects thorough the Directorate of traffic. It is important to
emphasize that compared with the previous year, the level
of capital expenditures in 2008, is higher by 80,13%, or
4,45 % GDP.
Programme budget implementation continued, with the
objective of more efficient development of the strategy for
realization of governments objectives. In 2008, programme
budget was implemented in 16 spending units.
47
In accordance with the Budget Law for 2008, stateowned funds represent the integral part of the Budget of
Montenegro and the Final Account, improving public finance
management and increasing rationality and transparency of
the public finance.
Total receipts of the Budget of Montenegro in 2008,
were realized in the amount of 1.353,84 mil €, which is by
0,74 % higher than planned. Out of stated amount, receipts
of the Budget of Montenegro, excluding state-owned funds
amount to 831,66 million €, and state-owned funds receipts
amount to 522,18 mil €.
state-owned
funds
receipts
39%
receipts of
the Budget
excluding
state-owned
funds
Consolidated current revenues with receipts of repayment of loans of the Budget of Montenegro in 2008, amounted to 1.287,20 million €, or 38,56% GDP, which is by 2,44%
higher than planned.
The consolidated current revenues structure is as follows:
- Tax revenues in the amount of 827,98 million €, or
97,76 % of planned amount, representing 64,32 % of current
revenues;
- Revenues from contributions in the amount of 339,91
million €, higher by 15,10 % than planed, representing 26,41
% of current revenues;
- Revenues from duties in the amount of 26,59 million
€, or 99,45% of planned amount, representing 2,06% of current revenues;
- Revenues from fees in the amount of 38,24 million €,
or 88,43% of planned amount;
- Other revenues in the amount of 45,48 million €, higher
by 39,97% than planned, consisting from capital revenues in
the amount of 13,80 million €, revenues from fines and divested material benefit in the amount of 9,43 million €, revenues
from activity of state bodies in the amount of 5,38 million €
and other revenues in the amount of 16,88 million €;
- Receipts from repayment of loans in the amount of
9,00 million €, consisting from repayment of loans approved
by the state Budget for financial support to companies from
the previous period, self-employment loans realized through
the Employment Fund and loans for development projects realized through the Development Fund.
48
Fees
Benefits
3%
2%
Contribution
Other revenues
4%
i i i dfrom
Receipts
repayment
of loans
26%
taxes
64%
Total expenditures of the Budget of Montenegro for
2008, amounts to 1.423,94 million €, or by 7,74% higher than
planned, being the result of higher debt repayment, liabilities
from previous period, interests, rights from the area of pension
and disability insurance, health protection and health insurance rights, transfers to public institutions (i.e. Public health
institutions), borrowings and loans to financial institutions.
Expenditures of the Budget of Montenegro, excluding
state-owned funds, consist of 901,79 million € (current budget 828,42 million € and capital budget 73,37 million €), and
expenditures of state-owned fund 522,15 mil €.
expenditures of
state-owned fund
37%
expenditures of the
Budget excluding
state-owned funds
63%
Consolidated expenditures of the Budget of Montenegro
for 2008, amounts to 1.272,08 million €, for 3,41% higher
than planned amount. Consolidated expenditures of the Budget of Montenegro represent 38,11 % GDP.
Consolidated expenditures structure is as follows:
- Gross earnings and contributions charged to employers - 21,59% or 274,70 million €;
- Social protection transfers - 27,24% or 346,54 million €;
- Transfers to institutions, individuals, NGO’s and public
sector -16,80% or 213,71 million €,
- Capital expenditures - 11,68% or 148,54 million €;
- Expenditures for material and services - 8,99% or
114,43 million €;
- Borrowings and loans - 4,91% or 62,54 million €,
- Current maintenance - 1,74% or 22,15 million€;
- Interests - 1,77% or 22,53 million €;
- Subsidies - 1.46% or 18,59 million €;
- Other personal income - 1,71% or 21,75 million €;
- Expenditures for reserves - 0,98% or 12,44 million €;
- Rent - 0,66% or 8,36 million €, and
- Other expenditures - 0,45% or 5,74 million €.
Current
maintenance
2%
Subsidies
1%
Interests
Other
personal
income
Expenditures
for reserves
Rent
2%
Expenditures
for material
and services
Other
expenditures
1%
2%
0%
1%
Gross earnings
and contributions charged to
employers
9%
Borrowings
and loans
22%
5%
Capital
expenditures
12%
Social
protection
transfers
Transfers to
institutions,
individuals,
NGO’s and
public sector
26%
17%
Current budget consumption (current budget consumption decreased by total capital expenditures) amounts to
1.123,54 €, or 33,66 % GDP.
In accordance with functional classification, expenditures of the Budget of Montenegro in 2008, are as follows:
- General and public services in the amount of 278,88
million € or 15,59% total expenditures,
- Defense in the amount of 47,25 million € or 3,32%,
- Public order and safety in the amount of 157,73 million € or 11,08%,
- Economic affairs in the amount of 174,00 million € or
12,22%,
- Environmental protection in the amount of 6,21 million
€ or 0,44 %,
- Housing and community affairs in the amount of 6,62
million € or 0,46%,
- Health in the amount of 187,56 million € or 13,17%,
- Sports, culture and religion in the amount of 23,44
million € or 1,65%,
- Education in the amount of 147,22 million € or 10,34%,
and
- Social protection in the amount of 395,01 million € or
27,74%.]
Social
protection
27.70%
General
and public
services
19.60%
Education
10.30%
Sports,
culture
and
religion
1.60%
Environmental
Housing protection
Healt o
and
0.40%
13.20%
community
affairs
0.50%
Defense
3.30%
Public
order and
safety
11.10%
Economic
affairs
12 20%
Surplus of the Budget of Montenegro in 2008, amounts
to 15,12 million €. Surplus consists of: privatization revenues
in the amount of 24,82 million € and deposits transferred
from previous year in the amount of 70,10 million €, net repayment of debt on the basis of lending and loans to residents in the amount of 40,72 million €, old foreign exchange
savings in the amount of 8,23 million €, restitution in the
amount of 6,79 million €, other liabilities from previous years
in the amount of 42,76 million € and net repayment of debt
on the basis of foreign loan in the amount of 11,54 million €.
It is important to emphasize that the Government of Montenegro, with the objective of supporting banking sector, in accordance with the article 4, paragraph 1 of the Law on Banking Sector Safeguards (»Official Gazette of Montenegro«, No.
64/08), made early redemption of debt of budgetary users to
the banks and assumed debt of the Railways of Montenegro
in the amount of 41,81 million €. Assumed debt of Railways
of Montenegro is converted in share capital of the state in
this Joint Stock Company.
State debt as of 31st December 2008, amounts to 894,7
mil €, out of which external debt amounts to 481,7 million €,
consisting of engaged (disbursed) credit funds, and internal
debt amounts to 413,00 € million €. Guarantees of Montenegro for loans of state-owned enterprises amount to about
62,6 million €, which is 7,00% of total state debt. State debt
represents of around 79,3% in 2007, and in 2008, 69,51%
of total expenditures with receipts from the repayment of
loan of the Budget of Montenegro.
Compared to the end of 2007, the external debt increased by 19,6 million €, due to engagements from current
loans in the amount of 36,40 million € (International Development Agency - IDA, Credit development Bank KfW, European
Bank for Reconstruction and Development - EBRD, Hungarian commodity loan, Polish loan, Societe Generale Bank loan
and on-landed commodity loan of the French Government for
EPCG), decreased on the basis of regular repayment of principal in the amount of 16,80 million €.
The internal debt growth in the amount of 137,91 million
€, is a result of adoption of the Law on compensation of users
of right to pension and disability insurance setting forth the
payment of overdue pensions in the amount of 105,00 million
€, the Law on payment of foreign exchange currency savings
deposited with authorized banks headquartered outside Montenegro increasing the debt for 27,6 million €, and the start
of the project realization of the Directorate of traffic with the
objective of resolving the problem of bottle necks in traffic.
Outstanding liabilities of the Budget of Montenegro as
of 31st December 2008, amount to 88,86 million €, relating
to the liabilities of the Budget excluding state-owned funds
in the amount of 24,52 million € and state-owned funds liabilities in the amount of 64,34 million €. It should be emphasized that these are gross outstanding liabilities, and that
mutual liabilities amount to 21,74 million €. The amount of
49
outstanding liabilities comprises the pension in December in the amount of 24,57 million €, which by the Law is paid backwards,
or following the expiration of a month, and 3,48 million € for the social protection, although during 2008, 12 monthly amounts
were paid on this grounds.
Deposits of the Budget of Montenegro, as of 31.12.2008, amount to 96,58 million € and 38.477,69 ounces of gold, which
market price amounts to 23,61 million €, unblocked by the Bank for International Settlements (BIS), which gross amount is
120,19 million €.
The Government deposits grew in period 2004-2007, while in 2008, was recorder the decline in deposits due to application of measures for the support of the banking sector (early debt redemption and credit support to the banking sector). During
2008, two state-owned funds (Employment Fun and Compensation Fun) were fully integrated into the Treasury system, thus the
deposit balance was recorded as the deposit balanceof consolidated Treasury account.
The trend of Governments deposits in the period 2004 – 200, by users (excluding gold), is as follows:
(in thousands €)
Description
2004.
2005.
2006.
2007.
2008.
1
Budget of Montenegro with the state-owned funds
fully integrated into the Treasury system
Republic Fund PIO
Republic Fund for health insurance
Employment Fund of Montenegro
Development fund of Montenegro
Compensation fund
T o t a l:
2
3
4
5
6
13.374,05
50.976,78
58.311,14
91.103,16
30.441,66
13.837,00
3.568,00
164,00
3.249,00
14.832,00
2.842,57
4.785,00
35.766,00
4.419,69
113.622,04
23.398,00
2.322,89
860,00
29.009,00
5.844,97
119.746,00
38.108,34
4.043,81
2.789,47
26.228,15
4.409,60
166.682,55
38.687,98
9.846,68
34.192,05
17.607,96
96.581,29
Ms. Stanimirka Mijović,
50
Commentary
Impact of Global Economic
Crises to Labor Market
As it was expected, the global economic crises affected
Montenegrin economy. However, unlike most economies, formal labor market is recording positive trends, i.e. increase in
employment vs. unemployment.
In the countries of the Euro zone (EU-16), unemployment rate increased to 9.6% in May 2009, from 7.4% as it
was in June 2008. In EU-27, unemployment rate increased
from 6.9% in June 2008, to 8.9% as it was in May 2009.
Recorded employment in Montenegro, for the first five
months in 2009, increased by 5.4% compared to the same
period last year, while compared with the figures in January
2008, recorder unemployment declined by 14% as it was
in June 2009, Unemployment rate declined from 10.9% to
10.2% in June 2009. Results of the Public survey on manpower conducted in 2008, indicated similar trend, since the
unemployment rate declined from 18% in the first quarter to
16.5% in the forth quarter, provided that the rate in the forth
quarter against the third quarter increased by 0.3%.
Graph 2: Unemployment rate and the real GDP growth rate
25.0%
20.0%
21 2%
22 7%
20 7%
22 4%
18 5%
14 5%
12 6%
10 7%
10.0%
7 0%
6 0%
5 7%
5 2%
5 0%
5 40%
4 9%
4 50%
4 0%
8 6%
5.0%
4 4%
1 9%
0.0%
2 9%
1 8%
2 0%
2 2%
1 7%
1 4%
0 9%
1 9%
1 1%
0 2%
0 4%
0 0%
0 1%
0 4%
10%
0 6%
1 0%
2 0%
2 5%
2 5%
3 0%
Source: MONSTAT
In the first five months of 2009, average number of employees was 171.270. Employment swaps trend in the observ-
10 9%
8 1%
4 2%
2 5%
0 2%
2001
3 0%
10%
The question whether the crises really affected the labor marker will be answered only after publishing the results
of the Manpower Survey conducted for the first two quarters.
However, it is that the biggest impact of the crises will be on
seasonal employment and employment of foreigners.
15.0%
Graph 1 : Formal employment rate in Montenegro
2 0%
ing period is followed by the changes in the commercial activity, i.e. employment rate decrease in the industrial sector,
while it increased in agricultural and services sector. Hence,
the average employment rate decreased in the following sectors: in the industry sector to 6.5%, in the mining sector to
10.5%, in the processing industry to 6.4% and in the electricity
generation sector to 4.7%. In the sector of services, the highest increase is recorded in construction by 22.5%, hotels and
restaurants by 20.2% and real estate operations by 18%.
2002
2003
2004
2005
2006
2007
2008
-5.0%
Unemployment rate
the real GDP growth rate
Source: MONSTAT, Employment Bureau
Despite positive trends in registered employment, there
is aggravated trend in registered unemployment since the
number of users of unemployment fee increases, since persons having at least 6 months of working experience are entitled to it. In January 2008, the number of the users of the
unemployment fee was 9, 222, while in March this number
increased to 12.294.
51
Overview of unemployment trends in other countries
If we analyze the data on the amount of unemployment rate in the countries of European Union, it is evident that the highest
growth of this rate was registered in Baltic countries and Ireland (Graph 3). Thus, according to the Eurostat data, in the period from
June 2008 to May 2009, unemployment rate in Estonia increased by 11%, in Ireland by 5,8, Latvia by 9,9 and Lithuania by 9,2%.
Graph 3 : Unemployment rate trends in selected EU countries
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
16.3
15.6
14.3
11.7
9.0
8.9
6.9
7.0
4.6
EU-27
EU-25
Estonija
Jun-08
5.9
6.4
Irska
Latv ja
5.1
Litvan ja
Maj-09
Source: EUROSTAT
If we observe data on registered unemployment, in the period from March 2008 to March 2009, highest increase in unemployment was also registered in Baltic countries. In Estonia, the number of unemployed persons tripled, in Latvia and Lithuania
this number doubled, while in Turkey increased by 60%. At the same time, registered unemployment declined in Belarus, Bosnia
and Herzegovina, Montenegro, Macedonia, Serbia and Tajikistan.
Graph 4: Registered unemployment growth rate in Europe and Central Asia (ECA) in the period from March 2008 to March 2009.
Source: Labor Market Monitoring in Europe and Central Asia Countries: Recent Trends, World bank.
Changes in registered unemployment are followed by other negative trends. The number of vacancies offered by Employment Agencies suffered significant decline, as well as the ratio between those who are looking for job vs. a vacancy. This ratio
in Kosovo is 500 people vs. a vacancy, in Bosnia and Herzegovina is more than 200 people, and in Armenia, Latvia and Turkey
of around 100 people. The exception is Belarus, where the number of vacancies at the beginning of 2009, was higher than the
number of people who are looking for job.
52
Which groups will be mostly affected by the crises? Experience from the previous period is indicating that young,
older, unqualified workers women and migrating workers are
the most vulnerable groups in the situation of general decline
in economic activity. At the same time, in crises, chances are
lowered for inexperienced workers, graduates or those who
are unemployed for long period of time.
Up to now, on the basis of data obtained from Europe
and Central Asia region, it cannot be concluded which groups
of citizens will be most affected by the crises. EU-10 data
had shown that the unemployment of young people almost
tripled in Baltic counties, while it declined in Slovenia. Gender disparity is not the same in all countries, e.g. increase
in unemployment of men occurred in Lithuania, especially in
construction and production sector, while the employment of
women in Bulgaria and Slovakia declined in the period March
2008 – March 2009.
However, it is obvious that the most vulnerable group
will be migrating workers. The World Bank data on amounts
of transfers from abroad are showing that in the period from
2000 – 2007, in the ECA region, these amounts reached following levels: over 36% in Tajikistan, 35% in Moldova and
18% in Armenia. In the situation of decline in commercial
activity, countries featured by the high number of migrating
workers are declaring redundant migrating workers due to
the crises. Being without a job, migrating workers are returning to their countries of residence, making pressure on their
national labor marker. At the same time, migrating workers
are the first ones who are discharged from the service due to
their concentration in the most vulnerable sectors (tourism,
construction), usually being employed on a temporary basis,
so called “unregistered work “.
8. incentives and investments in the energy efficient
technology for “green jobs”;
9. social dialogue development.
***
Since the crisis is global, measures undertaken on local level cannot resolve all problems. Development of the
situation in the following period will mostly depend on the
situation in world economy, which will influence the economy of Montenegro (tourist season, way of overcoming the
crises in the processing industry, privatization in the energy
sector).
If we take into consideration the recommendations of
the International Labor Organization, we can conclude that
these recommendations are already under implementation
in Montenegro. The Employment Bureau starter with the
realization of the special programme for improving employment on the northern part of the country whereas special
incentive measures are designed for employment of persons
having employment difficulties, fees for unemployed elderly
persons are significantly increased (so called minimum pensions for elderly unemployed persons). Support to the small
and medium-sized enterprises through the provision of credit
lines from European Investment Bank (EIB) and KfW, in cooperation with commercial banks in Montenegro. Initiation
of the works on construction of highway was planned for the
second half of the year, while problems in the processing industry sector will be resolved by restructuring and support
to most important companies in the sector, while the project
of crediting energy efficient programmes is already under
implementation.
International Labor Organization Recommendations
International Labor Organization (ILO) Recommendations are aimed for national policies, with the objective of decreasing unemployment and global economic crises effects1
are as follows:
1. appropriate mix of measures of labor market active
and passive policy;
2. adjusting social protection and pension transfers,
with the objective of avoiding its devaluation;
3. support to companies, especially small and mediumsized enterprises for overcoming liquidity problems and obtaining loans;
4. public investments in infrastructure;
5. directed assistance to vulnerable groups;
6. company restructuring in socially responsible manner;
7. strengthening institutions providing services to unemployed persons;
Independent Advisor,
Ms. Bojana Bošković,
1 - José Manuel Salazar-Xirinachs, Executive Director, Employment Sector, ILO
53
Procedures in
Printing and Issuing
Excise Tax Stamps
The Law on Excise Tax (“Official Gazette of the RoM”, No.
65/01 and 76/05, and “Official Gazette of Montenegro”, No.
76/08), sets forth the obligation of marking excise products,
tobacco products and alcohol beverages (excluding beer and
table wine), with the excise tax stamps. Last amendments to
the Excise Tax Law which were made at the end of 2008, prescribe the use of special (recording) excise stamps for marking of tobacco products and alcohol beverages being sold in
free customs shops are made.
The form and content of an excise tax stamp, manner
and procedure of approving, printing and issuing, and the
manner of keeping records on issued, used and unused excise tax stamps are regulated in details by the Decree on
marking tobacco products and alcohol beverages with the
control excise tax stamps (“Official Gazette of the RoM”, No.
82/05 and “Official Gazette of Montenegro”, No. 22/09).
The excise tax stamp for marking of tobacco products
and alcohol beverages in accordance with the provisions
of aforementioned Decree includes the letter mark, coat of
arms of Montenegro and the title “Montenegro – Ministry
of finance“, serial mark and serial number of the excise tax
stamp for marking of tobacco products. The size of the excise
tax stamp for marking of tobacco products is 45x19 mm and
it is being printed in special colors, such as the following:
54
- In blue – for tobacco products produced in the country
(mark D),
- In yellow – for imported tobacco products (mark U),
- In green - for tobacco products for sale in free customs
shops („for export only“),
- In red – for export of tobacco products for which the foreign supplier did not provide the excise tax stamp (mark E).
Moreover, cigarettes being sold in free customs shops
are marked with the special excise tax stamp, measures
50x25 mm being glued over a box of cigarettes.
The size of the excise tax stamp for marking of alcohol
beverages is 90x19 mm and it is being printed in special colors, such as the following:
- In orange – for alcohol beverages produced in the
country (mark D),
- In blue - for imported alcohol beverages (mark U),
- In green - for alcohol beverages for sale in free customs
shops („for export only“),
- In red – for export of alcohol beverages for which the foreign supplier did not provide the excise tax stamp (mark E).
The Decree on amendments to the Decree on marking
tobacco products and alcohol beverages with the control excise
tax stamps (“Official Gazette of Montenegro”, No. No. 22/09),
sets forth the obligation to mark retail price on the excise tax
stamp for tobacco products which are being put into free circulation on the customs territory of Montenegro. The objective of
this legal solution which application will start from 1st January
2010,is to protect consumers from increase in prices of tobacco products that are not being sold at old prices.
In accordance with the provisions of aforementioned
Decree, the excise tax stamp for marking of tobacco products must be glued on the packing under cellophane or any
other wrapper, in order to make it visible and irremovable not
damaging the packing. The excise tax stamp for marking of
alcohol beverages, is glued over the bottle cap or any other
packing, so that the bottle may not be open without damaging the stamp.
Aforementioned solutions provide for more efficient control over calculating and paying out the excise tax being connected to the moment of taking over the excise stamps from
the Tax Administration.
The request for the issuance of the excise tax stamp is
submitted monthly to the Tax Administration in the period
from 1st to 15th day of the current month for the subsequent
month, and if the excise tax stamps are printed out for the fist
time or printed in quantities higher than usually requested
in previous months, the deadline is at least 30 days prior to
withdrawing the excise tax stamps. Aforementioned request
submitted by producers and importers comprise the data on
quantity of excise tax stamps, technical elements for its development, letter mark, serial number and type.
Along with the request for the issuance of excise tax
stamp, producers and importers are submitting following
documents:
- Extract from the Central registry of the Commercial
Court,
- Extract that importer or producer is registered with the
Registry on types of tobacco products of the Tobacco Agency,
- Extract from the Registry of excise taxpayers of the Tax
Administration (for producers).
Producers, or importers of tobacco products and alcohol
beverages are withdrawing excise tax stamps within 10 days
after the Tax Administration issues the information that the
excise tax stamps are printed out. They are obliged to submit
the payment guarantee (banking guarantee payable on first
call), in the amount of calculated excise tax.
Jovica Petričević
Apart from aforementioned, the Decree sets forth the
obligation for producers, or importers of tobacco products
and alcohol beverages to return damaged, or unused excise
tax stamps to the Tax Administration within 15 days following
the expiry of three month. Moreover, damaged or completely ruined or unused excise tax stamps are destroyed by the
Commission established by the Ministry of finance.
Ms. Ružica Bajčeta,
Independent Advisor II,
Sector for Tax and Customs System
Mr. Jovica Petričević,
Independent Advisor I,
55
International Cooperation
International Cooperation of the
Finance Ministry - International
Financial Institutions Meetings
Annual Assembly of the EBRD Board of Governors
The European Bank for Reconstruction and Development
(EBRD) was founded in 1991, with the objective of accelerating
and strengthening market reform and transition process in
Central and Eastern European Countries, creating conditions
for efficient functioning of open market economies. The
Bank is owned by governments of 60 countries and two
intergovernmental organizations. The EBRD, with its capital
is the largest single investor in the region.
The bank is using its close cooperation with the regional
governments, in order of creating more effective and efficient
business environment. The operational rule of EBRD is coo
peration only with countries which are committed to demo
cratic principles.
Among other things, the EBRD is providing financing
of projects in the banking and commercial area, through
financing new initiatives, as well as financing of existing
companies. Moreover, the Bank financially supports privatiza
tion and restructuring process of state-owned enterprises and
projects aimed at improving services at municipal level. As
such, the Bank has extreme influence in Central and Eastern
European countries.
Eighteenth EBRD’s Annual Assembly, with the particip
ation of high representatives of government, states, leading
financial corporations, entrepreneurs of small, medium-sized
and large companies of the region, as well as civil society
representatives, took place on 15 – 16 May 2009, in London.
The EBRD Annual Assembly was attended by the delegation
of the Ministry of finance, led by the Deputy Prime Minister
and Finance Minister Mr. Igor Lukšić, PhD.
Current financial and economic situation in the world
56
was the main topic on the Agenda. Apart from its impacts to
economies of the countries, financial crises also negatively
affected the operations of international financial institutions,
as well as the EBRD, which for the first time in last 10 years
suffered loss in the amount of 620 million Euros. However,
all attendees of the Assembly have expressed their general
satisfaction with the measures undertaken by the EBRD
aimed at mitigating the consequences of the world economic
crises and estimated that aforementioned measures, adopted
in December 2008, were prompt and efficient. Moreover, the
meeting was the opportunity to emphasize the successful
cooperation of financial institutions with the objective of
overcoming financial crises, as well as the readiness to
extend the operations of the Bank, if necessary.
At the same time, Governors expressed their opinion on
the current economic crises and have presented measures
adopted by governments, as well as proposal of measures
that EBRD might consider with the objective of mitigating
the consequences of the crises. Apart from attending regular
sessions, the delegation of the Ministry of finance had several
bilateral meetings with the representatives of international
financial institutions: Credit Suisse, Moodys, European Inve
stemnt Bank (EIB), Japanees International Cooperation Age
ncy (JICA), as well as with the EBRD high representatives, Mr.
Tomas Mirow.
The aforementioned representatives expressed satis
faction with the results achieved by Montenegrin economy
in the previous period. Moreover, they were interested in the
current situation, with regard to the most important economy
issues, as well as with regard to our projections of main
economic indicators in Montenegro. It was jointly concluded,
that as in the most countries, the impact of economic crises
had slower the finalization of the transition process. With
the objective of easier overcoming of created situation and
finalization of the transition process, Montenegro is under
taking all necessary measures related to restructuring and
modernization of state-owned enterprises, further develo
pment of infrastructure, as well as the establishment of mo
dern governance standards.
During the meeting were discussed future capital proje
cts, as well as planned budget rebalance of Montenegro. As
one of the prerequisite for the future development are inve
stments in the tourism sector and energy, while as most
important project is the construction of the highway Bar –
Boljare, construction of the Power Plant on the river Moraca,
as well as restructuring of some companies, such as Alu
minum Plant Podgorica and Steelworks Niksic.
Dragan Darmanović
Financial institutions had shown their readiness for
continuation of cooperation and inclusion in realization of
aforementioned capital projects, which would be very impo
rtant for successful realization.
Following Annual Assembly of the EBRD Board of Gove
rnors, cooperation with aforementioned financial institutions
continued, with the objective of concreting aforementioned
projects. As a result of successful negotiations in London,
with the objective of realizing credit funds earmarked for the
small and medium-sized enterprises, the Ministry of finance
have signed on 2nd July 2009, the Guarantee Contract with
the EIB, worth 91 million €. It is expected, that commercial
banks in Montenegro will soon sign the Guarantee Contracts
with the EIB for one part of the credit. Aforementioned funds,
along with provided funds in cooperation with the German
Development Bank (KfW) in the amount of 50 million Euros,
will represent a significant support not only for the projects
aimed for small and medium-sized enterprises in Montenegro,
but for the overall economy, due to positive effects of the
inflow of cash in domestic cash flows.
Netherlands Constituency Meetings
Netherlands Constituency Meeting is organized eve
ry year in some of the member country. The purpose of
the meeting is to discuss issues that are important for
economies of member countries. Aforementioned meeting,
also represents a chance for ministries of finance and
governors of central banks being members of Constituency,
to exchange opinions on current economic issues, on which
the Constituency should form joint opinion on meetings of
executive directors of International Monetary Fund (MMF)
and the World Bank. The number of votes of each member
state depends on the amount of its the quote. The quote of
Montenegro in the IMF amounts to 27,5 million of Special
Drawing Rights (SDR), or 0,02% share in total capital of the
Fund. The World Bank is organized in a manner that the
member countries represent shareholders. The number of
shares, or country’s share is based on the size of its eco
nomy.
Marko Vukašević
The Constituency gathers countries cooperating with
the IMF and the World Bank. The member countries of
Netherlands Constituency are as follows: Netherlands,
Bosnia and Herzegovina, Cyprus, Georgia, Moldova, Ma
cedonia, Rumania, Ukraine, Armenia, Bulgaria, Israel,
Croatia and Montenegro being the youngest member of
Constituency.
Netherlands constituency, has well established dia
logue between its thirteen member countries, provid
ing adequate representation and protection of interests
of each country individually. Netherlands is committed
to intensifying dialogue between the member countries,
providing significant technical support on all levels of public
administration, covering different areas that are important
for member countries.
This year’s Constituency was organized in Bečići, in
the period 14 – 16 June. The meeting was organized in coo
peration of the Ministry of finance and the Central Bank of
Montenegro (CBCG).
The President of the Government of Montenegro,
Mr. Milo Đukanović and the Deputy Prime Minister and
the Finance Minister, Mr. Igor Lukšić welcomed the par
ticipants.
57
The meeting represented the opportunity to express
opinions on the current global economic crises and its
impact on the world economy. Moreover, the crises effects
to individual states were presented, as well as the measures
undertaken by the governments and central banks with the
objective of overcoming the crises. High representatives of
the World Bank and the IMF had several presentations which
raised the interest of representatives of the Netherlands
Constituency.
Apart from regular sessions, delegation of member cou
ntries of the Netherlands Constituency had the opportunity to
participate to bilateral meetings with the representatives of
Netherlands Constituency as well as with the representatives
of the World Bank and the IMF.
Montenegrin delegation, composed by highest repre
sentatives of the Ministry of finance and the Central Bank
of Montenegro, held several bilateral meetings. The Finance
Minister, Mr Igor Lukšić, PhD, with his assistants and
representatives of the Central Bank of Montenegro, met with
Mr. Age Bakker, the IMF executive director and Mr. Rudolf
Trefers, the World Bank executive director and Netherlands
Finance Minister, Mr. Nut Velink. Apart from aforementioned
meetings, Minister Lukšić held meetings with the Minister
of Finance of Georgia, Mr, Kahom Baindurašvili and with
Ukrainian Deputy Finance Minister, Mr. Andrija Kravec.
Meetings were the opportunity to discuss current world
economic crises and measures which the Government of
Montenegro implemented in cooperation with the Central
Bank of Montenegro, with the objective of overcoming the
58
negative effects of the crises. Moreover, Montenegrin repre
sentatives presented projects planned in the following period,
which are of great importance for the continuation of the
progress of Montenegrin economy. Participants expressed
their satisfaction with achieved results in the transition pro
cess and inclusion in international economic flows and ex
pressed hope that by joint forces will be designed a model for
overcoming the current situation in the world economy.
Moreover, apart from official part of the meeting, guest
were provided with a good entertainment programme related
to the visit to cultural heritage and with beauties of Mont
enegrin coast.
Joint assessment of participant was that Montenegro,
although being the youngest member of Constituency, was
an excellent host of this very important event, and that it
should organize future events - congress.
Mr. Dragan Darmanović,
International Cooperation Division Head
Mr. Marko Vukašević,
Advisor in the International Cooperation Division
Elections for the
European Parliament
From 4 to 7 June 2009, the seventh elections for the
European Parliament (hereinafter referred to as: the EP)
were held simultaneously in 27 member states of the European Union (hereinafter referred to as: the EU). The results of
multi-party elections (see Table 1), which were described in
the media as the victory of the center-right, are characterized
by the triumph of the European People’s Party (it was supported by around 2/5 of the voters) over its major political
opponent, the Party of European Socialists.
It is interesting to note that in time of the global economic crisis, increasing unemployment, uncertainty over the
future of the Lisbon Treaty, the turnout of 43.01% in the elections for the European Parliament was the minimum or modest one. Although, generally speaking, political parties and
voters’ turnout show a drop (except for the Greens that show
the increase of 2%), much greater surprise for political elites
around Europe represents a sudden growth of right-oriented
parties (majority of 36% of members) and bad results of socio-democratic parties («La stampa»).
Ana Ivanović
Table 1.1
Election Results: Towards the New European
Parliament (Composition of the EP- the
total number of MEPs is 736)
55
30
28
35
265
Nina Vukotić
184
55
84
European People’s Party
Group of the Progressive Alliance of Socialists and Democrats of Europe
Group of the Greens/European Free Alliance
Party of European Socialists
Confederal Group of the European United Left - Nordic Green Left
European Conservatives and Reformists Group
Europe of Freedom and Democracy Group
Other parties
The youngest member of the newly elected EP is 25-year
old Emilie Turen from Denmark, whereas the oldest member
is 85-year old Ciriano de Mita (Italy). The share of women in
the new EP is 35.3%, whereas the share of men is 64.6%.
The members who obtained the greatest support are Silvio
Berlusconi (2.7 million votes) and Indrek Tarand (Estonia)
who won 25.8% of votes. Eight former Prime Ministers will
replace their cabinets with MEP bench, among which there is
Alojz Peterle (Slovenia).
Although this is a single directly elected body by the citiz
ens of the EU, which adopts almost 2/3 of the European regulations, approves the budget of 133.8 billion €2, approves
the members of the European Commission and the European
Central Bank, and controls the executive power, it seems that
even the voters do not recognize its impact on everyday life of
a European family, starting from the climate changes to mobile telephony tariffs – or maybe the results reflect the apathy
at the national level, regardless of the left or right wing.
59
From the first Parliamentary elections held in 1979,
when the EP reflected the initial enthusiasm as far as the
voters’ turnout is concerned (the record high 61.99%), each
following elections mark a drop in the public’s interest (see
Table 2). However, regardless of the past events, the European founders are moving into opposite direction. With each
new contract, i.e. with each new change of the foundation
agreements, the power of the EP is continuously growing,
Thus, from the initial, more consulting role, which should
have served as introduction and weighting out of cohesion
forces of the future EU, today if a certain legal document
needs to be adopted by the European Community (such a
situation applies to majority of policies of the first pillar of
the EU – author’s comment), it must be adopted in identical text by the EP and the Council of the European Union.
The aforementioned procedure known as “co-deciding” actually represents the right of veto by the Parliament, and in the
conditions of its limited legislative competency, the strongest
legal instrument.
Table 23.
Turnout in the Parliamentary elections covering the period
1979 – 2009 (in %)
Historically speaking, the EP had its first session on 10
September 1952. One of the oldest common institutions, it
began as the “Common Assembly” of the European Coal and
Steel Community (ECSC). It was a consultative assembly of
78 parliamentarians drawn from the national parliaments
of member states, having no legislative powers. Its development since its foundation is testament to the evolution of the
Union’s structures without one clear “master plan”. The European Economic Community and Euratom were established
in 1958 by the Treaties of Rome. The Common Assembly was
shared by all three communities (which had separate executives), and it renamed itself the “European Parliamentary
Assembly”. The three communities merged in 1967 in accordance with the Merger Treaty, and the body was renamed
to the current “European Parliament” in 1962.
The Parliament consists of 785 members of the European Parliament, who serve the second largest democratic
electorate in the world (after Indis) and the largest transnational democratic electorate in the history, with 342 mil-
lion eligible voters in 2009. The Parliament has been directly
elected every five years by universal suffrage since 1979, in
accordance with the national regulations on elections. Elections for the European Parliament are held in each member
state separately, irrespective of national or local elections
(although they are sometimes organized at the same time).
The Parliament consists of representatives of several large
European political groups, as well as of the most important
political parties of the member states. Each member state
elects a number of members determined in advance, which
is established in accordance with the number of citizens. The
total number of members of the European Parliament should
be 732; however, from 1 January 2007, there are 785 members, which is the consequence of the accession of Romania
and Bulgaria, since the allocation of the number of members
per member state does not take into account the states that
have accessed the EU between the two elections. In accordance with the applicable regulations, the number should be
reduced to 732 after the elections, but the compromise was
made and the number will be 736.
The Parliament and Council are essentially two chambers in the bicameral legislative branch of the European
Union, with legislative power being officially distributed
equally between both chambers. However there are some
differences from national legislatures; for example, neither
the Parliament nor the Council have the power of legislative
initiative (except for the fact that the Council has the power
in some intergovernmental matters). In Community matters,
this is a power uniquely reserved for the European Commission (the executive). Meaning that while Parliament can
amend and reject legislation, to make a proposal for legislation, it needs the Commission to draft a bill before anything
can become law. The Parliament does have the right to ask
the Commission to draft such legislation4.
It is useful to note a few facts regarding the importance
and scope of the European parliamentary power. The Parliament, with its headquarters in Strasbourg, sessions in Brussels, and the Secretariat in Luxemburg, has the budget of
1.53 billion euro, and it costs, on the average, three euro
per citizen of the European Union. An MEP has a salary of
almost €6.000, and he/she receives €4.000 each month
in the name of costs. In the European Parliament, one can
speak and write in EU’s 23 official languages, and almost
1/3 of employees are working on translations.
The conclusion is a logical one: today, at the time of holding the elections, we have the institution with de iure greatest
power since it has been constituted, and with de facto the
weakest support of those who are giving it the legal power.
Ana Ivanović, Independent Advisor
Nina Vukotić, Advisor
1 - Preliminary results, until the inaugural session on 14 July 2009, are taken from the EU official site: http://www.elections2009-results.eu/en/new_parliament_en.html
2 - Amount for 2009
3 - Preliminary results, until the inaugural session on 14 July 2009, are taken from the EU official site: http://www.elections2009-results.eu/en/turnout_en.html
4 - Data taken from the following site: http://sh.wikipedia.org/wiki/Evropski_parlament
60
TRIM MNE FINAL CONFERENCE ROUND TABLE WITHIN THE COMPONENT: State Aid
„State Aid - New Challenges
or Obstacles for Montenegro
and Entrepreneurs”
The round table panelists were as follows: Mr. Dace Ber
kolde, TRIM, short term expert (STE) and Assistant Minister
of Finance of Latvia, Ms. Daiga Lagzdina, TRIM STE and the
Head of the State Aid department in the Ministry of Finance
of Latvia, Ms. Sonja Bećović, Assistant Minister of Finance
of Montenegro and Mr. Darko Konjević, MBA representative
(Montenegro Business Alliance).
Within the issue of accepting the EU discipline in the
field of state aid in the next couple of years, represent very
challenging task for Montenegro. Possibilities and con
sequences of the state, being one of the instruments for
economic development of Montenegro, were discussed, as
well as whether the country is adequately supporting com
panies representing support priority and which are most
used state aid instruments.
Challenges in introducing and applying the state aid
system in Montenegro originate from the fact that the state
aid represent a complex issue and a novelty in regulating the
state aid in general.
The EU requirements to Montenegro, and general requirements relating to the state aid area are as follows: full
application of the rules regulating the state aid area, establishment of independent body, granting or restricting the
state aid programme and individual state aid funds, provision of return of any illegally distributed state aid, provision
of transparency in the state aid area (generation of annual
reports), development of comprehensive list of all state aid
programmes.
