IMF says Montenegro should reduce spending on public wages and pensions to reduce debt

IMF says Montenegro should reduce spending on public wages and pensions to reduce debt
The Podgorica government is trying to improve local government finances, cut spending and reduce its high public debt
By bne IntelliNews June 7, 2017

The International Monetary Fund advised Montenegro to reduce its spending on public wages and pensions as a next step towards improving its fiscal discipline in order to cut public spending and reduce debt.

Montenegro has already drafted a set of measures aimed at cutting spending and reducing its high public debt, including reduction of social payments to mothers of three or more children and of public sector wages. The Podgorica government has also given local firms the opportunity to ask for tax debt reprogramming. The tax authority received around 5,500 requests to reprogramme a combined total of €185mn of tax debt. It is also discussing increasing VAT for certain goods.

“The authorities are already taking some steps to limit wage costs by reducing the wages of senior officials and shrinking the public sector work force. They do not intend to reduce existing pensions but rather limit costly early retirement options. There is also a need to improve local government finances, service delivery, and fiscal accountability,” the IMF said in a statement on June 7 upon completion of a mission to Montenegro.

It added that the fiscal strategy drafted by the government was in line with the fund’s recommendations and, if approved, would put government finances on a strong footing to achieve fiscal sustainability.

The programme aims to reduce Montenegro’s public debt and return its budget to surplus within three years. Several international institutions have warned that Montenegro should improve its fiscal discipline to cut spending and reduce public debt.

Related Articles

Montenegro to speed up re-nationalisation of power firm EPCG

Montenegro’s government has decided to speed up the acquisition of Italian A2A's stake in the power firm EPCG, paying €68.9mn for a ... more

EU slams Montenegro’s lack of progress in fight against corruption

The European Commission slammed Montenegro for its lack of progress in fight against organised crime in its progress report released on April 17, and said that the country ... more

Bulgaria’s Borissov appeals to Western Balkan leaders to preserve peace

Boyko Borissov, prime minister of the current EU Council chair Bulgaria, called on April 10 on the leaders of the Western Balkan countries to preserve peace and ... more

Dismiss