The UAE Situation Led Montenegro to Lose Ten European Investors
Montenegrin President Jakov Milatović announced that the prospective investments from the United Arab Emirates have resulted in the loss of ten investors from Western Europe for the country.
This declaration was made during the conference titled “Why are we late? What next?”, which was organized by the President’s Office to address the current state of the domestic economy.
Milatović indicated that the Cabinet has conducted three economic analyses focusing on economic indicators, governance of state-owned enterprises, and societal inequalities, specifically examining the periods from 2017 to 2019 and 2022 to 2024.
The President highlighted that the findings reveal that small and medium enterprises lack institutional support and benefits. He noted that foreign investments are predominantly directed towards real estate rather than production. Consequently, the government has proposed ten measures aimed at reducing inflation based on these findings.
“Montenegro possesses immense potential, yet there is a prevailing sense of stagnation and delay. Since September of last year, inflation has consistently risen each month, peaking in May at double the rate of the eurozone. Citizens are aware of the financial strain when their salaries last only two or three weeks, resulting in significant stress for workers and pensioners. Imports increased by eight percent in 2025, while exports saw a decrease of 0.5 percent. Financial resources are diminishing, jeopardizing development, which is unsustainable…” he elaborated.
In his comparison of the performance of state-owned enterprises today versus the past, Milatović noted that the Montenegrin Electricity Distribution System (CEDIS) and the Electric Power Company (EPC) are yielding lower profits than before, despite an increase in their workforce. He reported that the Pljevlja Coal Mine has seen a 50 percent increase in employees, while CEDIS and EPC have grown by 27 percent and 19 percent, respectively, asserting that the existing model of higher wages and reduced profits is not viable.
He also mentioned that tourism revenue declined in 2024 for the first time in 15 years, with domestic airports experiencing similar revenue drops. He emphasized the need for responsible, professional, and economical management of state resources.
Among his proposed measures for improvement are efficient tax oversight, alignment of the minimum wage with living costs, compensation for individuals not exercising their PIO rights, and a luxury tax.
He expressed his concern that the foundation for future growth is limited, stressing that Montenegro needs to strategically attract serious investors, a situation that is currently lacking. He reiterated the impact of the agreement with the United Arab Emirates, asserting that it has cost Montenegro ten investors from Western Europe.
Milatović also expressed his desire for timely preparations for the tourist season at least once. He remarked on the economic slowdown witnessed last year and its continuation into this year, with a reported growth of only 2.5 percent in the first three months. He highlighted that an annual growth rate of five percent is essential to bridge the gap with EU standards.
There were more investments before.
Maja Baćović, a professor at the Faculty of Economics, noted that the economy is experiencing a slowdown, arguing that the average growth rate over the last five years is on par with the previous 14 years, both hindered by significant international crises (Covid and the financial crisis). She mentioned that the average growth in those earlier 14 years was approximately 3 percent, whereas the last five years saw about 2.3 percent.
Baćović explained that the sources of growth have shifted: previously driven largely by investments, the current growth is fueled by consumer spending. She stated that Montenegro has been concentrating on EU accession and redistributive policies rather than those fostering production and competition. She emphasized that institutions, human capital, and infrastructure are crucial for economic growth, and that the state’s focus on institutions is at the expense of these other factors.
“The repercussions of the situation citizens have faced over the past five years will soon manifest. It’s crucial to evaluate how they will fare in the EU market and whether we are prepared to shoulder the burdens of competition,” Baćović asserted.
She explained that inflation can arise in two ways: through imported factors (services, production, and imports) or domestically, due to an increase in the money supply without a corresponding rise in production. She noted that inflation was first observed in 2007 due to real estate purchases, and again with the introduction of Europe Now 1, which increased citizens’ disposable income.
Baćović pointed out that any wage growth driven by fiscal measures has been negated by inflation, but that the government has various means to address this, particularly through fiscal policies.
Reduce the number of state-owned companies and capital
Marko Sošić, a public policy researcher from the Alternative Institute, addressed the management of state-owned companies, arguing that there is excessive focus on ownership; he believes Montenegro needs more radical changes, such as reducing the number of companies and state capital.
He contended that the issue is often approached by merely expanding its scale…
“You can’t rely on a home-based relationship because one board of directors supports one approach while another does not. Gentle measures might be effective in regulated systems, but we require drastic changes and local-level transformations, given there are currently 130 companies,” he emphasized, pointing out the significance of the Law on Business Companies in shedding light on the operational realities within these enterprises.
He asserted that he doubts this law will effect any significant change but anticipates that it will at least tighten employment conditions.
Ivana Mihajlović, representing the Union of Free Trade Unions, stated that they have repeatedly contacted the Government for accountability with no response. She highlighted that the housing policy is an area in need of reform, yet they have received no feedback on their proposals for over a year.
“All measures implemented post-2020, in my opinion, have lacked sustainable fiscal backing. In Montenegro, one in three children lives at risk of poverty. Furthermore, there are serious concerns regarding staffing shortages in critical public positions,” Mihajlović indicated, stating that the available data suggests Montenegro is not achieving a status of social justice.
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