In the light of the above, with the objective of implementing the Stabilization and Association Act (SAA), Montenegro
fulfilled following obligations: the Law on control of the state
assistance and aid was passed (“Official Gazette of the Republic of Montenegro “, No. 26/07); subordinate legislations
were passed: the Decree on more detailed criteria, purpose
and requirements for the provision of the state assistance
Sonja Bećović
Šefika Kurtagić
and aid (“Official Gazette of Montenegro “, No. 13/08), the
Decree on the manner and procedure for submitting and the
content of necessary documentation for ex-ante and ex-post
control of the state assistance and aid (“Official Gazette of
Montenegro “, No. 13/08), the Rulebook on the content of
the annual report on control of the state assistance and aid.
61
On the basis of the aforementioned Law on control of
the state assistance and aid, and on the basis of the Decision of the Government from 8th November 2007, the Commission for the control of the state assistance and aid was
established, composed from seven members. The tasks of
the Commission are focuses on control of distribution and
issue, granting, monitoring and return of the state assistance
and aid.
In accordance with legal obligations, the Division for the
preparation of the state aid prepared Annual Report on control of the state assistance and aid in Montenegro for 2007.
The Report was done on the basis of data submitted by the
state aid provider, and in accordance with the methodology
prescribed by the European Commission in the reporting
area of the state aid, first report of that type in Montenegro.
Moreover, the Division prepared the list of the state aid,
so called Inventory.
The objective of the state aid is the support to the strategy of the Government of Montenegro focused on increase of
the commercial growth, implementation of the structural reforms and better public finance governance, especially in the
part covering expenditures. The state aid structure, on the
basis of the Annual Report for 2007, has positive trend – increase in share of horizontal state aid in the overall allocated
state aid. Since this category of the state aid is minimally
producing malfunctioning the market competition, generating multiple effects, in the next period (from 2008 to 2009)
62
are intensified investments in the development of small and
medium-sized enterprises, which final effect is the increase
in employment and introduction of new technologies. In the
transition countries, the practice had shown the direct link
between activities of the small and medium – sized enterprises being the most dynamic element of the economy itself
and productivity growth.
Moreover, active measures in the employment policy
have created the possibility for new employment, education
and training.
Basic indicator of achieved higher degree of development will be foreseen in allocation of public funds in the
following areas: research and development, environmental
protection progamme, energy saving and increase in use of
alternative and renewable energy sources.
State aid instruments, the most used in the previous
analytic comparison period in 2007, are as follows:
A2 – tax relief and social benefits, than A1 – subsidies,
donations, debt writing-off and increased amounts in compulsory compositions; C1 – lending under more favorable
conditions and lending to companies in difficulties; B1 –
state and financial transfers in the form of share in capital;
C2 – other measures (reservations, general or accelerated
amortization, etc.); and D- guarantees.
According to available data from Annual Report for
2008, the biggest proportion is in the following instruments:
A1 – subsidies, interests, donations, debt writing - off and
decreased amounts in compulsory composition procedures
and C1 – lending under more favorable conditions and lending to companies in difficulties.
As to the instruments in use, although state subsidies
are more attractive for entrepreneurs, the practice had
shown that the more efficient are favorable lending or guarantees, because the state is engaging less funds to several
companies.
One of the problems with which the Division and the
Commission faced with in work and implementation of
regulations is inadequate or incomplete information on all
procedural measures for the use of state assistance.
In that light, the EU experts organized a series of seminars aimed at full education of public administration bodies,
companies, public services and judiciary bodies.
Second problem with which the Commission for the control of state assistance and aid and the Division for the preparation of the state aid face with cooperating with the public
administration is the insufficient time for the processing of
notification of the state assistance and aid and its completion in the sense of legal grounds and all necessary elements
of the state aid programmes such as justified expenses, intensity, accumulation, etc.
What is the meaning of the state aid and which instru
ments may be used in granting the state aid, what is the
difference between general measures as such and state
aid measures; as well as the difference between the state
aid policy and the state aid control policy?
“Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form
whatsoever which distorts or threatens to distort competition
by favoring certain undertakings or the production of certain
goods shall, in so far as it affects trade between Member
States, be incompatible with the common market”. (Article
87, of the Treaty Establishing the European Community).
In order for a measure to be classified as the state aid,
it should correspond with the criteria that should be fulfilled
at the same time:
• The measure should be financed from state funds
and granted or directly by the state or indirectly by a body
authorized by the state;
• Measure should represent the economic advantage
which certain company would not obtain under normal operational conditions;
• The measure should be “selective”, i.e. relates only to
certain companies, or certain commercial sectors or parts of
the territory of some member state;
• The aid must have the effect of jeopardizing market
competition and operations within the European economic
area.
The simplest way is to explain the essence of the state
aid is to divide general from special measures. In case of
general measures the subject is not the state aid and special
limitations: the money may be granted without any limitations, provided that the state has allocated funds. However, if
the state opts to support certain industry, region or a company, than this measure must be harmonized with the special
rules prior to granting any funds.
At the same time, it should be emphasized that the state
is not to obliged to provide any kind of funding. Off course,
the state may opt for it creating the state aid policy, only if the
state provided adequate funds to meet this objective.
There are two different things – state aid policy and
state aid control. This means that line ministries are deciding
what is the area and which projects will be supported, which
sectors have priority, whereas the Commission for the control
of state aid is establishing the framework in which the public
grants may be granted. In creating the policy that would foster economic development of the country, companies should
cooperate with public institutions and with business associations.
State aid positive effects are multiple, starting from the
effect in the creation of economic policy with the objective of
attracting foreign investments, rational budget planning and
implementing appropriate regional development policy.
Montenegrin tax policy is very stimulative and designed
in accordance with the SAA rules, and may be very attractive
to investors in a sense that tax relief are considered investments. Comprehensive tax reforms in Montenegro are making this area one of the main trumps in creating more favorable framework for dynamic growth of our economy.
Apart from economy and investors, citizens are hav
ing benefits from the state aid.
There is a great number of good examples where citizens have benefits from the state aid. One of the example
is in the case of the supports to the bank. This is an important segment of aid, especially in last months. By supporting banks, the benefit is distributed, also to the citizens by
securing deposits held with the banks. Moreover, benefit is
provided to the citizens having loans with the banks – by providing additional guarantees to the banks, the state is imposing additional requirements to the banks – that they cannot
change loan requirements, e.g. increase in interest rate.
Montenegro is adequately implementing the state – aid
control system, being in compliance with the international
rules regulating this area. Achievements of Montenegro in
this field, have significant positive effects to the European
integration process of Montenegro.
Ms. Sonja Bećović,
Advisor of the Minister
Ms. Šefika Kurtagić,
Senior Advisor III
63
Payment of Converted Foreign
Exchange Savings Bonds
The Law on settling obligations and claims regarding the
foreign debt and citizens’ foreign exchange savings and the Law
on payment of foreign exchange currency savings deposited
with authorized banks headquartered outside Montenegro, prescribes the payment of converted foreign exchange savings starting from 1st July 2009.
The Law on settling obligations and claims regarding the
foreign debt and citizens’ foreign exchange savings, sets forth
the conditions, manner and deadlines in the payment of foreign
exchange currency savings with authorized banks on the territory of Montenegro (regardless the residence of the owner of savings), and the payment is made from 1st July 2004 to 2017.
In 2009, is planned to make the payment for 66 thousand
owners of converted foreign exchange savings bonds, who are entitled to payment. The payment will be made through commercial
banks and the Central Bank of Montenegro – regional centers.
Moreover, owners who failed to withdraw the first installment and
do not have the certificate of concerted foreign exchange currency savings in bonds, need to address to the Bank in which
they held deposits (Banks in Podgorica - Societe General Group
– for former holders of deposits of Podgorička Banka, Atlasmont
Banka – for former owners of deposits of Beranska Banka and
Pljevaljska Banka and Prva Banka Montenegro – former owners
of deposits of Nikšićka banka).
Up to now, the amount of bonds that was paid and boughtout is 48,5 million €, and the amount of debt is 137,2 million €.
The Law on payment of foreign exchange savings deposited
with authorized banks headquartered outside Montenegro, prescribes conditions, manner and deadlines in payment of foreign
exchange savings deposited with authorized banks headquarter
outside Montenegro. The payment is made from 1 July 2007,
through commercial branch units of Crnogorska komercijalna
Bank. However, certain number of citizens – owners of foreign exchange currency savings outside Montenegro had failed to exercise their right to payment of the foreign exchange savings in prescribed deadline (up to 6th January 2008), and they addressed to
the Ministry of finance. Bearing in mind aforementioned reasons,
the Government of Montenegro on the basis of amendments to
the Law on payment of foreign exchange currency savings deposited with authorized banks headquartered outside Montenegro
(“Official Gazette of Montenegro”, No. 20/09), have created the
legal framework and extended the deadline for the payment of
foreign exchange currency savings up to 30th May 2009.
The amendments to the Law provided the citizens to submit
the request who do not have the final judgment on inheritance
of foreign exchange currency savings by submitting the evidence
on initiating legacy procedure before the competent court. We
are emphasizing, that the payment of foreign exchange currency
savings to this citizens will be made following the submission of
the final judgment on inheritance.
64
Marina Popović
Therefore, in the period from 20th March to 30th May 2009,
Crnogorska komercijalna Banka received 524 payment requests
and paid first installment (380,00€) in total amount of 171,5 thousand € and second installment (530,00€) in the total amount of
188,7 thousand €, which is in total 360,2 thousand €.
Up to now, the amount of paid and bought – out bonds is
3,8 million €, and the amount of debt is 34,1 million €.
Distribution of funds for the payment and redemption of foreign exchange savings bonds of citizens is done on the basis of
the Budget of Montenegro for 2009, in the amount of 20,1million
€, for the following:
- payment of sixth installment deposited with authorized
banks on the territory of Montenegro - 7,5million €;
- for the payment of third installment deposited with authorized banks headquartered outside Montenegro - 2,6 million €
- for redemption of foreign exchange currency savings bo
nds - 10,0 mil. €.
Moreover, the bonds may be used prior to maturity date for
the purchase of shares of state owned companies and companies owned by the Funds which are in privatization process, purchase of apartments, residential premises, business premised,
land or other property in state ownership for which Montenegro
determined that may be purchased with the bonds that are not
within maturity, payment of tax liabilities which maturity date is
in a year in which tax liabilities are due and may be sold on the
stock exchange through authorized persons on the securities
market (brokers).
Ms. Marina Popović,
Issuing, Withdrawing or
Suspension of Accreditation for
Decentralized Management of
the European Union Funds
1. Accrediting
Definitions of accreditation and conferral of management powers over the European Union funds, are defined
by legislative framework for application of the pre-accession assistant instruments (IPA), such as: IPA Implementing
Regulation (hereinafter referred to as: “IPA IR“), as well as
Framework Agreement1, signed by every beneficiary country
with the European Community Commission. In this way, the
Framework Agreement becomes binding document for all
signing countries and accepts prescribed criteria for accrediting by the European Commission (hereinafter referred to as:
“Commission “).
Article 11, IPA IR – General Requirements – subsection 1, define that the Commission is making sure that the
country concerned meets the conditions referred to in Article
56(2) of Regulation (EC, Euratom) No 1605/2002 (hereinafter referred to as: the “Financial Regulation”), in particular as
regards the management and control systems established,
and that the accreditations. Article 56, of the Financial Regulation sets forth that the audit, accounting and procurement
systems of beneficiary country is equivalent to the rules established in the European Union countries, i.e. in accordance
with the rules and legislation of the European Community,
as well with due account for internationally accepted standards.2 Apart from aforementioned requirements, it is necessary to have accreditations in force of the National Fund, the
NAO and operational structures. In that manner, in compliance with defined requirements, management and control
systems established within beneficiary country are providing
efficient controls in the following areas: where the control is
carried out (as to establishment of organization and its management), risk planning and management, control activities,
monitoring and communication.
IPA IR Regulation sets forth that where specific persons
have been given responsibility for an activity in relation to the
management, implementation and control of programmes,
Nataša Kovačević
the beneficiary country shall enable such persons to exercise
the duties associated with that responsibility, including in
cases where there is no hierarchical link between them and
the bodies participating in that activity. The beneficiary country is in particular providing those persons with the authority
to establish, through formal working arrangements between
them and the bodies concerned:
(a) an appropriate system for the exchange of information, including the power to require information and a right of
access to documents and staff on the spot if necessary;
(b) the standards to be met;
(c) the procedures to be followed.
The Competent Accrediting Officer (or Competent Authorizing Officer as being defined in Montenegro - CAO3), is
responsible for the accreditation of the National authorizing
officer (NAO)4, both as the head of the National Fund, since
the NAO is managing this unit. Prior to accrediting the NAO,
the CAO is making sure that the applicable requirements set
out in Article 56(2) of the Financial Regulation are fulfilled, as
65
well as criteria set forth in the Annex IPA IR (Accrediting Criteria). Aforementioned must be supported by an audit opinion drawn up by an external auditor functionally independent
from all actors in the management and control systems. The
audit opinion is based on examinations conducted according
to internationally accepted auditing.
The CAO is informing the Commission of the accreditation of the NAO, not later than the notification of the accreditation of the first operating structure. Moreover, the
NAO is obliged to provide all relevant supporting information
required by the Commission. The CAO immediately informs
the Commission of any changes concerning the NAO or the
National Fund, where a change affects the NAO or the National Fund in relation to financial management, therefore
accreditation validity. Where such a change is significant, the
CAO shall also notify the Commission of his decision concerning the accreditation.
Regardless the IPA component, the NAO is responsible
for the accreditation of the operating structure. Prior to accrediting an operating structure, the NAO is making sure that
the requirements set out in Article 11, of the IPA IR, are fulfilled by the operating structure Concerned, being identical
situation as in accrediting the NAO and the National Fund.
This means that the NAO must assure that all requirements
prescribed by the article 56(2) of aforementioned Financial
Regulation, as well as all criteria set forth in the Annex. Both
in case of accrediting operating structures as in the case of
accrediting the National Fund and the NAO, the assurance
has to be supported by an audit opinion drawn up by an external auditor functionally independent from all actors in the
management and control systems. Moreover, the audit opinion shall be based on examinations conducted according to
internationally accepted auditing standards.
It is necessary to emphasize that the NAO is the person
who should inform the Commission of the accreditation of
operating structures, as well as to provide all relevant supporting information required by the Commission, including a
description of the management and control systems.
It is necessary to make the difference between the Na-
tional Accreditation, when key players in accrediting process,
i.e. the CAO and the NAO are assured that upon appointed
bodies, designed procedures and established control and
management system, there is a justified ground by national authorities to submit the application for the next phase,
which is conferral of management powers5 by the Commission, representing accrediting by the Commission.
Thus, prior to conferral of management powers, the
Commission is reviewing accreditations for the NAO, the National Fund and Operating structures (CAO is submitting the
application to the Commission for decentralized management
for the National fund, while NAO is submitting for relevant
operating structures). At the same time, the Commission is
reviewing procedures and structures of all relevant bodies
or institutions in the beneficiary country, which may include
on – spot –verifications by its services or subcontracted to
an audit firm.
It may be the case that the Commission sets further
conditions, with a view to ensuring that the requirements referred to in Article 11, of the IPA IR are met. These further
conditions must be fulfilled within a fixed period determined
by the Commission for the conferral of management powers
to remain effective. The Commission Decision on the conferral of management powers should contain the list of the
ex-ante controls, if any, to be performed by the Commission
on the tendering of contracts, launch of calls for proposals
and the award of contracts and grants. This list may vary with
the component or the programme. The ex ante controls shall
apply, depending on the component or programme, until the
Commission allows for decentralized management without
ex ante controls, so called EDIS, i.e. expanded DIS. Moreover,
the Commission may define the suspension or withdrawal of
the conferral of management powers in relation to specific
bodies or authorities.
2. Withdrawal or suspension of the accreditation
Regardless the Commission Decision on the conferral
of management powers, CAO is responsible for monitoring
the continuing fulfillment of all the requirements for accreditation to be maintained and shall inform the Commission
1 - Framework Agreement between the Government of Montenegro and the European Community Commission, on rules for cooperation related to the financial assistance of the
European Community to Montenegro within implementing IPA (“Official Gazette of Montenegro, No. 01/08 – International Treates) and the Regulation of the Commission (EC), No.
718/2007 as of 12th June 2007, implementing Framework Regulation IPA- IPA IR – Chapter II – Management and control systems, Articles 11-17. -Commission Regulation (EC) No
718/2007 of 12 June 2007 implementing Council Regulation (EC) No 1085/2006 establishing an instrument for pre-accession assistance (IPA)
2 - See Article 56(2) (EC,EURATOM) -Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European
Communities
3 - CAO – Mr. Igor Luksic, PhD, Finance Minister is the Competent Authorizing Officer.
4 - NAO – Mr. Dušan Perović, Assistant Minister for Treasury Operations, is the National Authorizing Officer.
5 - Conferral of management represents the last phase in so called DIS Road Map, or the first step in independent management of the EU funds, when the European Commission is
passing the Decision on decentralized system.
6 - See Article 50, IPA IR: 1. The NAO, who bears in the first instance the responsibility for investigating irregularities, shall make the financial adjustments where irregularities or negligence are detected in operations or operational programmes, by cancelling all or part of the Community contribution to the operations or the operational programmes concerned. The
national authorising officer shall take into account the nature and gravity of the irregularities and the financial loss to the Community contribution. In case of an irregularity, the national
authorising officer shall recover the Community contribution paid to the beneficiary in accordance with national recovery procedures.
66
of any significant change related thereto. If any of the applicable requirements set out in Article 11 are not, or are
no longer, fulfilled, the CAO is obliged to either suspend or
withdraw the accreditation of the NAO, and immediately inform the Commission of his decision and of the reasons
for his decision. This assurance is to be supported by an
audit opinion. During the period when the accreditation is not in force, all the euro accounts or the euro
accounts for the components concerned shall be
blocked, because the accreditation refers to the
work of the National Fund or NAO.
With regard to accrediting operating structures, after the conferral of management powers
by the Commission, the NAO is responsible for
monitoring the continuing fulfillment of all the requirements for this accreditation to be maintained
and is informing the Commission and the CAO of
any significant change related thereto. If any of the
requirements set out in Article 11, IPA IR are not, or
are no longer, fulfilled, the NAO will either suspend or
withdraw the accreditation of the operating structure concerned, and immediately inform the Commission and the CAP
of his decision and of the reasons for his decision. Before restoring the accreditation to operating structure, the NAO will
assure himself that those requirements are again fulfilled.
This assurance is supported by an audit opinion. Where the
accreditation of an operating structure is withdrawn or suspended by the NAO, the Commission is not making transfers
to the beneficiary country of funds relating to programmes
or operations implemented by the operating structure concerned while its accreditation is suspended or withdrawn.
If the beneficiary country of funds failed to comply with the
requirements and conditions related to the conferral of management powers, the Commission may make financial corrections, which means that in accordance with the Articles
49-56, IPA IR, the beneficiary country of funds is obliged to
return the funds to the European Community.6
No new legal commitments made by the operating
structure concerned shall be considered eligible during the
period when the accreditation is not in force. The NAO shall
be responsible for taking any appropriate safeguard measures regarding payments made or contracts signed by the
operating structure concerned.
of the requirements mentioned in Article 11, IPA IR are not,
or no longer, fulfilled. The Commission shall cease to make
transfers of funds to the beneficiary country. In case of misuse, the Commission may make financial corrections, which
means that in accordance with the Articles 49-56 of the IPA
IR, the beneficiary country is obliged to return funds to the
European Community. The Commission may lay down other
consequences of such a suspension or withdrawal in a specific Commission Decision.
