Montenegro - Country Commercial Guide
Market Overview
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Since regaining independence in 2006, Montenegro has adopted an investment framework to encourage growth, employment, and exports.  Although the continuing transition has not eliminated all structural barriers, the government recognizes the need to remove impediments, ensure business-friendly policies, and improve transparency and openness to foreign investors.

Montenegro makes no distinction between domestic and foreign companies.  Foreign companies can own 100 percent of a domestic company, while profits and dividends can be repatriated without limitations or restrictions.  Exceptions to this policy are the small number of cases dealing with defense-related industries.

As a candidate country on its path to joining the European Union (EU), Montenegro has opened all 33 negotiating chapters (and closed three).  But the county’s candidacy is dependent on progress against specific rule of law benchmarks outlined in the EU Accession Framework.  Under the revised accession framework adopted in 2021, the EU will not close any other chapters until these benchmarks related to the judiciary and fundamental rights and justice, freedom, and security are achieved.  The European Commission’s 2022 Country Report for Montenegro termed progress in this area as “limited.”  Despite regulatory improvements, corruption remains a significant concern.  Montenegro is a member of the Central European Free Trade Agreement (CEFTA) and participates in the Regional Cooperation Council of Southeast Europe and the Berlin Process but has not joined the Open Balkan Initiative, previously known as “Mini-Schengen,” an initiative championed by Serbia and Albania that was designed to facilitate trade, services, and movement of people throughout the Western Balkans.  The Euro is the official currency in Montenegro, which stabilizes financial flows and results in lower transaction costs.  Private ownership is protected by the Constitution and includes equal treatment of foreigners.  Montenegro joined NATO in June 2017. 

According to the Montenegrin Investment Agency, foreign direct investment (FDI) to Montenegro in 2022 totalled $1.03 billion.  Although no one source country dominates FDI, significant investments have come from Serbia, Russia, Germany, Switzerland, UAE, Turkey, Italy, and the United States, with other investments coming from Cyprus, the Netherlands and Austria.  Montenegro has one of the highest public debt-to-GDP ratios in the region, but this ratio has been declining over the last two years thanks to strong growth and repayments, dropping from a high of 105 percent in 2020 to about 73 percent in April 2023.  Infrastructure development remains a government priority.  The China Road and Bridge Corporation built the first section of Montenegro’s north-south highway, which became operational in July 2022 and is designed to better connect the more developed south with the relatively underdeveloped north of the country.  The final three sections to connect to Serbia have not entered the tender process.  The Adriatic-Ionian to connect Albania to Croatia via Montenegro is another strategic project with the potential to unlock increased commerce along the Adriatic coast. 

The pandemic hit Montenegro’s economy hard, with the unemployment rate reaching 24 percent by the end of 2021 before returning to 16 percent at the end of 2022.  Gross domestic product (GDP) declined by 15.3 percent in 2020, the biggest drop in Europe.  The country enjoyed a strong recovery in 2021; however, with the government announcing GDP growth of 14 percent for the year, one of the highest in Europe.  GDP growth was 6.9 percent in 2022, led by private consumption and a better-than-expected tourism season.  Economic recovery will continue to face challenges, however, including an unpredictable political environment characterized by frequent changes in government since 2020.  The current government lacks a clear political mandate following a vote of no confidence in August 2022 that has left holdover or “caretaker” ministers occupying key postings, slowing or altogether halting critical government investment decisions.  Early parliamentary elections took place in June 2023, and negotiations to form a new government are underway as of October 2023. 

Under the previous government in 2022, Montenegro began implementing a wide-ranging economic reform program known as Europe Now, which eliminated all individual health care contributions, almost doubled the minimum wage, increased pensions, and introduced a system of progressive taxation.  Analysts have attributed Montenegro’s 20 percent increase in consumption and an inflation rate of over 17 percent in 2022 to the reforms, coupled with inflows of Russian and Ukrainian citizens as a result of Russia’s war of aggression against Ukraine. 

Political Environment

For background information on the political and economic environment of Montenegro, please click on the following link: