The UN sanctions in the wake of Yugoslavia’s collapse hit Montenegro’s economy hard. It is currently undergoing a reform process to become a market economy, accompanied by privatisation and restructuring measures. There is a major structural mismatch between the poor North, the comparatively well developed centre with its industrial and administrative sectors, and the tourism-based southern regions bordering the Adriatic. While tourism on the coast is visibly developing, there are very few competitive enterprises in other industries.

Montenegro’s EU membership depends on a number of factors, one of which is its acceptance of the acquis communautaire. This will require the country to align its national laws with EU standards, introduce a competitive market economy and introduce structural reforms.

Sustainable economic promotion

GTZ is supporting the economic reform programme of the Montenegrin government, which seeks to enhance import substitution, open up new export markets and create jobs. These improvements are vital to the establishment of an independent, competitive and sustainable market economy – the prerequisite for continued rapprochement with the EU.
The projects and programmes address all levels of economic development and are linked in the creation of clusters and value chains: at the micro or enterprise level, in associations and advisory services at the meso level, and the state macro level. Using the core tourism sector as a springboard, support is provided to develop complementary industries, while cross-industry issues are also addressed. The principal aim is to enable the partners to develop sustainable promotion and advisory services.

Further priority goals for the Montenegrin Government in the vocational training sector are improving the education and training system, aligning it with labour market supply and demand, and bringing the vocational training sector up to European standards. In selected vocational training institutions GTZ supports efforts to introduce demand- and practice-oriented curricula to enhance the employability and employment opportunities of students and unemployed young people and adults.

Montenegro is beginning to develop modern administration structures and efficient local self-government systems. GTZ is supporting the modernisation of (local) administrative bodies, which helps to improve public service provision. Public authorities’ sources of revenue, such as property and land taxes, are being strengthened, the municipalities’ capacities enhanced and legal issues (e.g. land and property ownership) clarified.

Montenegro’s fiscal policy has been independent of Serbia since 1998. Since 2001 priority has been given to stabilising the overall economy and accelerating structural reforms. These predominantly aim to create legal security, streamline public administration and reform the financial sector and the labour market.

Montenegro imports one third of its energy needs at a high price. Energy across the entire region is scarce. Even so, with the exception of hydropower the country is not using the major potential it has to improve energy efficiency and introduce renewable energies. GTZ supports Montenegro in drawing up and adopting legislation and implementing provisions in these two areas. Energy efficiency competences are strengthened, innovative measures identified and implemented, and the resulting knowledge scaled up.