3. Withdrawal or suspension of conferral of manage
ment powers
Irrespective of the decision by the CAO to maintain,
suspend or withdraw the accreditation of the NAO, or of the
decision by the NAO officer to maintain, suspend or withdraw the accreditation of the operating structure, the Commission is continuously monitoring issued accreditation and
therefore may withdraw or suspend the conferral of management powers at any time, in particular in the event that any
Ms. Nataša Kovačević,
Assistant Minister,
CFCU
67
Return of Pension
and Disability
Insurance Contributions
The Law on compulsory social insurance contributio
ns sets forth the obligation of payment of compulsory social
insurance contributions (“Official Gazette of Montenegro“,
No.13/07 and 79/08), which entered into force on 1st
January 2008.
The adoption of aforementioned Law on compulsory
social insurance contributions establishes unified financing
system of compulsory social insurance in Montenegro.
Apar t from aforementioned, the Law unified all three types
of contributions (pension and disability insurance, health
insurance and unemployment insurance) and aligned basic
68
solutions related to the obligors, basis and deadlines in pay
ment of insurance.
The obligors of compulsory social insurance contribu
tions are the insurers (employees and self-employed per
sons), employers (legal entities and entrepreneurs employing
workers) and other persons (farmers, etc.), who are socially
insured in accordance with special laws regulating certain
types of compulsory social insurance.
The new Law on contributions regulates the institute of
the highest annual basis for the payment of contributions
for compulsory pension and disability insurance and return
of contributions. The Article 14, of the Law prescribes that
if an insurer is realizing revenues on the basis of several
different grounds (employment, etc.), compulsory pension
and disability insurance is calculated and paid on the basis
of those grounds up to the amount of the highest annual co
ntribution basis. Following the expiry of the calendar year, the
amount of the highest annual basis is aligned with the growth
rate of minimum wage in Montenegro obtained in previous
calendar year in accordance with the data obtained from the
statistical authority (MONSTAT). The Ministry of finance has
the authority to adopt subordinate regulation on alignment of
the highest annual basis.
The highest annual basis for payment of contributions for
the Pension Insurance Fund in 2007 - amounted 20.885,14
€, and in 2008 - amounted 23.976,14 €, in accordance
with the Rulebook on alignment of amounts of the highest
annual basis for the payment of contributions for pension
and disability insurance (“Official Gazette of Montenegro“,
No.15/08).
On the basis of the Rulebook on alignment of amounts of
the highest annual basis for the payment of contributions for
pension and disability insurance for 2009 (“Official Gazette
of Montenegro“, No.9/09) this basis for 2009 amounts
29.370,80 €. Namely, the amount of the highest annual basis
for the payment of contributions for pension and disability
insurance for 2009, compared to the highest basis in 2008,
is higher for 22,5% (representing the increase in average
salary in Montenegro in 2008 compared with 2007).
In accordance with the provisions of the Article 22, of
the aforementioned Law on contributions, the obligor who
paid contributions for pension and disability insurance, or on
whose behalf was paid the contributions on the basis of the
basis for calculation of contributions exceeding the amount
of the highest basis for the calendar year, will be entitled to
return of overpaid contributions.
Tatjana Bošković
contributions and paid contributions on all grounds, or the
report of the payer of personal income and other income
and certificated of authorized tax body (for revenues from
independent activity).
For example, if a physical person in 2008, realized reve
nues on two grounds (employment and membership in the
managing board) and total basis for calculation and pay
ment of contributions for pension and disability insurance
is exceeding the amount of 23.976,14 €, than the person is
entitled to return of exceeded amount of paid pension and
disability insurance contributions.
Competent tax body is deciding on submitted request for
the return of pension and disability insurance contributions
and final decisions are submitted to the applicant and the
payer of personal income and other income, and return of
paid contributions is made within 30 days following the sub
mission of the final decision on return of contributions.
More detailed procedure and the manner of returning
exceeded amount of paid contributions is prescribed by the
Rulebook on the procedure and the manner of returning
exceeded amount of contributions for pension and disability
insurance (“Official Gazette of Montenegro“, No. 38/08 and
27/09), adopted by the Ministry of finance.
Obligor of contributions (physical person) will return
overpaid contributions following the expiry of the calendar year.
The request is submitted to authorized tax authority in Form
„ZPD” (Request for the Return of Contributions) containing
data on the grounds for paid contributions (i.e. employment,
independent activity, contracted feed, membership in board
of directors, managing board, etc.).
Along with the aforementioned request, the obligor must
submit proofs on the amount of the basis for calculation of
MSc. Independent Advisor in the
69
Fuel Consumption Assessment
Based on Collected Excise as
the Economic Activity Indicator
The understanding of real economy trends is the conditio sine qua non concerning decisions on: creating economic environment (Economic policy), selecting appropriate fiscal policy instruments and possible changes in
these areas. One of the occurrence indicators in the real
sector showing the level of economic activity is the mineral oils consumption (fuels)1. It is necessary to emphasize
that the significant advantage of this indicator is that it is
allowing the assessment on the basis of very short period
of time2. The fuel excise tax, represents the convenient
indicator of fuel consumption because of being paid on
quantity providing independence from fluctuation in imported prices, having huge oscillations in last year3. The
analysis is suggesting that though collected excise which
is proportional to the quantity of mineral oil (mineral oils
consumption) we may have one of the leading indicators
of the level of economic activity on the economy of Montenegro. As already known, the transportation represents
an important segment in the economy. because it permeates all industry, whereas the fuel consumption directly
implies. The analysis is not providing the division of consumption into a part related to individual needs and the
part related to the renewal of the different economic activities, although we are aware of the fact that these two
segments of consumption imply different elasticity.4
By applying inverse method we are obtaining the data
on quantity of fuels on which the excise is collected, i.e.
data on consumption through the following:
In order to calculate fuel consumption5 by types, we
took into consideration the following data:
It is commonly accepted that the fuel consumption
1. data on collected excise for certain types of fuels,
such as unleaded fuel 95, diesel fuel D2 and bio – diesel
and leaded fuel 98, for the period 2006-2009. (data on
receipt accounts - Eko code, Treasury);
2. Data on excise amount for certain types of fuel
(Law on excise tax);
3. data on conversion of fuel volume to weight equivalent (Decree on calculating maximum retail price of fuel);
4. “The Regime of deferred payment of excise“ (the
Law on excise tax).
70
Kt =
A p * k l / kg
Al
or
Kl =
Ap
where:
Al
K l = fuel quantity (volume)
K t = fuel quantity (weight)
A p = collected excise
k l / kg = ratio for converting the fuel from liter to kg
A l =Excise per liter
The value of the converter ratio is indicated in the
following Table:
Type of Fuel
kl/kg
Al
Unleaded fuel 95
Diesel D2
Leaded fuel 98
0.772
0.85
0.755
0.364
0.27
0.369
is accounted for in liters, thus K l is fully illustrating the
measured consumption (fuel quantity on which the excise
is collected) applying 45 days, because on the basis of the
deferred payment regime the excise holders are entitled
to deferred payment, i.e. collected excise for this moth relates to consumption in previous 45 days. Due to easier
calculation, 60 days were accounted for as deferred payment. This concretely means that the equivalent to collected excise in the first two months of 2009, represent
the consumption in last two months of 2008, because we
are taking into consideration aforementioned deferred
payment regime.
Since the values in the upper table are constant the results are as follows:
In liters
In kilograms
K l (D2 and Eco-diesel)= Ap * 3,703704
K t = (D2 and Eco-diesel)= Ap * 3,148148
K l (fuel 95) = Ap * 2,747253 (2,785515 )6 K t (fuel 95)= Ap * 2,120879 (2,150148)7
K l ( fuel 98) = Ap * 2,747253
K t (fuel 98)) = Ap * 2,07416
Quantity of fuels on which the excise is collected
30.0
25.0
20.0
15.0
10.0
5.0
0.0
I
II
III
2008
IV
V
VI
2007
VII
VIII
IX
2006
X
XI
2009
XII
Obtained results are given in the graph to the right. The graph indicated the total mineral oils consumption by months
for the period 2006 -2009, as well as on the basis of the fuel types8.
71
1. The mineral oils consumption in 2006, amounted
approximately 176 million liters, and in 2007 the consumption was higher for 18% or for 207 million liters, while
in 2008 was higher for 28% and amounted 265 million
liters. In 2009 was recorded a moderate decline in fuel
consumption (4 %) which corresponds to more moderate
economy activity. Monstat’s data on trends of the transport of goods in the period from January to April 2009 are
in accordance with this conclusion. ( 98.3 )
2. The mineral oils consumption in u 2006 and 2007
has a significant seasonal pattern. The consumption is
highest in summer season, which clearly corresponds
to the peak of tourist and construction season. In 2008,
this monthly pattern is to certain extend jeopardized in
the last quarter which may be explained by the settling of
commercial activity. Moderate decline in consumption is
viable in the first quarter of 2009, and similar trend may
be expected by the end of the year. In this manner was
calculated the fuel consumption for the first quarter of
2009, compared to the same figure in the last year period
it shows the decline of 4 %.
Vladislav Karadžić
Conclusions and proposals
1. Considering the importance of transport in economy, as well as aforementioned fact on availability of data
on collected excise, it can be treated as one of the leading
indicators of the commercial activity level.
2 If we take into consideration the facy yjay the three
values in upper equation are constant (excluding collected excise), it may be concluded that the fuel consumption
– fuel quantity on which the excise is collected – is proportional to collected excise, thus it is easy to calculate possible financial effects of increase or decrease in excise.
3. Considering the nature of collected excise (on qua
ntity) it may be used as one of the instruments of control
in sales of fuel (comparing quantity and collected excise).
Radovan Živković
Mr. Vladislav Karadžić,
Mr. Radovan Živković,
1 - Robert Peston, the BBC’s business editor expressed similar idea in his blog on economic and business topics treating the electricity consumption and a leading indicator of
commercial activity. - http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/06/corus_jobs_and_electricity_usa.html
2 - Data on collected excise are available on a daily basis.
3 - The oil price ranged from 150$ /barrel in July – and 40$/barrel in December 2008, 37 $/barrel in March 2009, 72 $ in June 2009).
4 - Individual consumption is inelastic in the situation of moderate fluctuation of prices, while consumption connected to commercial activity has high elasticity ratio.
5 - We must emphasize that more precise term is the quantity of mineral oils on which the excise is paid, but for this analysis was made on the assumption that these categories
coincide.
6 - From 1st January 2009, the excise on unleaded fuel was reduced from 364 to 359 €/1000 liters.
7 - Same as with 5.
8 - Due to limited space, data on total consumption for certain types of fuels on the basis of years and months had not been indicated.
72
World Bank Project REPARIS
1. Basic Information
Road to Europe: Program of Accounting Reporting and
Institutional Strengthening (The Road to Europe: Program
of Accounting Reform and Institutional Strengthening) –
REPARIS is a regional program aimed at creating a transp
arent policy environment and effective institutional frame
work for corporate reporting within South Central and South
East Europe. Participating countries/entities include Albania,
Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo (UNSCR
1244), the former Yugoslav Republic of Macedonia, Romania,
and Serbia, Montenegro. Moldova, Turkey and Ukraine are
also participating in certain regional activities.
Main objectives of the regional REPARIS are focused on
optimization of economic volume, elimination of double effo
rts and facilitation of exchange of knowledge and experience
between the countries in the Region. Key regional activities
of the REPARIS Program include the following: Academic education – development of the model for
curriculum in the area of accounting and auditing;
IFRS Courses – design of the standard set of courses in
International Financial Reporting Standards (IFRS) focused on
different target groups – including academics, accountants,
auditors, regulators, taxpayers, etc.;
Setting of accounting and auditing standards – develo
pment of patterns for defining accountability, obligations and
73
competency of the body responsible for setting of standards
harmonized with the best international practice;
Strengthening professional auditing bodies – provision of
funds to professional auditing bodies for improving the qu
ality of the audit.
Professional education, experience and testing of knowle
dge – establishing the model in accordance with the require
ments of the 8. EU Directive in the area of commercial law.
Strengthening institutional capacity for implementation of
regulations – provision of authority and mechanisms to the
regulatory and supervisory bodies in the area of the banking
sector, insurance and capital market in implementation and
application of the sound accounting and audition in accor
dance with the acquis communautaire.
Application of coordination application activities – esta
blishment of the platform for coordination of regulatory
and supervisory bodies in the area of the banking system,
insurance and capital marker, as well as the system of public
auditors supervision in each country.
Public supervision – development of patterns for defining
accountability, and competency of the supervisory board
which is in accordance with the acquis communautaire.
Quality assurance – establishment of the international
experts pool that would be providing asvisory services on
proposals for the provision of quality.
Twinning and Secondment – Twinning and secondment
represent the tools for the strengthening and development
of professional and regulatory bodies.
European and international organizations – adoption of
the European and international practice in professional and
regulatory bodies through the transfer of skills and participa
tion in meetings, seminars, workshops, as well as the cour
ses provided by the relevant European and international org
anizations.
Public access to financial information – developing the
model for complying with the requirement 1 of the EU Directive
in the area of commercial law and the EU transparency
Directive.
2. Achieved objectives
• Diagnosis – ROSC assessment for each country –
completed;
• Raising awareness, information and creating the
momentum for reforms – initiated;
• Local action plans – initiated;
• Implementation of local action plans – initiated;
Regional capacity building, technical assistance and
training – initiated.
3. Initial phase in 2009.
4. Implementation phase – from 2010 - 2014.
74
Aleksandra Popović
5. Financing – Austrian development corporation and
the Government of Luxemburg
Participation of Montenegro
Up to present four workshops were organized within REPA
RIS Project attended by the representatives of Montenegro.
The first workshop was organized in March 2009 in
Vienna for senior officials of the Ministry of finance whicih
objective was the launching of the REPARIS program. The
representatives of the Ministry of finance participated in the
work of this workshop.
The second workshop was organized in April 2009 and
it was intended for the educational process in the area of
accounting and auditing and it was organized in Vienna in April
2009. The workshop was attended by the representatives of
the Ministry of finance, Institute of certified accountants and
the Faculty of Economics.
At the end of June 2009, additional two workshops were
organized, out of which the first one was dedicated to the
exchange of experience, finding the solution to the current
problems in the accounting and auditing area, education, while
the second one will be dedicated to education and exchange
of experience between the senior officials of the Ministry of
finance, as well ad to the preparation of ministerial conference
that should take place by the end of October 2009.
Ms. Aleksandra Popović,
Independent Advisor II
Leasing Market in Montenegro Report for First Quarter
of 2009 and Comparative
Analysis of Leasing Market Trends
in the Region
Introduction
In the first quarter of 2009, the leasing market in Montenegro registered decelerating trend of the business activity. In
accordance with the data obtained from the leasing companies, they are indicating the decline in operating volume, primarily due
to the general fall of economic activity. Apart from the data on Montenegrin market, the document is providing data overview on
leasing markets in neighboring countries, with the reference to the leasing market legislative.
Market Participants
At the end of the first quarter of 2009, as it was in the previous one, there are six leasing services providers out of which
four leasing companies with the legal entity status and two banks, which within their area of operation have special departments
dealing with the leasing operations, such as: Hypo Alpe Adria Leasing, S-Lesing, Porsche Leasing, NLB Leasing and Opportunity
Bank and Prva banka Crne Gore established in 1901
Financial and operational leasing services are provided by the following leasing companies: Hypo Alpe Adria leasing, Sleasing, NLB leasing and Porsche leasing, while other leasing providers deal with financial leasing. Three leasing companies are
dealing with the real estate leasing - Hypo Alpe Adria Leasing, NLB leasing and Opportunity Bank, while the remaining three leas
ing companies are dealing with the provision of leasing services of the immovable property.
All leasing companied are directly or indirectly in foreign ownership, with the exception of the Prva banka Crne Gore which
is in dominant domestic ownership.
Investment Structure
Leasing recipients
In the first quarter of 2009, the total number of concluded leasing contracts amounted to 275, which is by 60.77% less than
realized in the same period last year.
Table 1: The number of concluded contracts by leasing recipients
Leasing Recipients
Legal entities
Physical entities
Entrepreneurs
Total
I Quarter 2008
Number of
%
Contracts
75.18
527
24.68
173
0.14
1
701
I Quarter 2009
Number of
%
Contracts
50.91
140
47.27
130
1.82
5
100.00
275
Ratio
%
-73.43
-24.86
400.00
-60.77
Out of the total number of concluded contracts, total of 140 or 50.91%, relates to the contracts concluded with legal entities,
while 130 or 47% relates to the contracts concluded with physical entities. If we compare available data on the share of the
contracts concluded with physical entities against the total number of contracts, it is obvious that this share is higher than the
same period last year. This fact is indication that the leasing companies in Montenegro are earmarking their business strategies
on physical entities aimed at risk diversification insuring optimum client’s structure.
The Value and the Number of Concluded Contracts as to the Leasing Type
As it was the case in previous years, in the first quarter of 2009, financial leasing operations had significant share in the total
number of operations, as well as the value of concluded contracts.
Table 2.: The value and the number of concluded contracts as to the type of leasing
31st March 2008
Number of
Leasing type concluded
contracts (1)
Operational
70
leasing
Financial
631
Leasing
T O T A L:
701
Growth
Growth Rate
Rate (No.) (value)
(3)/ (1)
(4)/(2)
31st March 2009
%
Value of concluded
contracts
(2)
%
Value of
concluded
contracts (3)
%
Value of
concluded
contracts (4)
%
%
%
9.99
3,927,373.63
9.34
19
6.91
271,453.11
3.10
-72.86
-93.09
90.01 38,114,022.23
90.66
256
93.09
8,493,298.85 96.90 -59.43
-77.72
100
100
275
100
8,764,751.96 100
-79.15
42,041,395.86
-60.77
In the first quarter of 2009, the value of concluded contracts amounts to 8.764 million Euros, representing decline of around
79.15%, compared to the amount reached last year. Out of the total number of concluded contracts, over 93% or 8.493 million
Euros, related to the financial leasing, and the rest to operational leasing.
Leasing Subject
If we take into consideration the structure of the total number of concluded contracts, based on the leasing subject, it is
obvious that passengers’ cars have the biggest share of 89%, in the total amount of leasing investments.
76
Table 3: Comparative review of the value of concluded contracts based on the subject of leasing
Leasing Subject
Passengers cars
Commercial vehicles (trucks,
buses and delivery cars)
Constructing machinery and
equipment
Ships
Real-estate
Other
Total:
Number of Daily Contracts
31st March 2008
(1)
466
Leasing
Subject
66.48
31st March 2008
(1)
219
Leasing
Subject
79.64
31st March 2008
(1)
-53.00
137
19.54
30
10.91
-78.10
78
11.13
13
4.73
-83.33
1
19
701
0.14
2.71
100.00
1
12
275
0.36
4.36
100.00
0.00
-36.84
-60.77
The share of commercial vehicles in the total number of concluded contracts is of around 11%, while the share of constructing
machinery and equipment is in the amount of 4.73%, and the real estate leasing amounts to 4.36%. Compared to the same period
last year, the leasing market recorded the decline in share of commercial vehicles and constructing machinery and equipment,
while the share of other categories is recording the increase in share in the total number of conclude contracts.
