Djukanovic: Greek scenario for Montenegro is inevitable if the practice does not immediately change

The proposed budget for the next year is consumer, planned on unrealistic assumptions and unsustainable due to the high deficiencies planned, said the President of Montenegro, Milo Djukanovic, said that in this way the practice of political populism continues.

- The budget is much more consumer than the developmental and to a significant extent continues the practice of political populism established by the adoption of the budget for this year. It is a very dangerous practice that threatens public finances stability and economic sustainability. That is why he requires an emergency change in the policy of the executive power - establishing a responsible government that will do the job of consolidation of public finances and the realization of structural reforms, so that economic activity can be normalized in this country, and therefore political life - Djukanovic said in an interview with Mina -Business.

He added that the budget is planned in the amount of 2.85 billion euros, which is about 165 million more than the current year and is worried in itself, having the height and structure of budget consumption this year. He also recalled that the capital budget was planned to 202 million euros, which is about seven percent.

- If the structure of the budget is such that 93 percent is consumption and seven percent of the investment, then it is clearly not developmental but consumer Budzet. That is quite clear - Djukanovic said.

He said that the reality of budget planning is closely dependent on the reality of projections of the political and macroeconomic framework.

- I am afraid that budget planning is based on unrealistic assumptions both domestic and international. The proposal of the budget assumes that the Montenegrin economy will grow at the rate of four percent next year. This optimistic assessment is based on the implementation of reforms and the influx of investment. I am afraid that neither is realistic - Djukanovic said.

He said that if the realization of reforms really wanted, especially deep as they are now needed by Montenegro, then it is necessary to have a distinct political stability, which there is no.

- It is not realistic that in the conditions of unreliable political stability, we will have a strong government that will take responsibility of bringing in public finances and be able to realize very painful structural reforms that cannot be disposed of further - said Djukanovic.

The budget rests on an unrealistic assumption

He added that he was afraid that the proposal of the budget law for the coming year rests on the unrealistic assumption of the position of our country abroad.

- It is more realistic to expect the EU to occupy a complete distance in relation to the Government than to support it and open the possibility of borrowing with European banks - said Djukanovic.

He warned that the value of Montenegrin bonds had fallen fiercely in the European market, that there is also no virtuous possibility of borrowing with domestic banks, and that the Government in the last quarter of this year, in the inability to borrow on the foreign financial market, in the domestic borrowing 55 million. And the Government plan is to take 2.7 billion euros in the next three -year period (2023 - 2025).

- It is clear that it is not a realistic assumption that we will have a deep reform, nor an intense appearance of investment - said Djukanovic.

He believes that the budget is also unsustainable because of the high deficits that are planned.

- The deficit for the next year is planned at a level of 366milion, or about six percent, and on this level it is designed for both 2024 and 2025. So, far beyond what is the rules that are valid by the Eurozone. It is even more dangerous that after a long time, we will have a budget deficit of current consumption. In this way, we directly violate the Budget Law and Fiscal Responsibility and disrupt the gold fiscal rule, which is that current consumption must be financed from original revenues - Djukanovic said.

He stated that the capital consumption, or investment, may be financed to a certain level from a loan, assuming that the newly created product, whether it was a car, cable or ski resort, generated new revenues in the coming years and that they would be from these Revenue to service loans that are taken to realize these investments.

- We plan not only for the next, but also for 2024 and 2025, with a budget and medium -sized frame, approximately 150milion of current consumption deficits. This means that we will finance salaries, pensions and social giving from the loan, and there is no basis to believe that we will create a new and larger social product from such consumption that will provide us with additional public revenues later and repay loans - said Djukanovic.

He said that in this way it was only created an illusion that it was possible to live independently of the results of work and increase personal receipts or earnings, independently of growth of labor productivity.

Djukanovic believes that Montenegro is in a serious problem with the sustainability of the budget and when it comes to the relationship between current and capital consumption.

- The capital budget is planned at a level of EUR 202 million, which is 20 percent lower than this year when it was 240 million and significantly lower than in some previous year when it came up to 280milion. I am afraid that there is nothing planned in the capital budget that could encourage the renovation of the investment cycle, generate a more favorable dynamics of economic life and provide job creation - said Djukanovic.

