Montenegro’s police stopped protesting mothers from forcefully entering the parliament building on February 16. Thousands of mothers of three and more children joined the demonstration as they are unhappy with the 25% benefits cut made in January.
In the 2017 budget, Montenegro’s government decided to reduce the social payments introduced by the previous government by 25%, and the wages of workers in the state administration by 12.5%, in order to tighten fiscal discipline and avoid the excessive rise of public debt.
A video broadcast by news outlet CDM showed the group tore down the protective fence and attempted to enter the parliament, shouting “Thieves!” and “Resignations!”. The police stopped them without using force.
Legislative amendments giving mothers of three or more children who have worked for at least 25 or 15 years respectively lifetime benefits equal to 70% of the average wage came into force in January last year. In February 2016, Montenegro also decided to raise public sector wages by up to 16%. Both decisions were criticised as putting at risk public finances and the opposition claimed they were adopted to help the ruling party to win the general election in October 2016.
The protest was staged the day after the parliament decided to lift immunity of two opposition leaders and allow their arrest by special prosecutors. Andrija Mandic and Milan Knezevic are suspected of playing a key role in an alleged coup plot with the aim of seizing power in the country. The parliament’s decision and the investigation have significantly increased political tensions in Montenegro, where all opposition parties are unhappy with the October 16 general election results and claim that the long-ruling Democratic Party of Socialists (DPS) won unfairly.
The mothers’ protest will put more pressure on the government of Prime Minister Dusko Markovic of the DPS, which must find a way to seriously reduce public spending and stabilise public debt, which stood at 60.6% of the projected end-year GDP as of end-June 2016.
Earlier in February, the European Commission warmed that Montenegro’s fiscal deficit will most likely rise this year despite fiscal consolidation plans, mainly because of the increased spending on social payments.
Substantial financing needs are expected to raise the stock of public debt above 70% of GDP until 2018. Although the country will not have to refinance Eurobonds in 2017 or in 2018, the refinancing risk will intensify in 2019, when bonds worth 7% of GDP are due to mature.
The cost cutting measures in the 2017 budget plan were well accepted by the central bank, but faced strong objections from all opposition parties.
According to the budget bill, the government is targeting a deficit equal to 6% of the projected GDP. The government has also adopted measures to cut the budget deficit by 2021. In 2019, the deficit should fall to 3.9% of GDP, while in 2021 the country should have a surplus equal to 0.9% of GDP.
At the same time, public debt is seen rising further in the coming years. In 2019 it is expected to reach 79.5% of the projected GDP compared to 70.7% estimated for 2016. The debt should then start declining, reaching 74.1% of GDP in 2021.
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