Montenegro

Montenegro applied for EU membership in 2008. While the country made significant progress in implementing necessary reforms and aligning its laws in the initial years, recent progress has been slower.

Programme support for Montenegro

Slovakia has gained a solid reputation in Montenegro by supporting the country in the process of gaining its state sovereignty. In the context of Slovak development cooperation efforts, Montenegro was assigned a priority country status in the national ODA strategy in 2009. Montenegro is no longer explicitly defined as a priority country in the current strategy, but the Western Balkans is included among priority territories 

In Montenegro, we focus on enhancing the efficiency, transparency, and accountability of public finance management (PFM). Several projects also aim to engage private sector in development cooperation. Montenegro has been a programme partner country since 2010. 

Under Public Finance for Development program, we have made significant strides in several key areas. We have enhanced our capacity for increasing public revenues, we have fortified the skills and knowledge of municipal officers in capital budgeting, and we have invested in building technical and human resources capabilities within the Ministry, specifically on designing and implementing Economic Reform Programme, accrual accounting, and implementing measures related to regulatory reform and the enhancement of the business environment. The insights and experiences we gain from Slovakia are of immense value as we plan and execute reforms in the realm of public finances.

Aleksandar Damjanović

former Minister of Finance - Montenegro

With almost two decades of experience in the Ministry of Finance and a history of collaborating on projects with various international institutions, I can confidently and objectively assert that the Public Finance for Development program stands out as one of the most valuable initiatives for our administration. The UNDP project team displayed an exceptional level of comprehension regarding our specific requirements during the design phase. This understanding translated into concrete and quantifiable outcomes, duly recognized by the European Commission.

Bojana Bošković

former State Secretary, Ministry of Finance - Montenegro
PUBLIC FINANCE

Within the initial comprehensive support from Slovakia, the Ministry of Finance of Montenegro received assistance in enhancing the accounting and reporting systems within the public sector. Later, additional areas of support were introduced, including increasing gambling revenues, strengthening the effective management of public finances at the local level, improving macroeconomic and fiscal forecasts, and managing public debt. 

Our current efforts focus on: 

  1. Providing support for Montenegro’s PFM reforms – we address key issues in public accounting reform, local government finances, and revenue collection mechanisms. 
  1. Tackling the informal economy – this will foster a more transparent and competitive business environment, improve tax collection, and promote fair competition. 
  1. Preparing Montenegro’s financial systems for the future – we do so by leveraging innovative financing solutions, including fintech, to promote green, inclusive, and digital transformations. 

Key achievements

  • With our support, the Economic Reform Programme, which details crucial economic policies and structural reforms needed for EU integration was developed and adopted. The program has brought about tangible economic and social improvements. 
  • Since 2014, we have been assisting Montenegro with transitioning from cash to accrual accounting. This long-term process includes contributions to the Strategy for Transition to Accrual Accounting and the development of various laws and documents, such as the Law on Accounting in the Public Sector and related secondary legislation, Rulebook on the Uniform Classification of Accounts for the Public Sector Entities (Central Chart of Accounts Rulebook), the Communication Plan for the Transition to Accrual Accounting, Analysis of Accounting Transactions in the Public Sector (proposing expected processing in the accrual accounting system and reporting under the European System of Accounts – ESA), and updates to the Chart of Accounts (CoA) in line with the development of the IT system, accrual accounting, and reporting.  

As part of our support in this area, we focused not only on developing the system but also on building the capacities necessary for its successful implementation. A series of workshops were organized to introduce the concept of accrual accounting, as well as the current developments in EU public sector accounting. Crucially, we also implemented practical on-the-job trainings and coaching sessions on the IPSAS methodology directly at the Ministry of Finance. Since 2015, capacity building has been further supported through a partnership with the Center of Excellence in Finance (funded by our project). Key results of this collaboration include the certification of public accountants (PACT) and the training of over 100 public sector accountants between 2015 and 2020, in partnership with CIPFA, with 75 of them obtaining CIPFA certificates. 

  • We enhanced local financing by equipping municipal officers with knowledge and skills necessary to implement new Regulatory Impact Assessment (RIA) standards. This leads to improved enhancing financial transparency and accuracy in the public sector. 
  • In 2018 – 2021, the MFSR provided EUR 1 million in the form of budget support to cover Montenegro’s budget deficit. This funding was allocated to the development of effective gambling control system in Montenegro, which directly supported the revenue side of the budget. The Law on Gambling and its secondary legislation that were drafted received positive feedback from the European Commission. 
  • We also supported capacity development for Department of the State Treasury at the MF Montenegro in public debt management (which concluded in 2011). Programme enhanced Montenegrin public debt management framework, improved internal processes related to public debt, and prepared the Ministry for the introduction of a risk management system. 
  • In 2015, we played a key role in enhancing the efficiency and transparency of state budgeting. Drawing on the MFSR’s experience in establishing the Financial Policy Institute, a comparable analytical department was created within Montenegro’s Ministry of Finance. 
  • We assisted with the development of six Citizen Budget Guides for the cities of Podgorica, Bar, Bijelo Polje, Mojkovac, Pjevlja, and Tivat in 2020, enabling citizens to better understand and monitor their municipal budgets. 
  • We improved municipal budget revenues by developing a Methodology to Assess Fiscal Risk in Public Enterprises and Municipalities. 
  • We increased transparency in the allocation of funds from the Equalization fund for underdeveloped municipalities by creating a formula and software for calculating these allocations. 
  • We supported the creation of a mechanism to assist municipalities with pre-financing EU-funded projects through a Revolving Fund. 
  • We contributed to the drafting of the Local Self-Government Financing Act by facilitating knowledge exchange between Montenegrin and Slovak local self-government representatives through several study visit to Slovakia. 
PRIVATE SECTOR ENGAGEMENT

In Montenegro, we focus on improving waste management, which is currently one of the country’s most pressing challenges. The issues include a lack of proper landfills, many of which do not meet ecological standards, as well as a minimal and inefficient recycling system, particularly for waste such as tires, electronic waste, and construction debris. The project we support, ReWaste: Reducing Waste and Reassessing Waste Management in Montenegro, aims to improve this system by promoting the implementation of extended producer responsibility (EPR) for the aforementioned waste. These changes are also mandated by the European Commission as part of the country’s EU accession process. The project seeks to establish new processes to integrate waste generation, collection, and disposal, increase waste separation at the source, and enhance recycling rates. Additionally, the goal is to encourage a shift in behavior among citizens and businesses. 

Between 2020 and 2024, several projects aimed at engaging the private sector have been implemented in Montenegro through the Resource Mobilization Facility (RMF). This fund was created to assist with pre-investment studies, including feasibility studies, sector analyses, financing models, and other preparatory work for future investment projects under the UNDP national offices. Projects supported within RMF focused mainly on decarbonization, energy efficiency or the use of solar energy. Click below for details of the projects implemented in Montenegro.

Projects funded by RMF
UNDP in Montenegro website