He also stated that the organization of early parliamentary elections is the only possible way to reach the responsible government and to return to Montenegro to a proven to a successful model of political life and run economic policy, which it had until two years ago.

Social policy needs a serious reform

Djukanovic said that social policy refers to the same grade as when it comes to the policy of salary and personal consumption.

- You have to notice that there is no announcement of serious reforms in the policy of earnings and social fees. When I talk about earnings, it would be logical to expect a reform package that would infuriate the productivity of labor productivity in the public sector and provided a fiscal sustainability of the earnings system, improved the award -winning system and contributed to a better service of citizens - said Djukanovic.

When it comes to social fees, he recalled that in just two years, the consumption framework for social and children's protection increased more than 100 from 100 and reached approximately a level of 190 million.

- To understand each other, I am also a man of politics and I want to do as much as possible to increase the earnings of people in Montenegro, to increase social fees, but I have never used to create illusions. So, I believe that we are all responsible, and especially the Government and the state functioners to speak the truth and to develop the awareness that the consumption of each individual and society as a whole depends solely on how we have worked before and how much we created - Djukanovic said.

When it comes to social policy, he believes that a serious reform is required to provide these fees to be more accurately directed towards those who are really needed.

- I do not think that it is neither a smart nor a rational policy that introduces children's accessories for all children in Montenegro. This is absolutely not necessary. Instead, it needs more generously help families who really need social assistance. Also, some other measures from the social policy framework are a consequence of populist irresponsible resonance - said Djukanovic.

He recalled that the US program was now, when adopted, was dominantly focused on the labor market.

- However, when the program was supposed to vote, parliamentarians and most prominent clubs played, so that they were supporting their support with demands for increasing various social benefits to play more successful care for the benefit of citizens. That is why today we have this level of consumption in the policy of earnings and social compensation that has no foundation in the created social product. When you get into such a situation, the only thing you can realistically hope for in the near future is bankrupt. Whether it is a household, a presence or a state - Djukanovic said.

If there was a responsible government, an arrangement with the IMF would be unnecessary

He also believes that an arrangement with the International Monetary Fund (IMF) would be unnecessary if there was a politically responsible government, which takes care that the revenues and expenses in the budget are to the maximum possible extent secreted and the deficit tolerable.

- When you do not have such a government, then you have to turn to the IMF and together with it a medium -sized program of consolidation of public finances - said Djukanovic.

He recalled the Greek experience, when in 2009, the then Prime Minister of Greek Jorgos Papandre announced that the state of public finances was unusual worse than what the previous governments had said. At that moment, the height of the public debt relative to the gross domestic product (GDP) was 126st.

- Greece addressed the IMF to conclude an arrangement that will mean a program of financial consolidation and structural reforms. From 2010 to 2020, Greece went through 14 packages of savings and realization of structural reforms. The IMF focus is how to balance revenues and expenditures. Thus, these packages of savings are required to water the consumption and increase in public revenue. What does that specifically mean? Plato and pension and tax increase - Djukanovic said.

He recalled that through these 14 packets of savings on eight occasions, there was a decrease in earnings, and six occasions and pensions, while hundreds of thousands of jobs, above all in the public sector, were lost.

- These are packets of savings and structural reforms that are not affected by. Various governments in Greece have protested and jumped that they will never accept such conditions. However, in order to be sitting with the IMF at all and talking to him about financing assistance, they had previously had to undergo laws in parliament to guarantee the fulfillment of the conditions that the IMF set. Greece, during that time, leaned around 325 billion. This led an additional increase in public debt, so in 2017, when it was established by some stability and first realized a surplus, Greece was at 182 long debt compared to GDP - said Djukanovic.

He added that all of this was accompanied by a multiple tax increase, thus losing the attractiveness of the business ambience, and therefore the interest of the investor. And this is not a bit of a nice perspective for a country that needs a recovery of economics.

- The states and the smart governments are therefore avoiding the scenario, do not enter into uncontrolled, unfounded consumption if they would not have left the IMF and control, which will justifiably and quite understandable to be rigorous. Entering such a reality means a clear confirmation that the state behaves irresponsible and that it creates consumption that its economy cannot endure. So prevention is responsible for managing the Economic Policy of the Earth. Unfortunately, we do not have that now, so we are talking about a potential arrangement with the IMF - said Djukanovic.