Table 4: Comparative review of the value of concluded contracts based on the subject of leasing
Leasing Subject
Passengers cars
Commercial vehicles (trucks,
buses and delivery cars)
Constructing machinery and
equipment
Ships
Real-estate
Other
Total:
Number of Daily Contracts
31st March 2008
(1)
9,365,194.08
22.28
31st March 2009
(2)
3,853,838.01
43.97
Growth rate
(2)/(1)
-58.85
7,335,957.97
17.45
803,341.59
9.17
-89.05
6,672,398.38
15.87
996,170.17
11.37
-85.07
18,750.60
18,649,094.83
42,041,395.86
0.04
44.36
100.00
70,000.00
3,041,402.19
8,764,751.96
0.80
34.70
100.00
273.32
-83.69
-79.15
%
%
The passengers cars has the biggest share in the total value of concluded contracts in the amount of approximately 44%,
while the real estate leasing amounts to approximately 35%, the commercial vehicles amounts to approximately 10%, and the
leasing of constructing machinery amounts to approximately 12%.
The text below provides an overview of the leasing market trends in the first quarter of 2009, in the neighboring countries,
along with the information on legislation regulating leasing market.
CROATIA
Twenty-nine companies are operating on the Croatian leasing market, which operation is regulated on the basis of the
Leasing Law, adopted on 7th December 2006, and supervised by the Croatian Financial Services Supervisory Agency (HANFA).
The Agency is supervising the operation of the leasing companies, follows up their establishment, operation and the cease in
work of the leasing companies, prescribing accounting framework (Chart of accounts) for financial reporting and maintenance
of the business books. Aforementioned means that a leasing company needs to provide an approval for the conduct of leasing
operations, as well as to submit regular business reports to the Agency. The Agency is maintaining the Registry of Leasing subject
(objects), where in accordance with the Law the registry of leasing companies is mandatory. The Registry, apart from basic data
on provider and user of contract, contains and regulates in details the leasing subject, the value of the leasing subject, the
amount of a certain fee and the contract duration.
In the first quarter of 2009, is registered the decline of business activities compared to the same period last year, the
number of newly concluded contracts in the first quarter this year is by 44,9%, less than the same period last year, while the
1 - Calculated on the basis of the exchange rate: 1 Euro - 7.329 Kunas as of 7th July 2009.
2 - Calculated on the basis of the exchange rate 1Euro - 92.922 Dinars as of 8th July 2009.
77
value of newly concluded contracts fell for 38.8%. As of 31st
March 2009, the number of active contracts on the leasing
market amounted to 174,657, which total value amounts to
6,495,896,772.27 Euros1, representing the growth of 6.2%
or 14.8%, based on the value of contracts compared to the
realization from 31st March 2008.
The portfolio structure of newly concluded contracts
according the leasing subjects, generated decline both in the
number and the value of concluded contracts for all leasing
subjects compared to the first quarter of 2008. The biggest
decline is in the value of newly concluded contracts by 78,39
million Euros or 43,2% compared to the first quarter of
2008, and it relates to passengers cars, while the real estate
is recording the decline in the value of newly concluded
contracts by 61,26 million Euros or 65,2%.
By analyzing operating financial results on the leasing
market in the first quarter of 2009, there is a loss after
taxation of 6.56 million Euros, out of which 11 companies
realized profit in the amount of 5.28 million Euros, while
14 companies underwent a loss of 11.84million Euros. For
comparison purposes, in the same period last year, the profit
was realized in the amount of 2,072,883.97 Euros.
Total value of assets of leasing market participants
in the period from 1st January to 31st March amount to
4,845,539,687.59 Euros, while the amount in the same
period last year was 4,329,450,068.5 Euros, indicating the
increase of 11.92%.
SERBIA
Seventeen leasing companies are operating in Serbia,
whereas the supervision is performed by the National Bank
of Serbia, in accordance with the provisions of the Law on
financial leasing, enacted on 1st January 2004. The National
Bank is issuing licenses for the conduct of financial leasing
operations, providing consents on appointing of managing
body of leasing providers and undertakes corrective mea
sures towards leasing providers, in cases when on the
basis of supervision is determined an illegally or irregularly
conduct of operations. The Law sets forth the content and
the form of the Leasing Contract, as well as all requirements
in relation to the Registry whose maintaining is delegated to
the Commercial Registries Agency. Moreover, the National
Bank may prescribe the obligation to the leasing companies
to hold reserves on a special account, the amount of fund,
the rate of distribution of those funds, a swell as the manner
and conditions for their use.
On the Serbian leasing market, as of 31st March
2009, total claims of all leasing companies amount to
1.038.501.105,73 Euros.2. Concluded contracts of leasing
companies, concluded in the period from 1st January to
31st March 2009, resulted in new claims in the amount of
12.658.591 Euros, while in the same period last year total
claims amounted to 44,448,834.91 Euros. Aforementioned
is indicating the fall in the amount of newly created claims
by 71,52% in the first quarter of 2009, compared to the first
quarter of 2008.
78
As for the leasing subject structure, the highest share
in total claims have vehicles, buses and mini-buses with the
share of 39.6%, than machinery and equipment (production
machinery, constructing machinery and agricultural machi
nery and equipment) with the share of 26.2%, passenger
cars with the share of 22.6%, railroad devices, ships and ai
rcrafts with the share of 1.1%.
With regard to the leasing recipient structure, the hig
hest shares in total amount of claims have legal entities with
86.4%, physical entities with 6.3%, and entrepreneurs with
4.6% and farmers with 1.1%.
In the first quarter of 2009, the leasing market realized
positive net result in the amount of 9732.04 Euros. The to
tal assets of all leasing providers as of 31st March 2009,
amounted to 1.37 billion Euros, while in the same period last
year this amount was 1.11 billion Euros, representing the in
crease of 24.31%, compared to the same period last year.
SLOVENIA
The National Bank of Slovenia is monitoring the leasing
operation and generates annual reports on the basis of data
submitted by the leasing companies. Leasing operations in
Slovenia are not regulated by the special law, but this area
is regulated through the set of Banking Law and Law on con
sumer credit.
In accordance with the Bank’s Association Report, seve
nteen companies are conducting the leasing operations. Si
nce the leasing companies, within regular activities, are ent
itles to approve consumer credit, in order to perform these
operation they need to obtain the license from the Office for
Consumer Credit.
In accordance with the Analysis of the Bank’s Association
of Slovenia, on the Slovenian leasing market in the first
quarter of 2009, the total of 12,212 leasing contracts were
concluded, as well as 13,316 contracts on consumer credit,
the value of concluded contracts amounts to 367.53 million
Euros, out of which the value of leasing operation amounts to
295.00 million Euros. Out from the total number of contracts,
the financial leasing includes 10.000 contracts, which value
amounts to 208.97 million Euros, while the operational
leasing operation amounts to 2.212 of concluded contracts,
worth 86.03 million Euros.
BOSNIA AND HERZEGOVINA
Leasing operations in Bosnia and Herzegovina are regul
ated by the Leasing Law, enacted at the end of 2008. The Law
prescribes requirements for establishment, operation and
cease in work of the leasing companies, contract on leasing,
rights and obligations of the entities in leasing operations,
registration of ownership and other rights related to the
leasing subject, risk management, financial reporting and
surveillance over the operation of the leasing companies.
Similar to the legal solutions of Croatia, Serbia and Macedonia,
for carrying out leasing operations, the company must obtain
the working license, in this case issued by the Banking Agency
of Bosnia and Herzegovina Federation. Unlike other countries
neighboring countries, by this Law, Bosnia and Herzegovina
are regulating the operational leasing.
During 2008, seven leasing companies concluded cont
racts worth 351,7 million Euros, which is by 10% less than
in previous year, according to the Report of the Association
of the leasing companies of Bosnia and Herzegovina. At the
same time, the number of contracts amounted to 7.218,
which is approximately by 11% less than in 2007.
In the leasing structure, with regard to the value of
contracts, the biggest number of contracts was concluded for
cars and real estate in the amount of 39%, or more precisely
38,4%, for equipment in the amount of 22,3%, and on other
arrangements 0,2%. With regard to the number of contracts
the share of contracts on cars leasing is 81,9%, in the total
number of contracts.
Bojana Bošković
MACEDONIA
Eight leasing companies are operating in Macedonia,
licensed by the Ministry of finance. In accordance with the
Leasing Law, which last amendments were made in 2008,
leasing operations of leasing companies are controlled by
the Ministry of finance of Macedonia. Leasing companies are
submitting reports on operations, financial reports enabling
the Ministry of finance as regulatory authority to perform
surveillance. Moreover, the Law defines conditions related to
the contract on leasing and registration of the leasing subject
in the Central registry.
According to the data of the Ministry of finance of
Macedonia, during 2008, new contracts were concluded in
the total amount of 3.268, worth 65,409,381.31 Euros, while
as of 31st December 2008, the number of active contracts
amounted to 9.434, which total worth is 165,192,749.057€.
***
The current burning issue for both small and large
companies struggling for their market position, in the time
of global economic crises, is what is the most adequate
type of funding. According to many authors, the leasing
is the best funding solution for small and medium-sized
enterprises to finance their business in the time of crises,
having in mind easier procedure; it is easier to purchase a
fixed asset through the leasing, then to require bank loan.
Moreover, the leasing is not overburdening the balance sheet
of the company. In addition to this, as a special advantage
of this type of funding, the purchase of car is allegedly one
of the most frequent tax evasion, because in tax terms, the
payment of the leasing installments represents the expense,
or justified expenditure. Moreover, another advantage is that
business organizations are not investing their own funds, the
payment is adjusted to the needs and possibilities of users
and companies are allowed to change or to swap the leasing
subject quickly. In other words, both operational and financial
leasing is enabling business organizations lower financial
burden and more flexible management of funds, therefore
Jelena Vojinović
creating the possibility to invest it in further development.
By presenting leasing market trends in the neighboring
countries, where comparative data are available, the fall of
the business activity is evident, which is generally a conse
quence of declined commercial activity. The problem with
which all leasing companies in the region are facing with is in
difficult in aggravated collection of receivables, requests for
reprogramming of liabilities or return of leasing subject.
Data for the first quarter of 2009, both in Montenegro
and in other countries in the region are indicating declining
trend. However, having in mind that the first quarter was not
affected by the crises and that they are featured by lower
activities level, it is not unrealistic to expect the stabilization
of the market trends by the end of the year.
Ms. Bojana Bošković,
Ms. Jelena Vojinović,
79
Medium - Term Expenditure
Framework 2010-2012
The Medium-term expenditure framework comprises
planning and budgeting process for the period of three to five
years, and it is used as a basis for the preparation of the annual
budget. The key component of the medium – term expenditure
framework relates to the precise assessment of expenditures
deriving from the medium – term strategic policies. The total
available fiscal funds in the medium – term period are deter
mined on the basis of macroeconomic projections. Therefore,
the budget expenditures plan for a certain fiscal year must be
leveraged with the macroeconomic framework.
The Government of Montenegro opted for introducing
the medium - term expenditure framework starting from
2009, due to the advantages of this model which can be
seen from the following facts:
• Harmonization of the budget planning with the intern
ational standards,
• Establishment of the macro fiscal discipline and
stability,
• Possibility to control and manage public expenditu
res,
• Determining and completing priorities of the Gover
nment in the long run,
• Avoiding the crises in the public finance and
• Providing support to economic growth and stability.
The medium – term expenditure framework is prepared
on the basis of the principal «top - down » introducing financial
limits (ceilings) for budgetary users i.e. spending units in the
multi-annual period. The implementation implies the setting
of limits in the cumulative amounts based on economic
classification and budgetary users, while detailed expenses
breakdown is given in precise amounts on the basis of annual
budget laws. The key advantage of introducing the medium
– term expenditure framework is in improved possibility of
the Government to distribute funds within the programes
and organizational unit in accordance with adopted policy
and priorities. Budget consumption in the next period must
account for decline in collection of budget revenues, as well
as several additional factors:
1. Budget deficit must be within the limits of the Maas
tricht criteria - 3%
2. Up to 2012, gradual budget balancing is planned,
3. Decreased possibility of indepbtedning,
4. Process of joining the EU requires the allocation of
significant funds for this purpose, although Montenegro is
relying on the use of pre-accession assistance funds (IPA),
80
Tamara Gačević
Slobodanka Mila Popović
5. Initiation of the construction of the highway Bar-Bolja
re requires the allocation of significant funds being a part of
commitments,
6. Paying - off external and internal debt,
7. Social program for the protection of most affected
citizens by the consequences of global economic crises.
Having in mind aforementioned, it is necessary to conti
nuously analyze the medium – term fiscal sustainability. De
fining the medium – term objective of the budget policy will
help in harmonizing concrete needs for budgetary funds.
Economic and fiscal policy, in this period will be focused on
mitigating the economic crises effects, both on real economic
sector and the citizens sector. Hence, the objective of Mon
tenegro, as a potential candidate country for joining EU, is to
strengthen institutional and administrative capacities, to align
its regulations with the European Unions regulations, focus on development of the civil society, and improve regional and crossborder cooperation. In the medium – term expenditure framework 2010-2012, following budgetary policies will be implemented:
• Public Finance Sustainability
Decrease in budget revenues, in the first quarter of 2009 is calling for corrections in the revenue plan by the end of this
year, representing at the same time the basis for revenue planning in the following years. Decreased revenues, are driven by
the expenditure level in the following period. Current budgetary consumption will continue to grow in accordance with projected
inflation rate (3, 3% average annual inflation rate) and will gradually decline against GDP. The imperative is to provide regular
payments of personal income, pensions, social contributions and the repayment of debt.
• The continuation of the implementation of the medium – term expenditure framework
The reform of budgeting and budget planning process, introduction of the financial limits (ceilings) for budgetary users in multiannual period was the assumption in creating and applying the medium – term expenditure framework. Budget appropriations
for a multi-annual period will be based on strategic document of the Government and individual line ministries in accordance
with the fiscal framework of the overall public consumption. In that manner “top - down” method will be introduced in the process
of budget preparation and planning (unlike the current “bottom - up” method). The implementation implies the setting of limits
in the medium – term period in cumulative amount by budgetary users, on the basis of economic classification and budgetary
users, while the detailed breakdown of expenditures would be provided in annual budget laws. The key advantage of introducing
the medium – term expenditure framework is the creation of stable and sustainable fiscal policy, extended capacity for regulating
future budget effects / results and in improved possibility of the Government to perform the allocation of resources within the
programmes and organizational units in accordance with the adopted policy and priorities.
• The continuation of the implementation of the Capital Budget of Montenegro
The continuation of the implementation of the capital budget of Montenegro at the level of 3, 5% GDP annually in the
period from 2010-2012. The development of the data basis on all project is planned which will be linked with the budget. This
would provide for adequate analysis of the fiscal risks and improve the processes of decision making in selecting the priorities.
The adoption of the new law on concessions and private public partnership will represent a significant regulatory framework for
managing one part of investments.
• The continuation of the programme budgeting implementation
The implementation of the programme budgeting in Montenegro implies the model of the budget programme representing
the main activity (programme) or group of activities (subprograms) achieved by the spending units. Two level of application in
implementation of the programme budgeting were introduced, which disclosed through the programmes and subprogram’s.
The reform of the programme budgeting envisages the application of the logic programme classification for the overall budget,
as well as the preparation of the IT system for budget monitoring and execution on the basis of the progamme structure.
Gradual conversion from linear to the programme budgeting is in implementation process since 2005. Full implementation of
the programme budgeting, including indicators and full application of the “top – down” method in the budget preparation and
planning process is planned to be developed in medium - term.
• Debt management strategy
The projection of the internal debt trend in the period from 2010 to 2012, is based on the precondition that the debt on the
basis of the restitution will reach the legal limit of around 10 % GDP (in 2009 it will reach mentioned level, which is unrealistic to
expect, but the prerequisite is that these requirements will be fulfilled), while the payment of liabilities will amount to approximately
0, 5% GDP. The amount of payment of liabilities on the basis of due pensions will be 34, 0 mil. € annually and it will be fully
paid off up to 2011. The planned indebtedness level in 2009 will amount to 103, 0 million € and it will be used for financing the
projects of the Directorate of traffic for resolving the problem of bottle-necks. The assumption is that the indebtedness level of
81
local self-government units will remain the same. The payment of liabilities on the basis of foreign currency savings deposit will
amount to approximately 14, 0 mil. € Annually. The redemption of old foreign currency savings bonds is not accounted for OB16
and OB17 and DO16 and DO7, or the redemption of restitution bonds. The budget for 2009 provides the redemption in total
amount of approximately 20, 0 million €.
The following Table provides consolidated budget balance and state owned funds balance for the period 2010-2012.godine:
Description
Source revenues
Taxes
Contributions
Duties
Fees
Other revenues
Receipts from the payment of loans
Consolidated expenditures
Current budget consumption
Current expenditures
Gross earnings and contributions charged to employer
Other personal earnings
Expenditures for material and services
Current maintenance
Interests
Rents
Subsidies
Other expenses
Capital expenditures of the current budget and state – owned
funds
Transfers for social protection
Transfers to institutions, individuals and NGO’s
Capital budget of Montenegro
Loans and borrowings
Reserves
SURPLUS / DEFICIT
FINANCING
Domestic financing
Borrowings and loans form domestic sources
Payment of debts to residents
Payment of principal
Payment of guarantees
Payment of liabilities from previous years
Foreign financing
Borrowings and loans from foreign sources
Payment of debt to nonresidents
Donations
Privatization revenues or deposits
Increase/Decrease in Deposits
Projection 2010
Projection 2011
Projection 2012
mil €
% GDP
mil €
% GDP
mil €
% GDP
1280,03
812,58
356,40
24,96
33,50
40,14
12,45
1343,28
1160,34
478,44
270,75
25,85
121,34
6,79
24,34
10,31
12,70
6,35
34,46
21,87
9,59
0,67
0,90
1,08
0,34
36,16
31,23
12,88
7,29
0,70
3,27
0,18
0,66
0,28
0,34
0,17
1353,03
860,21
376,22
26,21
35,18
42,15
13,07
1393,59
1205,96
495,19
280,22
26,75
125,59
7,03
25,20
10,67
13,15
6,57
34,52
21,95
9,60
0,67
0,90
1,08
0,33
35,56
30,77
12,63
7,15
0,68
3,20
0,18
0,64
0,27
0,34
0,17
1449,05
917,62
404,41
27,65
37,11
47,46
14,79
1449,05
1252,26
514,52
292,03
27,69
129,99
7,27
26,08
11,05
13,61
6,80
35,05
22,19
9,78
0,67
0,90
1,15
0,36
35,05
30,29
12,44
7,06
0,67
3,14
0,18
0,63
0,27
0,33
0,16
48,61
1,31
50,31
1,28
52,07
1,26
424,46
213,27
134,33
30,46
13,71
-63,25
63,25
-79,80
20,00
26,28
23,39
2,89
73,51
80,23
93,48
21,76
8,51
49,60
-13,21
11,43
5,74
3,62
0,82
0,37
-1,70
1,70
-2,15
0,54
0,71
0,63
0,08
1,98
2,16
2,52
0,59
0,23
1,34
-0,36
442,32
222,73
137,33
31,52
14,19
-40,56
40,56
-67,07
20,00
26,56
24,39
2,16
60,51
58,69
71,80
21,76
8,65
35,27
-13,67
11,29
5,68
3,50
0,80
0,36
-1,03
1,03
-1,71
0,51
0,68
0,62
0,06
1,54
1,50
1,83
0,56
0,22
0,90
-0,35
459,90
230,53
144,72
32,63
14,69
0,00
0,00
-71,83
8,50
26,84
24,39
2,45
53,48
37,82
51,06
21,75
8,51
34,01
0,00
11,12
5,58
3,50
0,79
0,36
0,00
0,00
-1,74
0,21
0,65
0,59
0,06
1,29
0,91
1,23
0,53
0,21
0,82
0,00
The Ministry of finance is estimating that the consolidated budget consumption (with state – owned funds) will gradually
decrease from 36,16% GDP in 2010 to 35,56% GDP in 2011, while in 2012 it will decrease to 35,05% GDP. Moreover, it is
planned that the budget consumption will gradually decrease from 31, 23% GDP in 2010 to 30, 29% GDP in 2012. The state
budget and state – owned funds deficit in 2010 is planned in the amount of 63, 25 million €, or 1, 70% GDP. On the basis of the
Medium-term expenditure framework it is planned to reach the balance of the budget and finds up to 2012.
