Business Environment Macroeconomic Outlook Capital Markets Banking Sector Privatization and Investments Economic Freedom Business News In the Spotlight Coming up... Access to larger EU funds enabled Candidate status provided Montenegro with the possibility of making greater use of EU pre-accession funds. This means that it now has the right to use all five IPA components instead of just the two that have previously been used: • Support for transition and institutionbuilding; • Cross-border cooperation. The other three components are aimed at candidate countries only and include: • Regional development; • Human resources development; • Rural development.
In the Spotlight Montenegro Officialy Becomes an EU Candidate Country On Friday, December 17th, 2010, at a two-day summit in Brussels, the European Council backed a recommendation made by the European Commission to grant candidate status to Montenegro. However, this decision does not guarantee an easy journey towards joining the Union, since no date for the opening of membership talks has been set yet. This is a signal that the country, which has a population of just 630,000, needs to speed up reforms. Montenegro is the fifth candidate country in line for membership, together with Croatia, Iceland, Macedonia and Turkey. To obtain a date for launching membership negotiations, Montenegro must meet seven conditions: - Harmonize Electoral Law in line with the recommendations of the OSCE-ODIHR and the Venice Commission; - Strengthen its administrative capacity and independence of the judiciary; - Fight corruption and organized crime; - Boost media freedom; - Increase co-operation with the civil sector, mostly NGOs; - Prevent discrimination; and - Find sustainable solutions to close the refugee camp on the outskirts of Podgorica. Montenegrins have also been told that lots of work remains before they join the EU. Passing laws is good, says the European Commission, but implementation matters more. Such criticism has not ruffled feathers in Podgorica. Officials assessed the Commission’s opinions and comments as “quite fair”. The European Parliament expects the negotiations to start at the latest after the publication of the 2011 commission progress report, provided Montenegro makes good progress in fulfilling the benchmarks set by the commission.
Key findings of the opinion on Montenegro:
Political criteria Montenegro has continued to make progress in addressing the political criteria. It has improved its legal framework and has strengthened its administrative and institutional capacity. Regarding human rights and the respect for and protection of minority groups, the legal and policy framework is largely in place and broadly corresponds to European and international standards. The institutional framework is largely adequate. However, there are gaps in implementation. Montenegro needs to effectively implement and enforce legislation in all fields. The main concerns relate to the following areas: effectiveness of anti-discrimination policies, freedom of expression and government relations with the civil society as well as the situation regarding displaced persons from Croatia, Bosnia and Herzegovina and Kosovo. Furthermore, Montenegro needs to intensify its efforts to consolidate its rule of law, in particular in the fight against corruption and organised crime, which still remain a serious problem. Montenegro plays a constructive role in maintaining regional stability and in fostering good neighbourly relations with other Western Balkan and EU countries. Economic criteria Montenegro has taken important steps towards establishing a functional market economy. To be considered as a functional market economy, Montenegro needs to further address internal and external imbalances, as well as weaknesses, notably in the financial sector and in the functioning of labour markets. Montenegro has achieved a good track record in the implementation of economic reforms and in implementing a broad domestic consensus on the fundamentals of economic policy. The free interplay of market forces has developed over the last decade through privatisation and the abolition of controls on prices.
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Foreign investments have been attracted by the improved business environment. The Montenegrin economy remains very open and the level of trade and investment integration with the EU and the Western Balkan region is high. However, the global crisis unveiled significant internal and external imbalances which exposed the country and threatened its macroeconomic stability. The crisis also revealed vulnerabilities in the regulation and supervision of the banking sector, calling for the critical recapitalisation of banks. Persistent unemployment points to weaknesses in education and in vocational training systems, as well as to some problems regarding rigidity in the labour market. The country still has inadequate and insufficient energy and transport infrastructures. Persistent weaknesses in the rule of law and in the large informal sector have a negative effect on the business environment. EU legislation Montenegro has made further progress in aligning itself with European standards, particularly in certain areas of its internal market, in trade-related provisions, and in customs and taxation. However, additional efforts are needed for Montenegro to become aligned with EU legislation and to implement it effectively in the medium term, particularly regarding freedom of movement for workers, services and capital, public procurement, competition, financial services, information society and media, transport policy, energy, economic and monetary policy, consumerism and health protection. The country faces major challenges in implementing and enforcing legislation. Administrative and judicial capacities still remain very limited. The country needs to make sustained efforts to strengthen these in order to assume its obligations of membership during the medium-term.