He added that the arrangement was not officially requested so far, but that he did not think that Montenegro was far from him.

- In order to see that in the existing schedule of political forces, we will soon come to a political authoritative and stable government, which will take responsibility for the necessary cuts. And, it seems to me that now the dynamics are very unfavorable and that we are spoiling our position and chances from month to month - said Djukanovic.

Greek scenario for Montenegro is inevitable if the practice does not change immediately

He also recalled that at the moment when Greece had entered the crisis of European economy, it seemed much better than it is today.

- In the projections of the European Commission for the Last Quarter this year, it is said that the European economy will be on the fall, and for the next year there is a growth of only 0.3sto. Therefore, what was spent by European monetary practice during previous years, that the crises that performed were solved by the so -called quantitative loan, that is, a slightly more flexible monetary policy - said Djukanovic.

He added that thanks to such earlier practice, we have inflation in the euro area today, which will probably be about ten percent at the end of the year.

- Teacted by this, today the European Central Bank (ECB) is a real reduction of monetary mass in Europe with a smaller offer of the euro compared to the Zahuktal search. It is clear that the price of money is increasing, it is clear why the ECB has already raised the reference interest rate, which will now be upgraded by commercial banks on the basis of that rate of its costs and commissions, and why the costs of each next borrowing will be increasing - Djukanovic said .

He said that he did not want to spread panic and did not say that all this in Montenegro had to happen, but believes that the practice for the last two years is very warning and that if it does not change immediately, it is almost inevitable that Montenegro is also that Montenegro enters the so -called Greek scenario.

- And I don't see that change is planned. I wish I could qualify for the budget as development and investment, but unfortunately, I qualify it as consumer, and this consumption relies to the borrowing significantly - said Djukanovic.

He said he was a more optimistic scenario, even though he did not want him, that in partnership with the IMF, when we could not already, he had a medium-sized program that would guarantee that the poor practice of uncontrolled consumption and the country returned to real economic and financial frames.

- Pessimistic than that is to extend the spontaneous economic decay due to a very short -term political illusion of adventurers who think that thus wins or preserves power. And that means that the consumption we prescribed by law cannot be serviced from original revenues, we cannot borrow in the domestic and foreign markets, and therefore we cannot reconcile our obligations for salaries, pensions and social benefits, or those according to foreign creditors. That's the worst possible scenario I'm talking about. We haven't come until then, but as we have been doing for the last two years and as we have projects public consumption for the next year, I think we are close to such an epilogue. We continue to move in this direction with very threatening consequences - Djukanovic said.

About the Program of Europe USA

Asked if the Europe program was now adopted at the wrong time and whether it is an exclusive cause of inflation jump, Djukanovic replied that the time is not important, but to neglect the issue of public finances and non -stactified implementation without thinking that the program is a key generator of inflation .

- I understand and support some of the program ideas, such as the idea of relieving employers from high tax rates and contributions to work. I am a hard advocate that the correction of taxes and contributions must be only lower - said Djukanovic.

He said that he also supports the idea of finding a good balance between investment and personal consumption.

- When I look at this distance from this distance, the Government that I led and those in which the partition of which I am headed to the head is dominant, I think we had to look for a better balance between investment and personal consumption - said Djukanovic.

He said he was always on the side of the logic of a good host.

- If a good host says- let's invest in our house repair now, to build a car-path, to provide travel safety, to suffer less people through pay, to make a submarine energy cable to Italy, to build new structures of winter tourism in north of Montenegro Instead of the former industrial combines, to create the conditions for new investments with the development of the ski resort infrastructure, which is why today, for example, in Kolašin we have about 15 private investments in new hotels. It's hard to complain about this, but it seems to me now that we are guided by this idea to invest as much as possible in accelerated development, some of the policy implies very sensitive attention to improving the living standard because citizens want to feel the benefits of the policy for which they have supported you as soon as possible - Djukanovic explained.

Most of them, as he believes, do not accept arguments that there is so much priority to construction of the auto-put, nor are they ready to wait that the investment starts to reject new jobs where their children will work for five or seven years.