The framework for the development of the Economic policy in 2010 is driven by extraordinary conditions created by the
economic and financial crises which occurred during 2009, and which will continue in 2010, affecting projected macroeconomic
indicators. The basis for the development in 2010 is driven by the deepening of risks facing Montenegrin economy in the real,
fiscal and financial sector.
Because of newly created situation the reality of planned indicators for 2009 was revises, thus the growth of the GDP in
2009 will be 0%, representing the basis for reviewing the growth possibility in 2010.
82
Starting from the new estimates for 2009, basic macroeconomic indicators for the period 2010-2012 dictate the following
growth rates:
• Nominal growth rate of the GDP for 2010, from 5,0%, for 2011 6,5% and for 2012 7,5%,
• Real growth rate of the GDP for 2010 from 2,0%, for 2011 from 3,0% and for 2012 for 4,0%,
• Inflation rate for 2010 for 3, 0%, for 2011 from 3, 5 % and for 2012 for 3, 5%.
Budget (Current + Funds)
41
411 Gross salaries and contributions charged to employer
412 Other personal income
413 Expenditures for supplies and services
414 Current Maintenances
415 Interests
416 Rent
417
Subsidies
418 Other expenditures
42
421
Rights in the social protection areas
422
Funds for severance pay
423
Rights in the area of pension and disability insurance
424
Other social protection rights
425
Other health insurance rights
43
Transfers to institutions, individuals, NGOs and public sector
431
44
Capital expenditures
441
45
451
47
Reserves
471
Current budget reserve
472
Permanent budget reserve
473
Other reserve - deposits
Projection 2010
1.242.902.134,69
478.430.000,34
270.750.000,34
25.850.000,00
121.340.000,00
6.790.000,00
24.340.000,00
10.310.000,00
12.700.000,00
6.350.000,00
456.450.000,00
50.900.000,00
13.460.000,00
375.860.000,00
10.900.000,00
5.330.000,00
214.820.000,00
214.820.000,00
48.610.000,00
48.610.000,00
30.460.000,00
30.460.000,00
14.132.134,35
12.932.134,35
1.000.000,00
200.000,00
Projection 2011
1.284.846.950,35
495.175.050,35
280.226.250,35
26.754.750,00
125.586.900,00
7.027.650,00
25.191.900,00
10.670.850,00
13.144.500,00
6.572.250,00
471.305.750,00
52.681.500,00
13.931.100,00
387.895.100,00
11.281.500,00
5.516.550,00
222.338.700,00
222.338.700,00
50.311.350,00
50.311.350,00
31.526.100,00
31.526.100,00
14.190.000,00
12.990.000,00
1.000.000,00
200.000,00
Projection 2012
1.329.699.943,61
512.506.177,12
290.034.169,12
27.691.166,25
129.982.441,50
7.273.617,75
26.073.616,50
11.044.329,75
13.604.557,50
6.802.278,75
487.681.451,25
54.525.352,50
14.418.688,50
401.351.428,50
11.676.352,50
5.709.629,25
230.120.554,50
230.120.554,50
52.072.247,25
52.072.247,25
32.629.513,50
32.629.513,50
14.690.000,00
13.490.000,00
1.000.000,00
200.000,00
The following Table provides the overview of the state budget related to the current budget and state-owned funds budget
for the period 2010 – 2012, on the basis of economic classification.
The following Table provides the overview of current budget expenditures for the period 2010 – 2012, on the basis of
economic classification.
Current
41
42
Budget
411
Gross salaries and contributions charged to employer
412
Other personal income
413
Expenditures for supplies and services
414
Current Maintenances
415
Interests
416
Rent
417
Subsidies
418
Other expenditures
421
422
423
Rights in the area of pension and disability insurance
424
425
Projection 2010
641.225.582,88
459.961.823,00
261.170.053,34
24.388.167,11
115.623.302,50
6.381.670,99
23.429.075,84
10.230.027,37
12.700.000,00
6.039.525,84
53.616.104,51
50.900.000,00
2.697.304,07
18.800,44
0,00
0,00
Projection 2011
663.238.719,23
476.060.486,81
270.311.005,21
25.241.752,96
119.670.118,09
6.605.029,47
24.249.093,49
10.588.078,33
13.144.500,00
6.250.909,25
55.492.668,16
52.681.500,00
2.791.709,71
19.458,45
0,00
0,00
Projection 2012
686.462.424,40
492.722.603,84
279.771.890,39
26.125.214,31
123.858.572,23
6.836.205,50
25.097.811,76
10.958.661,07
13.604.557,50
6.469.691,07
57.434.911,55
54.525.352,50
2.889.419,55
20.139,50
0,00
0,00
83
43
44
45
47
Transfers to institutions, individuals, NGOs and public
431
sector
441
451
Reserves
471
Current budget reserve
472
Permanent budget reserve
473
Other reserve - deposits
58.082.644,38
60.115.536,93
62.219.580,72
58.082.644,38
60.115.536,93
62.219.580,72
46.219.055,48
46.219.055,48
9.413.821,16
9.413.821,16
13.932.134,35
12.932.134,35
1.000.000,00
0,00
47.836.722,42
47.836.722,42
9.743.304,90
9.743.304,90
13.990.000,00
12.990.000,00
1.000.000,00
0,00
49.511.007,71
49.511.007,71
10.084.320,58
10.084.320,58
14.490.000,00
13.490.000,00
1.000.000,00
0,00
The following Table provides the overview of the state-owned funds expenditures for the period 2010 – 2012, on the basis
of economic classification.
Budget of State-owned Funds
Gross salaries and contributions charged to
411
employer
412 Other personal income
413 Expenditures for supplies and services
414 Current Maintenances
415 Interests
416 Rent
417 Subsidies
418 Other expenditures
421
422
Rights in the area of pension and disability
423
insurance
424
425
Transfers to institutions, individuals, NGOs and public
sector
Transfers to institutions, individuals, NGOs and
431
public sector
441
451
Reserves
Projection 2010
601.676.551,81
18.468.177,34
Projection 2011
621.608.231,12
19.114.563,55
Projection 2012
643.237.519,21
19.783.573,27
9.579.947,00
9.915.245,14
10.262.278,72
1.461.832,89
5.716.697,50
408.329,01
910.924,16
79.972,63
0,00
310.474,16
402.833.895,49
0,00
10.762.695,93
1.512.997,04
5.916.781,91
422.620,53
942.806,51
82.771,67
0,00
321.340,75
415.813.081,84
0,00
11.139.390,29
1.565.951,94
6.123.869,27
437.412,25
975.804,74
85.668,68
0,00
332.587,68
430.246.539,70
0,00
11.529.268,95
375.841.199,56
387.875.641,55
401.331.289,00
10.900.000,00
5.330.000,00
11.281.500,00
5.516.550,00
11.676.352,50
5.709.629,25
156.737.355,62
162.223.163,07
167.900.973,78
156.737.355,62
162.223.163,07
167.900.973,78
2.390.944,52
2.390.944,52
21.046.178,83
21.046.178,83
200.000,00
2.474.627,58
2.474.627,58
21.782.795,09
21.782.795,09
200.000,00
2.561.239,54
2.561.239,54
22.545.192,92
22.545.192,92
200.000,00
1. STATE BUDGET – Current Budget and Budget of State-owned Funds
The State Budget in this period is manifesting the external tendency growth, thus the growth rate in 2011 compared to 2010
amounts to 3,4%, for 2012 compared to 2011, amounts to 3,5%, while the budget in 2010, amounts to 1.242,9 million € and is
less that the planned budget in 2009, for 33,9 million €.
The structure of funds of the State budget for the period 2010-2012, and allocations for the current budget and state –
owned funds budget are given in the following table and chart review:
84
BUDGET
Projection 2010
Projection 2011
Projection 2012
TOTAL ( I+II)
I
Current Budget
II
Funds
1.242.902.134,69
641.225.582,88
601.676.551,81
1.284.846.950,35
663.238.719,23
621.608.231,12
1.329.699.943,61
686.462.424,40
643.237.519,21
2. Budget of Montenegro for 2010
The Budget of Montenegro for 2010, amounts 1.242,9 million € and it represents 97, 3% of estimated budget for 2009.
Current budget, within the Budget of Montenegro participates with 51, 59% and amounts 641, 2 million € and it is less than
projected current budget for 2009, for 45, 8 million €. The structure of funds of the current budget for 2010, on the basis of the
type of expenses is given in the following table and chart overview.
Budget
I
Current Budget
4 Expenses
41
Current expenses (earnings, material and services, current maintenance, subsidies, etc.)
42
43
Transfers to institutions, individuals, NGO’s and public sector
44
45
46
Payment of debt
47
Reserves
Projection 2010
641.225.582,88
641.225.582,88
459.961.823,00
53.616.104,51
58.082.644,38
46.219.055,48
9.413.821,16
0,00
13.932.134,35
The biggest appropriation from the current budget is 71,7 % and it refers to the current expenditures.
Current expenditures comprise gross earnings and contributions charged to employer, other personal earnings, expenditures
for supplies and services, current maintenances, interests, rent subsidies and other expenditures.
The biggest part of these funds of 62,0% relates to the gross earnings and other personal earnings in the amount of 285,5
million €.
Transfers for social protection participate with 8,4% in the current budget in the amount of 53,6 million €, and they relate
to the transfers for social protection and severance pay.
The biggest amount of these funds of 95% relates to the transfers for social protection in the amount of 50,9 million €, and
5 % relate to the severance pay.
Transfers to institutions, individuals, NGO’s and public sector participate with 9,1% in the current budget and they amount
to 58,1 million €.
Capital expenditures participate with 7,2 % in the current budget and they amount to 46,2 million €.
Residual funds relate to reserves which in the current budget participate with 2,2% and borrowings and loans with 1,5%.
Funds budget participate with 48,41 % and amount 601,7 million €.
Funds budget for 2010 is higher for 11,9 million € than projected budget of the funds for 2009.
The budget of Montenegro for 2011, amounts 1.284,8 million € and it is higher than projected budget for 2010 for 41,9
million €.
Current budget, within the budget of Montenegro participates with the highest percentage of 51,62% and amounts to 663,2
million €, and it is higher than projected current budget for 2010, for 3,4%.
The structure of the current budget funds for 2011, on the basis of the type of expenditures is given in the following table
and chart overview:
BUDGET
Projection 2011
I
4
663.238.719,23
663.238.719,23
476.060.486,81
55.492.668,16
60.115.536,93
47.836.722,42
9.743.304,90
0,00
13.990.000,00
Current budget
Expenditures
41
Current expenses (earnings, material and services, current maintenance, subsidies, etc..)
42
43
44
45
46
Payment of debt
47
Reserves
85
The Budget of Funds participates with 48,38% and it amounts to 621,6 million €. The budget of funds for 2011, is higher
for 3,3% than projected budget of funds for 2010.
The Budget of Montenegro for 2012, amounts to 1.329,7 million € and it is higher than planned budget for 2011, for 3,5%.
Current budget, within the budget of Montenegro participates with the highest percentage of 51,63% and amounts to 686,5
million € and it is higher than projected current budget for 2011, for 3,5%.
The structure of funds of the current budget for 2012, on the basis of the types of expenditures is given in the following table
and chart overview.
BUDGET
Projection 2012
I
4
686.462.424,40
686.462.424,40
492.722.603,84
57.434.911,55
62.219.580,72
49.511.007,71
10.084.320,58
0,00
14.490.000,00
Current budget
Expenditures
41
Current expenses (earnings, material and services, current maintenance, subsidies, etc..)
42
43
44
45
46
Payment of debt
47
Reserves
The Budget of Funds participates with 48,7% in the total state budget and it amounts to 643,2 million €.
The Budget of Funds for 2012, is higher for 3,5%, than projected one for 2011.
The current budget for 2010, amounts to 641,2 million € and biggest appropriation of 92,3% relate to the financing of
executive authorities, judicial authorities 4,0%, and remaining 3,7% relates to the financing of expenditures for activities of the
President, legislative authorities and special bodies. The structure of the current budget funds for 2010 is given in the following
table and chart overview.
No.
TITLE
Projection 2010
1
2
3
4
5
PRESIDENT
LEGISLATIVE AUTHORITIES
JUDICIARY AUTHORITIES
EXECUTIVE AUTHORITIES
SPECIAL AUTHORITIES
Current budget (1 to 5):
704.727,89
9.460.457,05
25.776.026,13
591.800.525,31
13.483.846,51
641.225.582,88
No.
TITLE
Projection 2011
1
2
3
4
5
PRESIDENT
SPECIAL AUTHORITIES
729.393,36
9.791.573,04
26.678.187,05
612.083.784,64
13.955.781,13
663.238.719,23
86
No.
TITLE
Projection 2012
1
2
3
4
5
PRESIDENT
SPECIAL AUTHORITIES
754.922,13
10.134.278,10
27.611.923,59
633.517.067,10
14.444.233,47
686.462.424,40
Funds budget for 2010, amounts to 601,7 million € and highest appropriation of 63,6% relate to the financing of expenditures
of the Pension and Disability Insurance Fun, than the Health Insurance Fund 26,5%, Employment Fund 5,9%, Development Fund
43,9% and Compensation Fund 0,1%. The structure of the funds budget for 2010, is given in the following table and chart
overview.
No.
TITLE
Projection 2010
1
2
3
4
5
Pension and Disability Insurance Fund
Health Insurance Fund
Employment Fund
Development Fund
Compensation Fund
FUNDS (1 to 5):
382.807.062,72
159.356.654,03
35.435.759,56
23.710.794,17
366.281,33
601.676.551,81
of the Pension and Disability Insurance Fun, than the Health Insurance Fund 26,5%, Employment Fund 5,9%, Development
Fund 3,9% and Compensation Fund 0,1%. The structure of the funds budget for 2011, is given in the following table and chart
overview.
No.
TITLE
Projection 2011
1
2
3
4
5
Employment Fund
Development Fund
Compensation Fund
FUNDS (1 to 5):
395.078.309,91
164.934.136,92
36.676.011,14
24.540.671,97
379.101,18
621.608.231,12
of the Pension and Disability Insurance Fun, than the Health Insurance Fund 26,5%, Employment Fund 5,9%, Development
Fund 3,9% and Compensation Fund 0,1%. The structure of the funds budget for 2012, is given in the following table and chart
overview.
No.
TITLE
Projection 2012
1
2
3
4
5
Employment Fund
Development Fund
Compensation Fund
FUNDS (1 to 5):
408.779.050,76
170.706.831,71
37.959.671,53
25.399.595,49
392.369,72
643.237.519,21
Ms. Tamara Gačević,
Ms. Slobodanka – Mila Popović,
External Advisor
87
How to Exit Crises - Possible
Scenarios and Repercussions
to Montenegrin Economy
“The economy depends about as much on economists
as the weather does on weather forecasters.”
- Jean-Paul Kauffmann
What is common between the following symbols and
letters: V, U,
,W, L, ? ............ All these symbols represent the answer, or the selection of economists, on
which of these symbols is the best in illustrating the world
economic crises and trend forecasts in the following period. Left sides of each of the symbol represents the period
from the start of the crises to present, thus its trend its
88
similar in all scenarios, while the arguments are over how
the right half is going to look like. Right half represents the
forecast of the possible future recovery. Whether it will be
a sudden surge (letter V), or gradual recovery (letter U ), or
moderate recovery with long term stagnation (the square
cube), long period of instability (W), catastrophic scenario
( L) or less catastrophic symbol of fishhook ( ) the opinion
of Moody’s. Someone will instantly reply: what is this nonsense on symbols of the crises and who cares”. Is this really “the glass bead game” or is it senseless. According to
Stephany Flanders, Economic editor of BBC, the answer to
this question is worth billions of dollars. The right answer
to this question is the question of investments measured
in hundreds billion dollars, thousands new job posts or
dismissing hundreds thousands employees. The good illustration is the anecdote from nineties – to the question
addressed to the representative of Jugometal in London,
on prognoses of the aluminum price trends on the stock
exchange, the obtained answer was: one who knows the
answer can be considered millionaire.
The most recent Report of OECD is stating that we are
slowly, but certainly reaching the point representing reversal, but that the recovery will be weak and long. The history of the crises is teaching us that the exit from it is slow
and long, if generated by the problems in financial sector.
The OECD – represented by 30 most developed countries
of the world – is forecasting the decline in GDP by 4,1%
in 2009, while in 2010, they are forecasting recovery of
0,7%, which is more favorable than the earlier growth
prognoses of only 0,1%. The fall of the world economy will
amount to 16%, while the most unfavorable forecast is for
the growth unemployment rate indicator of 10%. Everyone
agrees that financial sector will eventually recover, while
the recovery of the real sector will delay. The most sensitive forecast is that the recovery in labor market will be the
most difficult. In the IMF Report “Regional Economic Prospects - Europe” forecasts the decline of 4,2 % for 2009,
and 0,1 % for 2010. While projected fall of GDP for Montenegro is 2,7 % for 2009, and 2 % for 2010. These days,
printing medias are often using the term “green shoots”.
Everyone is eager to see clear signals beginnings of economic growth after recession, huge investors, governments, as well as the army of unemployed persons being
the victims of this economic tsunami. However, according
to Christina Romer (Chair of the Council of Economic Advisers to the President Obama) in her article published in
prominent magazine “Economist” London, is writing that
the error from 1937, when after incredibly rapid recovery
from the Great Depression, economic activities fell causing drastic fall of unemployment, because monetary authorities introduced restrictive monetary and fiscal policy
reckoning that the worst consequences passed.
What is the answer to the selection of symbols as
well as all aforementioned facts in our economy?
It is clear that the recovery trend of the world economy is directly affecting Montenegro. The recovery means
the strengthening of aluminum and steel process, as well
as getting out from the current troubles brought by the
crises to these industries, improvements in purchasing
power bringing higher revenues in tourism, easier access
to more cheaper financing sources with regard to huge
infrastructural projects financed by the state, increase in
available income and in personal consumption, etc. At
the same time, the absence of recovery, clearly implies
many years of stagnation or even recession. What are the
repercussions of this problem to the budget of Montenegro? The selection of pessimistic recovery scenario may
cause the undervaluation of budget revenues and subsequently the postponing of unplanned budgeting of funds.
