M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 17– Economic and Monetary Policy Bilateral screening: Chapter 17 PRESENTATION OF MONTENEGRO Brussels, 25 February 2013

2 Economic and Monetary Policy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 17: Economic and Monetary Policy Fiscal Policy Focused on securing economic growth. Competitive and simple tax system. With the lowest tax rates in the region and one of the most competitive in the Europe. We attempted to resolve the problem of economic illiquidity by abolishing the income tax payment in advance and facilitating the payments of this obligation in a period of six monthly instalments. Also we have introduced the reprogramming the tax liabilities instrument, as well as the possibility of the deferred payment of customs duties. Largely aligned with the Acquis.

3 Economic and Monetary Policy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 17: Economic and Monetary Policy Fiscal Policy Fiscal policy objectives: Extension of the tax base, with fewer exceptions Attracting stable and strong investors Further harmonization of tax laws with EU legislation Reduction of grey economy Temporary Measures: The introduction of the crisis tax on income The freezing of the pension increase

4 Economic and Monetary Policy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 17: Economic and Monetary Policy Fiscal Policy -Budgetary balances Public debt -Long term sustainability of public finances -Bugetary rules and institutions - Bugetary framework

5 Economic and Monetary Policy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 17: Economic and Monetary Policy Preparation As a potential candidate country Montenegro prepared 6 EFPs. As EU candidate country we submitted second PEP. Preparation for every Programme starts in September with Workshop where team is informed with their obligation, with conclusion where we have to improve previous Programme. The quality of the EFP, namely PEP is improving each year. 40 people from various departments are gathered due to the preparation of the documents, whereas the coordination is entrusted to the MoF -Department of Economic Policy and Development. Coordination of economic policies

6 Economic and Monetary Policy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 17: Economic and Monetary Policy With regard to the years of experience in the preparation of EFP, as well as PEP, we clearly state that we are dealing with a high quality team with reinforced capacities. Montenegro was one of the first countries to introduce the alternative scenarios, which later became the European Commission's recommendations for other countries. The novelty of this year's PEP is the introduction of boxes, which are aimed to explain the specifics of our economy. The budget process is consistent with the time dynamics of developing the PEP, and it was aimed to create the preconditions for conducting the economic dialogue. For the purpose of conducting a clear economic dialogue, the MoF participates twice annually in the meetings of the EC, regarding the macro and fiscal projections (spring and autumn). Coordination of economic policies

7 Economic and Monetary Policy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 17: Economic and Monetary Policy - Each year from October to the end of year MoF with other institution in MNE prepare PEP. - Based on agreed format with Commission. -Focus on medium term projections - Goals macroeconomic stability and fiscal sustainability - Increase in transparency - MNE is member of IMF GDDS System - Improved data quality and availability on monthly and quarterly level - Fiscal discipline Fiscal Surveliance

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