- People are very, very impatient. I don't complain about it, I understand. We all want us to provide a better standard for our lives. I do not expect someone who does not deal with politics that it is not important for him to increase the earnings of 200 euros, and that it is more important for us all to separate from the budget together and make another section of the Auto Put. This is not a realistic expectation - Djukanovic said.

He said that it seemed to him now that they, as an earlier Government, have been underestimated to some extent, which is an impatientness and expectation of citizens for higher incomes and in some way created a suitable terrain for populism, which escalated late last year by creating Europe US program.

- As we run the Government, we are not economists, but above all politicians, we take responsibility for the public interests and interests of citizens. Today, it seems to me that it has had a political justification to realize some of the capital investments more in slow motion, and to direct some of these budget funds in the faster increase in salary and pension. Certainly from the accelerated realization of the most important infrastructure and development projects, especially in energy and Turzma, Montenegro is not at a loss. Maybe the previous government is at political and election loss. But every doctrine is paid - Djukanovic said.

He added that if he resented something that program, it was that he had created consumer expectations that were not based in the previous creation.

- He created an increase in earnings without growth of productivity and threatened the stability of public finances, and especially in part of health care. Instead of the cautious and phase realization of this program, for political reasons, the strawberries in the strawberries hurried and entered the throat - Djukanovic said.

According to him, the need for a significantly enlarged salary fund, which can only be financed from the loan, has been honored. And when you get into a situation where you finance current consumption from a loan, it is a trip to the breakdown of public finances and the bankruptcy of the state.

- Also, I don't think Europe's program is now a dominant inflation generator. It should be noted that most of the inflation in Montenegro is imported. You have an inflation in the Eurozone today, which is at 9.5-9.6, in the EU, even something above that - said Djukanovic.

Unfortunately, as he added, inflation in Montenegro is significantly higher.

- In October we had an inflation from 16.8 percent. We will see what an average inflation will be this year. The Ministry of Finance forecasts 12 percent. I would love to be just so much, and I am afraid that it will show that it is above that level - said Djukanovic.

One part of inflation is, as he stated, caused by a war in Ukraine, above all, growing in energy prices and a problem in the supply chains in Europe, and the other part by the arrival, not just seasonal, people affected by the war in Ukraine. Arrivals from Russia or from Ukraine, who also became a new consumption generator with their financial potential, which contributes to inflation growth.

- And at the end of all this, the US program now, also, has increased the consumer appetites of our citizens with significant growth and pension. It will be necessary for the government, whatever it is, in the coming period it is addressed by a comprehensive anti -inflammatory program - said Djukanovic.

When asked if at some period while he was a prime minister and when the economic situation in the country was better, there was a space for a program similar to the one that would significantly increase the wages of employees, he replied that there was a real space at some stages for this for this .

- It wasn't all the time since the renewal of independence. Most of that time faced the consequences of a difficult financial economic crisis in Europe and the world. Remember only the depths of the crisis start in 2008, which ran for at least the next five years - said Djukanovic.

A tight interdependence between political stability and economic state

Talking about the influence of the global economic crisis on Montenegro and the political crisis in the country, Djukanovic said that there was no doubt that there was a tight interdependence between political stability and economic state, not only in ours but in every country.

- Before renewing independence in 2006, and especially after that, we had a very responsible and thoughtful relationship with the challenges that Montenegro faced. We have succeeded in preserving political stability in the completely irregular conditions of war, sanctions, bombing, growing tensions, which has been promoted year after year, and the governments have continued to continue the business ambience in the country, making it very competitive - said Djukanovic.

In the period after the referendum until 2020, the direct foreign investments in Montenegro consisted of 18, 19, 20 percent of the domestic gross domestic product, which convincingly talks about the trust that foreigners had according to the political stability and business ambience of our country.

- In 2006, the citizen of Montenegro was at a level of 36 percent of the EU citizen's life standard, in 2019, or 13 years later, at a level of 50 percent. This is the most clear information about the good dynamics of the economic development of Montenegro - said Djukanovic.

He stated that by changing power in 2020, unfortunately, we have changed trends when it comes to the economic life of Montenegro, which, above all, is reflected in the lack of interest of investors.

- Today we are witnessing a serious deficit of investment interest not only from the expected new investors, but also to slow down the realization of investors' investors who are here. We are also witnessing the departure of a number of investors who have successfully started developing businesses in Montenegro - said Djukanovic.