It is certain that increased revenues may be budgeted by
rebalance, but it means the delay in possible capital investments or unnecessary delays in realization of development projects. The selection of excessively optimistic
scenario means potential undervaluation of budget revenues and painful consumption adjustments (rebalance).
Anyway, budgetary consumption in the following period must account for decrease in inflow of funds to the
budget, as well as several additional factors:
• Budget deficit must be within the limits of Maastricht criteria, up to -3% GDP, with gradual budget balancing in midterm;
• Decreased indebtedness possibility on international money market;
• The process of joining the EU, requires allocation
of significant funds for these purposes with the use of preaccession support funds (IPA);
• Initiation of the construction of the highway BarBoljare will provide additional impulse to economy, requiring the allocation of significant funds being a part of commitments,
• Regular repayment of external and internal debt,
in order to retain the confidence of creditors and international financial institutions,
• Social program for the protection of most affected
citizens by the consequences of global economic crises.
We will know soon the answer to the recovery question. What is necessary, regardless solution to the troubles in the economy, as it was suggested by the representatives of international institutions in Montenegro, is
the opting for internal growth generators. This is both the
priority and the big challenge for our country.
At the same time, it is necessary to reach the balance between the State as the “most reliable” employer
and significant “player” in times of crises, and the State as
the regulator and guarantor of market mechanisms and
free inflow of people, capital, goods and services. In these
times, this is the biggest challenge even for most developed market economies, being greater for small and open
post - transitional economy like Montenegrin one.
Mr. Vladislav Karadžić,
Mr. Radovan Živković,
89
Realization
of Public
Expenditure
on Local Self
- government
Level
January
- March 2009
Gordana Radović
Slobodanka Burić
I - Realized revenues
The total amount of realized revenues of the municipalities budget (21) for the period from January – March 2009,
amounted 73,4 mil. € (average monthly amount was 24,5 mil. €), which compared to the same period last year (116,0 mil. €)
declined by 36,7%. In the structure of realized revenues, the share of local revenues (taxes, duties, fees and other local revenues)
is 38,11%, the share of assigned state revenues (personal income tax, tax from sales of property, concession and other fees for
the use of natural resources and the annual fee for the registration of passengers cars) is 7,07%, the share of the Equalization
fund funds is 4,77% and the share of other revenues (revenues from sales of property, transferred funds from the previous year,
donations, subsidies of budgetary users and other transfers from the central level, borrowings and loans) is 50,05%.
In the following Table is given the overview of realized revenues of the municipality’s budget for the period from January –
March 2009, on the basis of the revenue sources:
in €
90
No.
Municipalities
Local revenues
Assigned
revenues
1
1.
2.
3.
4.
5.
6.
7.
2
Andrijevica
Bar
Berane
Bijelo Polje
Budva
Danilovgrad
Žabljak
3
66.828
1.793.795
345.317
493.507
7.434.168
245.222
71.280
4
5.933
482.576
85.999
116.990
768.373
79.075
30.157
Equalization fund
Other revenues
Total
(3 to 6)
%
5
117.332
6
86.246
2.807.209
472.584
1.439.550
291.755
1.524.930
324.411
7
276.339
5.083.580
1.434.968
2.583.704
8.494.296
2.032.481
488.565
8
0,38
6,92
1,95
3,52
11,57
2,77
0,67
531.068
533.657
183.254
62.717
8.
Kolašin
9.
Kotor
10. Mojkovac
11. Nikšić
12. Plav
13. Plužine
14. Pljevlja
15. Podgorica
16. Rožaje
17.
Tivat
18. Ulcinj
19. Herceg Novi
20. Cetinje
21. Šavnik
TOTAL:
%
722.199
1.263.171
138.564
1.317.608
130.568
622.129
1.767.557
7.685.086
202.483
706.968
332.159
2.191.077
443.461
15.528
27.988.675
38,11
30.934
342.540
27.377
290.988
21.774
39.613
158.529
1.732.688
111.410
208.837
122.088
399.707
129.357
3.684
5.188.629
7,07
124.090
190.628
600.680
238.489
51.429
118.872
266.078
145.305
170.845
170.091
3.504.535
4,77
239.834
5.607.809
157.228
444.699
67.169
2.239.284
519.272
18.381.172
3.996
1.169.187
350.650
16.200
425.631
187.319
36.756.135
50,05
1.117.057
7.213.520
513.797
2.653.975
458.000
2.952.455
2.564.230
27.798.946
583.967
2.084.992
950.202
2.606.984
1.169.294
376.622
73.437.974
100,00
1,52
9,82
0,70
3,61
0,62
4,02
3,49
37,86
0,80
2,84
1,29
3,55
1,59
0,51
100,00
1. Local revenues of the municipality’s budget
The local revenues of the budget of municipalities for the period January March 2009, amounted 27,99 million €, out
of which the share of local fiscal revenues is 84, 91% (taxes, fees and duties) and the share of other local revenues is 15,9%
(monetary fines and interest, concession fees for the use of public goods, revenues obtained from the activity of municipality
bodies and services) and other revenues 15,9%.
The amount of the realized local fiscal revenues of municipalities in this reporting period is 23,8 million € (average monthly
revenue was 7,9 mil. €). In the revenue structure, the highest share relates to the fee for urban zoning (52,65 %), the share
of the fee for the use of construction terrain (7,85 %), representing 71,27% of local fiscal revenues. For this reporting period,
municipalities have realized 4,2 million € (average monthly revenue was 1,4 million €) of other local revenues.
In the following Table is given the overview of realized revenues of the municipality’s budget in the period from January –
March 2009, on the basis of the revenue sources:
in €
No.
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Total
%
Municipality
1
Andrijevica
Bar
Berane
Bijelo Polje
Budva
Danilovgrad
Žabljak
Kolašin
Kotor
Mojkovac
Nikšić
Plav
Plužine
Pljevlja
Podgorica
Rožaje
Tivat
Ulcinj
Herceg Novi
Cetinje
Šavnik
Fiscal revenues
2
64.443
1.427.453
315.506
389.364
6.485.680
212.218
64.794
689.129
943.069
116.883
1.210.308
92.845
609.550
1.710.309
6.946.164
181.030
662.007
327.681
1.169.334
135.728
10.461
23.763.956
84,91
Other local revenues
3
2.385
366.342
29.811
104.143
948.488
33.004
6.486
33.070
320.102
21.681
107.300
37.723
12.579
57.248
738.922
21.453
44.961
4.478
1.021.743
307.733
5.067
4.224.719
15,09
Total (2+3)
4
66.828
1.793.795
345.317
493.507
7.434.168
245.222
71.280
722.199
1.263.171
138.564
1.317.608
130.568
622.129
1.767.557
7.685.086
202.483
706.968
332.159
2.191.077
443.461
15.528
27.988.675
100,00
%
5
0,24
6,41
1,23
1,76
26,56
0,88
0,25
2,58
4,51
0,50
4,71
0,47
2,22
6,31
27,46
0,72
2,53
1,19
7,83
1,58
0,06
100,00
91
2. Assigned revenues of the municipality budget
Budgets of municipalities (21) for the period from January - March 2009, on the basis of assigned revenues were assigned
5,2 million € (average monthly 1,7 million €), which compared to the same period last year (8,8 million €), represents decrease
of 40,91%. In the assigned revenues structure, personal income tax participates with 4.,96%, real estate tax participates with
40,12 %, concessions and other fees for the use of natural resources participate with 9,33% and annual fee for the registration
of passenger cars, tractors and units participates with 6,59%.
In the following Table is given the overview of assigned revenues to municipality’s budgets from the central level, for the
period from January – March 2009, on the basis of the revenue sources: in €
No
Municipality
1
2
1
Andrijevica
2
Bar
3
Berane
4
Bijelo Polje
5
Budva
6
Danilovgrad
7
Žabljak
8
Kolašin
9
Kotor
10
Mojkovac
11
Nikšić
12
Plav
13
Plužine
14
Pljevlja
15
Podgorica
16
Rožaje
17
Tivat
18
Ulcinj
19
Herceg Novi
20
Cetinje
21
Šavnik
Total
%
Personal income
tax of physical
persons
3
4.561
118.827
47.133
64.797
133.252
32.896
9.359
19.958
129.530
11.758
181.280
12.825
7.099
66.829
1.101.173
21.050
52.314
22.974
135.418
104.987
3.115
2.281.135
43,96
Real estate
sales tax
4
90
317.774
17.617
9.100
615.166
31.575
13.264
8.252
181.845
901
24.456
1.206
337
20.677
348.001
5.055
139.562
90.499
243.206
12.910
229
2.081.722
40,12
Concession fees
for the use of
natural resources
5
109
16.322
5.831
16.533
19.955
7.059
6.292
2.524
9.984
4.258
56.995
7.743
31.960
54.268
180.078
51.345
8.745
298
3.666
483.965
9,33
Annual fees for
registration of
passengers cars
6
1.173
29.653
15.418
26.560
7.545
1.242
200
21.181
10.460
28.257
217
16.755
103.436
33.960
8.216
8.317
17.417
11.460
340
341.807
6,59
Total
(3 do &)
7
5.933
482.576
85.999
116.990
768.373
79.075
30.157
30.934
342.540
27.377
290.988
21.774
39.613
158.529
1.732.688
111.410
208.837
122.088
399.707
129.357
3.684
5.188.629
100,00
%
8
0,11
9,30
1,66
2,26
14,81
1,52
0,58
0,60
6,60
0,53
5,61
0,42
0,76
3,06
33,39
2,15
4,03
2,35
7,70
2,49
0,07
100,00
3. Equalization fund
In the period form January – March 2009, out from the funds from the Equalization fund, municipalities were allocated with
3,5 million € (average monthly allocation of 1,2 mil. €). The highest shares in allocated funds have the following municipalities:
Berane, Bijelo Polje, Nikšić, Mojkovac, Danilovgrad and Rozaje.
4. Other revenues
On the basis of other revenues (revenues from sales of real estate, transferred funds from previous years, donations,
subsidies and other transfers, borrowings and loans) for the period from January – March 2009, municipalities have realized the
total of 36,8 million €. In the share of other revenues, the percentage of the transferred funds from the previous year is 89,39%,
the percentage of the borrowings and loans is 5,57%, the percentage of the donations is 2,07%, the percentage of the revenues
from sales of real estate is 1,59 %, the percentage of the subsidies and other transfers is 1,38 %.
In the following Table is given the overview of realized other revenues of municipalities in the period from January – March
2009, on the basis of the revenue sources:
92
in €
No.
Municipality
1
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Total
%
2
Andrijevica
Bar
Berane
Bijelo Polje
Budva
Danilovgrad
Žabljak
Kolašin
Kotor
Mojkovac
Nikšić
Plav
Plužine
Pljevlja
Podgorica
Rožaje
Tivat
Ulcinj
Herceg Novi
Cetinje
Šavnik
Revenues
from sales of
property
3
Donations
4
10.000
711
550.000
119.889
20.515
138.696
5.078
11.216
5.593
35.457
25.000
175.000
198.805
3.996
24.700
16.200
3.085
524
584.465
1,59
Transferred
Borrowings funds from
previous years
5
6
76.246
2.807.209
170.000
55.851
858.509
31.041
50.000
121.866
1.504.415
185.715
225.000
9.756
5.343.502
126.635
70.000
164.242
60.607
2.239.284
284.000
235.272
18.182.367
390.000
2.000
762.000
2,07
2.047.509
5,57
Subsidies
Total
%
7
8
86.246
2.807.209
472.584
1.439.550
291.755
1.524.930
324.411
239.834
5.607.809
157.228
444.699
67.169
2.239.284
519.272
18.381.172
3.996
1.169.187
350.650
16.200
425.631
187.319
36.756.135
100,00
9
0,24
7,64
1,29
3,92
0,79
4,15
0,88
0,65
15,26
0,43
1,21
0,18
6,09
1,41
50,01
0,01
3,18
0,95
0,04
1,16
0,51
100,00
246.022
253.091
6.562
1.144.487
350.403
247
32.546
184.795
32.856.239
89,39
505.922
1,38
II - Revenue Execution
Total expenditures of the local self government for the period January – March 2009, have been planned in the amount
of 111,08 million €, while total execution of municipal budgets amounted is 52,49 million €, which is 47,26% compared to the
planned one for the period from January – March 2009.
The highest budget execution is in the municipality Savnik – 77,99%, Kolasin – 76,17%, Tivat – 75,63%, Podgorica –
72,47% compared to the plan. The lowest execution degree compared to the plan for the period January – March 2009 is in the
municipality Pluzine – 56.66 %.
Municipality
Andrijevica
Bar
Berane
Bijelo Polje
Budva
Danilovgrad
Herceg Novi
Kolašin
Kotor
Mojkovac
Nikšić
Plav
Plužine
Municipal expenditures January – March 2009
Plan - January – March 2009
Execution - January – March 2009
%Execution
377,059.00
10,705,855.20
2,303,500.00
3,765,000.00
26,947,000.00
1,455,195.00
5,199,600.00
1,463,766.00
6,500,155.81
1,039,846.29
9,604,853.93
740,976.75
1,012,800.00
134,525.79
4,938,829.19
1,424,140.34
2,498,792.28
8,222,989.80
890,692.81
2,276,460.09
1,114,896.24
2,677,560.36
323,891.41
2,634,472.79
417,911.51
228,744.92
35.68
46.13
61.83
66.37
30.52
61.21
43.78
76.17
41.19
31.15
27.43
56.40
22.59
93
Pljevlja
Podgorica
Rožaje
Tivat
Ulcinj
Cetinje
Šavnik
Žabljak
TOTAL
5,575,000.00
24,298,941.60
1,378,749.50
1,976,075.00
3,892,992.00
1,910,000.00
197,764.64
736,360.00
111,081,490.72
2,527,740.02
17,610,304.04
488,537.59
1,494,461.85
887,349.81
1,078,470.00
154,242.69
470,484.71
52,495,498.24
45.34
72.47
35.43
75.63
22.79
56.46
77.99
63.89
47.26
Consolidated expenditures of municipalities for the period January – March 2009, amounted 42,08 million €, which is 1.19%
of estimated GDP for 2009. In the expenditure structure, the highest share have the capital expenditures – 20.77 million € or
39.56% of the total amount of expenditures, and current expenditures (gross income, other earnings, expenditures for material
and services, interests, rent, subsidies and current maintenance) 13.90 million € or 26.48% of total expenditures for the period
January – March 2008. Transfers (transfers for social protection, transfers to institutions, individuals, NGO’s and public sector)
amounted 6.00 million € or 11.43% of total expenditures, payment of debts 10.43 million € or 19.82% of total expenditures,
while other expenditures amounted 1.42 million € or 2.70% of total expenditures.
The following Table indicates the overview of consolidated and total expenditures for the period January – March 2009, (in
million €) by municipalities and types of expenditures:
Municipality
Andrijevica
Bar
Berane
Bijelo Polje
Budva
Danilovgrad
Herceg Novi
Kolašin
Kotor
Mojkovac
Nikšić
Plav
Plužine
Pljevlja
Podgorica
Rožaje
Tivat
Ulcinj
Cetinje
Šavnik
Žabljak
TOTAL
% share
Consolidated expenditures – January – March 2009
Current
expenditures
0.07
0.77
0.63
0.31
0.65
0.49
1.13
0.42
1.28
0.19
1.04
0.11
0.11
1.33
3.67
0.24
0.56
0.41
0.20
0.11
0.19
13.90
26.48
Capital
expenditures
0.01
3.34
0.30
1.06
0.94
0.06
0.25
0.29
0.81
0.04
0.09
0.04
0.04
0.90
11.57
0.05
0.69
0.05
0.10
0.01
0.14
20.77
39.56
Transfers
0.04
0.76
0.19
0.40
0.24
0.32
0.25
0.10
0.43
0.04
0.48
0.08
0.06
0.15
1.81
0.14
0.24
0.08
0.11
0.03
0.03
6.00
11.43
Other
expenditures
0.00
0.07
0.07
0.06
0.06
0.00
0.08
0.00
0.05
0.02
0.15
0.00
0.00
0.04
0.54
0.01
0.01
0.00
0.10
0.06
0.12
1.42
2.70
Consoldated.
% GDP
expenditures
Debt
payment
Total
expenditures
0.12
4.93
1.19
1.82
1.89
0.87
1.71
0.81
2.56
0.29
1.77
0.23
0.21
2.43
17.58
0.44
1.49
0.54
0.51
0.21
0.48
42.08
80.18
0.01
0.00
0.23
0.68
6.34
0.02
0.27
0.30
0.11
0.03
0.86
0.19
0.02
0.10
0.15
0.05
0.00
0.35
0.57
0.01
0.11
10.41
19.82
0.13
4.93
1.42
2.50
8.22
0.89
1.98
1.11
2.68
0.32
2.63
0.42
0.23
2.53
17.73
0.49
1.49
0.89
1.08
0.21
0.59
52.49
100.00
0.00
0.14
0.03
0.05
0.05
0.02
0.05
0.02
0.07
0.01
0.05
0.01
0.01
0.07
0.50
0.01
0.04
0.02
0.01
0.01
0.01
1.19
III - BUDGET INDEBTEDNESS
Total budget indebtedness of the local self government for the period January – March 2009, amounted 25,68 million €,
which is 0,73% of estimated GDP for 2009. In the indebtedness structure, domestic debt is 17.62 million €, which is 68.65% of
total indebtedness, and foreign debt 8.05 million €, which is 31.35% of total indebtedness.
In total indebtedness structure for the period January – March 2009, loans of domestic financial institutions amount 6.90
million €, out of which long term loan amounts 6.51 million € or 25.36% of total credit indebtedness for aforementioned period.
94
Foreign loan share is 31.35% out of the total budget indebtedness, out of which long term loans amount to 31.35% of the total
budget indebtedness for the period January - March 2008.
No.
Type of Indebtedness
TOTAL
% share
%GDP-a
I
Domestic debt
17,629,906.72
68.65
0.50
1
a
b
2
3
II
1
a
b
I+II
Loans
Short term
Principal
Interest
Long term
Principal
Interest
Bonds
Guarantees
Foreign debt
Loans
Short term
Principal
Interest
Long term
Principal
Interest
Total indebtedness
6,901,159.28
387,426.33
382,800.98
4,625.35
6,513,732.95
5,899,984.76
613,748.19
6,384,754.00
4,343,993.44
8,050,183.62
8,050,183.62
0.00
0.00
0.00
8,050,183.62
7,160,980.04
889,203.58
25,680,090.34
26.87
1.51
1.49
0.02
25.36
22.97
2.39
24.86
16.92
31.35
31.35
0.00
0.00
0.00
31.35
27.89
3.46
100.00
0.20
0.01
0.01
0.00
0.18
0.17
0.02
0.18
0.12
0.23
0.23
0.00
0.00
0.00
0.23
0.20
0.03
0.73
IV - Outstanding liabilities
Total outstanding liabilities of the local self government for the period January – March 2009, amounted 30.49 million
€. In the outstanding liabilities structure, capital expenditures amount – 13.04 million € which is 42.79 % of total outstanding
liabilities. Liabilities for current expenditures amounted 8.18 million €, while liabilities on the basis of borrowings and loans
amounted 3.73 million € and payment of debts 3.42 million €.
No.