He stated that it was a very dangerous warning, which has been over unemployment for consequences, because it is logical where there are no investors and people from business, there are no new jobs.

- This also reflects on the state of public finances, to the height and mainability of public debt and the difficult capabilities for borrowing. We have a bad credit rating - a non -insecation credit rating that makes it difficult for us to access the capital in the financial market, which will make a slower realization of the next capital projects that Montenegro must realize if it wants to be an economically developed country. And on all this, a new practice is leaning that comes as a result of emphasized political populism - Djukanovic said.

He stated that two years ago, the state borrowed for 750millions at the rate of 2.9 or 2.95 percent, and today it is not possible to reach the loan below the interest rate between eight, nine, at one point as many as ten percent.

The state of the energy is not the way it should be

He, speaking of an energy crisis and aid of 30 million EUR that Montenegro should receive from the EU in January, said that it is good that we can count on this help and hopes that this plot in political relations between our parliamentary majority and The EU institution will not threaten to help Montenegro to solve the problem that arose as a result of the war in Ukraine and which generated the energy crisis in Europe.

He believes that the situation in the energy sector of Montenegro today is not as it should be.

- I think this is a dominant consequence of irresponsible energy companies management. In the first three quarters of the Elektroprivreda (EPCG) achieved a loss of 88 million. Her revenues increased 38 percent, and expenditures for 73 percent. And I get that related to the information we have had the opportunity to read that the Electric Power Pillar as a carrying staircase of the energy sector in Montenegro during the previous period of any uncontrolled, completely unproductive, party -political employment, which confirms that selfish partitocratic interests have taken over the state of state - said Djukanovic.

He believes that Montenegro lacks a clear strategy for the development of the energy sector.

- You will remember the criticisms sent to the expense of the previous government because it forced greater use of hydro and wind potential in Montenegro. Today, when we have an energy crisis shows that the purchase price of the current from the domestic mini hydro power plant and wind farm is 90 euros per megavat hour, and that electricity from the European market imports such energy from 300 to 500 euros per megavat hour - said Djukanovic.

He said that opposite Elektroprivreda, the Montenegrin electricity system (CGES), establishing a quality strategic partnership with today with the most renovated electric transmission operator in Europe - Italian tern and good management even in this time, in a state of stable and positive .

- I think this time in Montenegro in this sector must be guided by much more thoughtful policy and must define a clear medium -term strategy for the development of the energy sector - said Djukanovic.

Djukanovic is asked if Montenegro can avoid a crisis, given the energy situation in the world, any restrictions and significant prices, replied that the responsible policy of the competent state authorities and the responsible management of energy companies can absolutely.

- If the necessary level of responsibility and competence is shown, despite the problems that exist, I think it can be done. If, however, it happens that we also come to mandatory electricity restrictions, it will be just another very convincing confirmation of incompetence and disobedience to the interests of the state of management and managerial structures in these companies - Djukanovic believes.

Commenting on the agreement that EPCG for 20 million euros to buy Niksic Ironworks from the Turkish Tosyali Group, as well as the possible implications of the business to the business of the Montenegrin electricity company, Djukanovic said he had repeatedly led the Government and had a long experience of continuous care of the state according to that a company and employees in it.

- I understand and support the government's desire to save any production that can be saved. Whether this is done in the right way, I doubt - Djukanovic added.

He recalled that he had the opportunity to speak with the owners of the Turkish company during a recent stay in Turkey. to the production of electricity from solar panels at that location.

- I do not know why the agreement between a private investor and the government did not know. Now EPCG appears in the role of someone who substituted that private initiative. I'm scared that the whole arrangement is quite controversial - Djukanovic said.

He also claims that the way it is done is problematic, from the point of view of the transparency of public finances.

- The Government opted for an EPCG 15 million EUR to buy its actions in this presence, which would certainly, and without payment, be canceled in a short period of time and became state ownership in EPCG. In addition, it was done from a liquid budget reserve, which means that generated an additional deficit - Djukanovic warned.

The position of foreign investitotra exacerbated by political instables

Djukanovic also assessed that the position of foreign investors in Montenegro was exacerbated by political instability.

According to him, it is important for every investor that there is political stability and predictable business environment, which is not currently the case in Montenegro.