The type of outstanding liability
TOTAL
% share
% GDP
1
I
II
III
IV
V
VI
VII
2
Liabilities for current expenditures
Liabilities for gross salaries and contributions charged to employer
Liabilities for other personal earnings
Liabilities for other current expenditures
Liabilities on the basis of social protection transfers
Liabilities on the basis of transfers to institutions, individuals and NGO’s
Liabilities for capital expenditures
Liabilities on the basis of borrowings and loans
Liabilities on the basis of the repayment of debt
Liabilities from reserves
Total outstanding liabilities ( I+II III+IV+V+VI+VII )
3*
8,181,415.21
5,019,960.32
284,983.09
2,876,471.80
2,987.00
2,059,104.35
13,045,924.60
3,733,563.80
3,427,067.65
40,245.33
30,490,307.94
26.83
16.46
0.93
9.43
0.01
6.75
42.79
12.25
11.24
0.13
0.13
0.23
0.14
0.01
0.08
0.00
0.06
0.37
0.11
0.10
0.00
0.86
Ms. Gordana Radović,
Independent Advisor I in the Sector for Tax and Customs System
Ms. Slobodanka Burić,
Independent Advisor I, Budget Department
95
Consolidated Public
Consumption in Montenegro
for the Period from I - VI 2009
Consolidated public consumption in the period January-June 2009, has been estimated to the amount of 572,14 million €.
The estimated public consumption level was financed from taxes in the amount of 338,26 million €, contributions 133,61 mil €,
duties 15,45 million €, fees 49,87 million € and other current revenues in the amount of 26,07 million €, and receipts from the
payment of loans in the amount of 23,32 million €.
The Ministry of finance estimated the realization of the local self government units for the first six months of 2009, on the
basis of the plan of municipalities’ from 2009 and realization of municipal budgets in previous years. Moreover, a consolidation
of joint transfers of the Pension and Disability Insurance Fun and the Health Insurance Fun was done.
Current public revenues were estimated in the amount of 586,11 million € or 16,58% out of estimated GDP for 2009
(3.538,00 million €). In the public revenues structure the most important revenues are taxes – 9,56% GDP and contributions –
3,78% BDP-a.
Consolidated public expenditures for the first quarter of 2009, were estimated in the amount of 16,17 % GDP. Current public
consumption (consolidated expenditures decreased by capital expenditures of the current budget, capital budget of Montenegro
state owned funds and local governments) in the first quarter amounted 482,76 million € or 13,65 % GDP.
Individually by economic classification, the highest item represent the transfers for social protection transfers – 160,15
million €, which is 4.53 % GDP, gross wages – 153,61 million € or 4.34 % GDP and transfers to public institutions – 87.06 million
€ or 2,46 % GDP, while capital expenditures amounted 89,37 million € or 2,53% GDP.
96
The following Table indicates the realization of source public revenues and execution of consolidated public expenditures
with financing for the first six months of 2009 in million € and in GDP%:
Consolidated Public Consumption
DESCRIPTION
Current revenues
Taxes
Personal income tax
Tax on profits of legal persons
Property taxes
Value added tax
Excise Tax
Tax on international trade and transactions
Local Taxes
Other revenues of the Republic
Contributions
Pension and disability insurance contributions
Health insurance contributions
Unemployment insurance contributions
Other contributions
Duties
Fees
Other revenues
Receipts from the repayment of loans
CONSOLIDATED EXPENDITURES
CURENT PUBLIC EXPENDITURES
Net salaries
Tax on salaries
Contributions on behalf of employee
Contributions on behalf of employer
Municipal surtax
Expenses for supplies and services
Current maintenance
Interests
Rent
Subsidies
Other expenditures
Rights in the social protection area
Redundancy funds
Rights in the area of health protection
Other rights in the health insurance area
Transfers to institutions, individ. NGO’s and public sector
Transfers to public institutions
Transfers to NGO’s
Transfers to public enterprises
Transfers to individuals
Total capital expenditures
I-VI 2009
Plan
in million €
759,00
478,71
63,39
41,73
23,30
228,11
59,95
38,89
18,51
4,84
164,36
93,16
66,72
4,49
18,20
59,12
32,09
6,51
833,84
650,18
283,41
162,49
13,77
65,05
7,16
12,64
6,19
12,49
3,62
203,24
124,95
183,66
20,40
18,18
-74,84
74,84
-71,03
2,28
17,04
56,28
9,20
16,82
12,46
4,85
36,01
-100,66
Realization
in million €
586,57
338,26
46,58
30,44
8,22
160,17
51,86
21,31
15,32
4,37
133,61
86,33
43,51
3,69
15,45
49,87
26,07
23,32
572,14
482,76
223,21
153,61
8,12
39,23
4,38
6,74
2,86
6,08
2,19
160,15
87,06
89,37
3,87
8,44
14,43
-14,43
-32,17
43,31
30,11
45,37
-6,92
1,49
9,80
1,39
7,07
-17,59
% realization
77,28
70,66
73,47
72,95
35,27
70,22
86,51
54,80
82,77
90,32
81,29
92,67
65,22
82,21
84,92
84,35
81,24
357,94
68,61
74,25
78,76
94,53
59,01
60,30
61,21
53,33
46,24
48,71
60,46
78,80
69,68
48,66
18,99
46,42
45,30
1.896,44
176,78
80,62
-75,17
8,86
78,62
28,61
19,64
Realization
in % GDP
16,58
9,56
1,32
0,86
0,23
4,53
1,47
0,60
0,43
0,12
3,78
2,44
1,23
0,10
0,44
1,41
0,74
0,66
16,17
13,65
6,31
4,34
0,23
1,11
0,12
0,19
0,08
0,17
0,06
4,53
2,46
2,53
0,11
0,24
0,41
-0,41
-0,91
1,22
0,85
1,28
-0,20
0,04
0,28
0,04
0,20
-0,50
97
Budget of Montenegro
Receipts of the Budget of Montenegro and state funds for the period from January – June 2009, amounted 524,99 million
€. Source revenues of the Budget for the period from January – June 2009 amounted 501,67 million €, or 14,18% GDP.
Revenues on the basis of duties amounted 306,72 million €, or 8,67 GDP. Revenues on the basis of fees amount 1333,67
million €. Revenues on the basis of contributions amounted 133,61 million € or 3,78 % GDP. Other current budget revenues
amounted 16,26 million €, while the receipts from the payment of loans amounted 23,32 million €, out of which 22 million €
represents the repayment of the first installment by the Prva Banka. Consolidated budget expenditures for the first six months of
the current year amounted 482,85 million € or 13,65% GDP.
Consolidated Budget and the State Funds Balance
I-VI 2009
98
DESCRIPTION
Plan
Realization
Current revenues
Taxes
Personal income tax
Tax on profits of legal persons
Property taxes
Value added tax
Excise Tax
Tax on international trade and transactions
Other revenues of the Republic
Contributions
Pension and disability insurance contributions
Health insurance contributions
Unemployment insurance contributions
Duties
Fees
Other revenues
Receipts from the repayment of loans
CURENT BUDGET EXPENDITURE
Current maintenance
Interests
Rent
Subsidies
Other expenditures
Transfers to institutions, individ.NGO’s and public sector
Total capital expenditures
Borrowings and Loans
Reserves
DEFICIT/SURPLUS
FINANCING
Domestic financing
Borrowings and loans from domestic sources
Payment of debts to residents
Payment of liabilities from the previous period
Foreign financing
Payment of debts to nonresidents
Donacije
Donations
Privatization revenues and sales of property
in million €
641,39
429,69
48,94
41,73
7,24
228,11
59,95
38,89
4,84
164,36
93,16
66,72
4,49
11,13
10,42
19,26
6,51
713,19
592,12
247,43
144,32
10,64
56,49
3,77
11,96
5,58
11,54
3,13
201,60
109,40
121,07
18,61
15,08
-71,81
71,81
-54,00
0,00
15,64
38,36
6,00
12,62
10,88
4,26
17,50
-102,31
in million €
501,67
306,72
36,02
30,44
2,56
160,17
51,86
21,31
4,37
133,61
86,33
43,51
3,69
10,18
11,59
16,26
23,32
482,85
436,27
192,07
136,38
5,94
32,65
1,31
6,17
2,50
5,39
1,75
159,32
75,78
46,57
3,07
6,01
18,83
-18,83
-26,41
38,95
26,88
38,49
-7,97
0,16
8,96
0,83
0,23
-15,33
% realization
78,22
71,38
73,59
72,95
35,33
70,22
86,51
54,80
90,32
81,29
92,67
65,22
82,21
91,45
111,28
84,39
357,94
67,70
73,68
77,63
94,50
55,89
57,79
34,64
51,55
44,71
46,66
55,83
79,03
69,27
38,47
16,48
39,82
48,92
0,00
171,94
100,33
-132,91
1,27
82,35
19,51
1,29
Realization
in % GDP
14,18
8,67
1,02
0,86
0,07
4,53
1,47
0,60
0,12
3,78
2,44
1,23
0,10
0,29
0,33
0,46
0,66
13,65
12,33
5,43
3,85
0,17
0,92
0,04
0,17
0,07
0,15
0,05
4,50
2,14
1,32
0,09
0,17
0,53
-0,53
-0,75
1,10
0,76
1,09
-0,23
0,00
0,25
0,02
0,01
-0,43
Local Self Government
Estimated consolidated expenditures of the local self government for the first six months of 2009, amounted 89,56 million
€ or 2,53 % GDP. The consumption was covered from taxes in the amount of 31,54 million €, duties 5,27 million€, fees 38,28
million € and other current revenues in the amount of 9,81 million €. Total amount of current revenues of the local self government
in first six months of 2009, are estimated to 84,90 million € or 2,40% GDP.
Consolidated Balance of the Local Self Government in 2009
DESCRIPTION
Current revenues
Taxes
Personal income tax
Real estate tax
Local taxes
Duties
Fees
Other revenues
CURENT PUBLIC EXPENDITURES OF THE LOCAL GOVERNMENT
Current maintenance
Interests
Rent
Subsidies
Other expenditures
Transfers to institutions, individuals and NGO’s
Borrowings and loans
Reserves
DEFICIT / SURPLUSS
FINANCING
Domestic financing
Borrowings and loans from domestic sources
Payment of principal
Payment of liabilities from the previous period
Foreign financing
Payment of debts to nonresidents
Donations
Revenues from privatizations and sales of property
Transfers from the Budget of Montenegro
Increase/Decrease in Deposits
I-VI 2009
Plan
In mill. €
117,61
49,02
14,45
16,06
18,51
7,07
48,71
12,82
118,89
56,30
35,98
18,17
3,13
8,56
3,39
0,68
0,61
0,95
0,50
1,64
16,90
62,59
1,79
3,10
0,07
-0,07
-17,03
2,28
1,40
17,92
2,62
4,20
1,58
0,59
18,51
1,35
4,75
Realization
In mill. €
84,90
31,54
10,56
5,66
15,32
5,27
38,28
9,81
89,56
46,76
31,15
17,23
2,18
6,58
3,08
0,57
0,37
0,70
0,44
0,82
11,55
42,80
0,81
2,43
-4,40
4,40
-5,76
4,36
3,23
6,88
0,49
1,33
0,84
0,56
6,84
0,27
-2,26
% realization
72,18
64,33
73,07
35,24
82,77
74,63
78,59
76,51
75,33
83,05
86,57
94,83
69,60
76,85
90,70
84,91
60,23
73,68
89,71
50,23
68,35
68,38
45,16
78,53
33,82
190,71
230,86
38,42
18,86
31,67
52,93
94,58
36,98
0,00
Realization
in % BDP-a
2,40
0,89
0,30
0,16
0,43
0,15
1,08
0,28
2,53
1,32
0,88
0,49
0,06
0,19
0,09
0,02
0,01
0,02
0,01
0,02
0,33
1,21
0,02
0,07
-0,12
0,12
-0,16
0,12
0,09
0,19
0,01
0,04
0,02
0,02
0,19
0,01
-0,06
Mr. Stanko Jeknić, Independent Advisor I,
Mr. Vladislav Karadžić, Independent Advisor I,
Mr. Radovan Živković, Independent Advisor I,
Mr. Iva Vuković, Senior Advisor III
99
Removing International
Double Taxation
On the basis of the Resolution on Proclaiming the Ind
ependence of the Republic of Montenegro (“Official Gaze
tte of the Republic of Montenegro” No. 36/06), Montenegro
assumed the obligation to apply and take over international
contracts and agreements which had been concluded and
which were entered by the State Community Serbia and
Montenegro and which concern Montenegro and are in acco
rdance with the current legal system.
Introductory remarks
International double taxation represents the barrier in
economic and financial relations development between coun
tries, having dissimulative effects on capital investments and
conduct of international commercial activities. It is arising
when the income or property of a resident (physical or legal
entity) of one country is taxed by the same or significantly
similar tax, both by the country of residence country and
by the country where the income is realized, or where the
property is located.
Tax legislation of most of the countries is design with
the objective of eliminating the problem of international
double taxation by applying unilateral measures. However,
these measures did not prove efficient because they are:
- general, unable to fully comply with the specific nature
of the tax system of other countries;
- unstable, because each country may change them
wholly or partly or withdraw them; and
- not conditioned by reciprocity, i.e. they may have as
a consequence unilateral tax victim, i.e. decrease in tax
revenues without the guarantee that other countries will also
apply appropriate unilateral measures.
Contracts on avoiding double taxation with interested
country* represent the most efficient manner of removing
this barrier, because apart from eliminating obstacles,
foreseen in unequal treatment of taxpayers, legal and fiscal
security is obtained which is one of the prerequisite for
international business activities.
Taxes subject to contract
Contracts on avoiding double taxation are applied to
personal income and property tax imposed by the contracting
100
Mitar Bajčeta
country. In case of Montenegro, the contract is applied to
profit tax, income tax and property tax. Income and property
taxes represent all taxes calculated on total income, total
property or parts of income or property, including taxes on
profit for divested immovable or movable property, taxes on
total amount of earnings paid by companies, as well as taxes
on property yield.
Property income
General rule applied in the Contracts on avoiding
double taxation is that the profit gained from immovable
property (including agricultural or forestry income) is taxed
in the country where the property is located. This solution
does not apply to income realized by direct use of rented the
property or other way of using immovable property, as well
as on income from immovable property used for the conduct
of independent personal activities. Moreover, contracts
regulate that movable business property of the permanent
branch office which a company of the contracting country
holds in other country, to be taxed by that other country.
Profit obtained from divesting other property is taxed
in the contracting country whose resident is a person who
divested property. Contracts with the NR China and Ukraine
prescribe a solution on the basis of which the capital gain
from divesting of shares of company which property directly
or indirectly consists of immovable property located in the
contracting country, to be taxed in that contracting country.
Operational gain
Right to tax the company profit has the contracting co
untry where the company is located. However, if a company
is performing business in other contracting country through
the permanent branch unit, than the taxation right is divided
between the country of origin and country of residence,
whereas the country of residence must recognize the tax paid
on profit of permanent branch unit in the country of origin.
When determining the profit of the permanent branch
unit, as deduction are recognized operational expenses
(including executive and administrative expenses), regardless
if the expenses derived in the contracting country where the
permanent branch unit is located or on any other place. If
commonly accepted in the contracting country, the profit
of the permanent branch unit subject to taxation may be
determined on the basis of distribution of total profit of the
company to individual parts. By rule, this profit should be
regularly determined by applying selected method, except of
there is a justified reason for not applying the method.
racting county where the headquarters of the company is
located.
Taxation of dividends, interests and authorial fees
The contracting country has unlimited right to tax divi
dends, interests and authorial fees of its residents, while the
contracting country in which these revenues were realized
is applying withheld tax. The Contract sets forth beneficiary
tax rates for the withheld taxes applied only if nonresident
recipient provides evidence that he/she fulfils prescribed
conditions, i.e. that he/she is the resident of the country whit
which the contract is concluded and that he is the real owner
of revenues, and not the mediator between the payer and
nonresident recipient.
Taxation of profit from carrying out international tran
sport
The contracting country which company is paying out the
dividend, usually on the basis of the contract withholds the
right to tax this type of revenue based on beneficiary tax rate.
The tax rate usually amounts to 5% of gross dividend amount
if the owner of this type of revenues is the company which
share in the companies capital amounts 25%. If the share
in capital is less than 25%, that the tax rate amounts 15%
of total gross dividend amount. However, aforementioned
does not represent unified rule, thus in certain contracts**
prescribe unified tax rate which the country of origin is
applying to the dividends of nonresidents paid by the resident
company, regardless the share in capital.
Profit from carrying out international transport by
marital ship, aircraft or vehicle is taxed only in the cont
In accordance with the provisions of concluded contracts,
unlimited right to tax interests has the resident country,
101
while the right of the country of origin is limited to 10% of
gross amount of interest. The country of origin is the country
which resident is the payer of interest. However, pursuant to
international practice, regardless the contracted rate, the
amount of the tax for foreign residents is 5%*** on gross
amount of interest, because this is prescribed by national
legislation and in this concrete case is more favorable for
taxpayer.
The country whose resident is the recipient of authorial
fees, has the exclusive right to tax these fees. Contracts in
force, prescribe solution in accordance to which authorial
fees are taxed in Montenegro4, provided however that if a
real recipient is the resident of other contracting country,
the surtax may not exceed 10% of gross amount of authorial
fees. Contracts with Slovenia, Czech and Leetonia prescribe
solution based on which for the fee for the use or right to
use author right to literally or scientific works, including
cinema movies and movies or tapes for TV or radio (so called
intellectual property rights) is applied the withheld tax base
of 5% of gross amount of fee.
- exemption method, where the resident country is
excepting from taxation the income or property of its resident
that was subject to taxation in other country; and
- tax credit method, where the resident country is
deducting from its tax on income or property tax the amount
which its resident paid in other country.
When applying both methods, contracting country whose
resident realized income or property which on the basis of
the contract are excepted from taxation in that country, may
when calculating taxes on other income or other property
of that resident, take into consideration excepted income
or property in order to provide adequate application of tax
progressive rate on income or property if that country is
applying progressive taxation of income or property.
Taxation of earnings or other income
Earnings, fees and other types of income, realized
from labor relations are taxed in the country of residence.
However, if the resident is working in the other contracting
country than personal income is taxed in that country, except
in case when the following three cumulative requirements
are fulfilled:
- that recipient of personal income does not stay in the
other country in the period longer than 183, i.e. tax year,
- that personal income is paid by employer who is not
the resident of other country,
- that personal income is not beard by the permanent
branch unit or headquarters owned by employer in other
country.
Current Contracts on avoiding double taxation prescribe
solution according to which parts of income realized by the
resident of the contracting country, not being regulated by
any other article of the contract, are taxed only in the country
of residence regardless the territory of any contracting party.
Methods of avoiding international double taxation
Contracts prescribe two basic elements for avoiding
double taxation, such as:
Mr. Mitar Bajčeta,
1 - The review of the Contracts on avoiding double taxation applied in Montenegro can be be found on the website of the Ministry of finance (www.mf.gov.me)
2 - E.G. Czech, Italy, China, Cyprus, Rumania.
3 - As of 1st January 2010, withheld tax rate will be applied in the amount of 9%, on interests paid out to nonresident legal entities. (Re. Article 29 and 43a, of the
Law on amendments to the Law on corporate profit tax of legal entities (“Official Gazette of Montenegro”, No. 40/08)).
4 - Contracts with France and Sweden set forth the solution according to which the exclusive taxation rights have aforementioned countries
102

Bulletin of the Ministry of Finance

Transcription

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