- When it is gone, it's alarm alarm for private investors. Some have already responded to that sign and left Montenegro. Some companies, such as Aman Rizort in St. Stefan, are also in the process of arbitration, also a port of Adria, as an operator at the port of Bar - said Djukanovic.

He added that investors do not leave the business environment where there is security.

- When a renowned investor leaves you, it is like collecting feathers from the pillow, previously carelessly or ignorantly spread. Because investors communicate with each other and convey to each other experiences, especially negative, so it is not surprising that we have a deficit of interest in business in Montenegro - Djukanovic said.

He believes that this condition that the competent state organs should be treated quickly, otherwise the serious slowdown of development will occur.

- Montenegro is a country that seeks very dynamic development and progress year after year. We cannot provide it without a serious partnership with references to investors. Do we know how to provide that? Of course. We did not experiment, we did neither porto Montenegro, nor Portonovi, nor Luštica, nor a submarine cable, nor built a car on our own. Because we did not have any domestic companies with experience on such projects. We have built these facilities with renowned foreign companies, because foreign investments do not only bring money, but also an urgent necessary management and managerial experience and new technologies - explained Djukanovic.

That is why, as he thinks, for the country at this level of development, it is crucial that it has a good business environment and reliable partnerships with reference investors.

O Open Balkan Initiative

When asked why Montenegro should not be part of the Open Balkan Initiative, whose members are Serbia, Northern Macedonia and Albanija, Djukanovic replied that all regional initiatives were welcome, if they lead to a strategic goal - which is EU membership.

- All regional initiatives, and there are over 30 of them, are the polygons on which we train our capacities for that level of competitiveness we have to have on the European market. Of course, training sessions make sense if we have a European coach, who helps us adopt the rules of conduct and standards, with the implied our willingness to respect these standards - said Djukanovic.

He said that Montenegro had clearly defined its goal - that he wanted membership in the EU, not an alternative to membership.

- Because of this, we believed that the two existing initiatives were, namely Cefta and Berlin process, more than enough, and that they obliged us to systematically adopt European standards, and have a European management that warns us if we did not realize everything we needed somewhere we needed They would qualify - Djukanovic said.

He estimated that Montenegro made serious progress and the farthest moved in the EU association process, after which an Open Balkan initiative appeared, which was created by people who lost faith in the EU accession to the alternative to seek alternatives at that moment.

- The agreements that have signed and three Member States, meanwhile, are not ratifical in their parliaments. Obviously there are also problems in their parliamentary public. When it comes to Montenegro, we would have to go back in relation to the already reached European standards and adapt to cooperation under regional Balkan rules - said Djukanovic, adding that this is not really necessary.

Montenegro has real resources of serious development

Commenting on the economic perspective of Montenegro in the coming period, Djukanovic said that from the interview so far, someone may have concluded that the image of the future is gloomy, but that it does not have to mean.

- I am convinced that Montenegro has very realistic resources of serious development, and we have proven this in the period from 2006 to the end of 2019. I am also convinced that we have not used half of our development resources, even in tourism, which we have developed most intensely without, and not I am talking about food production, energy, IT - Djukanovic said.

He claims that real resources and opportunities exist, but that the country should return responsible control.

Also, as he stated, Montenegro has been dynamically progressed for years to a good extent thanks to the quality of management.

- Someone will understand this as bragging, but it's not. This is a reality. Montenegro had a responsible management - Djukanovic added.

According to him, Montenegro has not had a good management for two years.

- I do not comment, it would be upside down to controversy with the decision of the citizens in the election. They have the right to choose and those decisions as people of politics have to respect. That is why I understood the change of government in 2020 as a chance. Changing power in mature and responsible societies is always a chance to get some new impulse in the dynamics of the Democratic Development of the Land. What I have criticized is now a two -year experience that says that parties and people who have longed for their chance of such irresponsible and national interests disobedient management of the state and society in agony in a short time. And this is a bad fate of this country for a couple of years, but it should not be judged by the inevitable and final epilogue - Djukanovic said.

He believes that this is just one bad experience that society goes through in its democratic ripening and believes that we are smarter today than we were two years ago.

- With responsible management of the state of Montenegro, relying on domestic resources, I think we have a good perspective of economic and democratic development - said Djukanovic.

I.B.