Improving Financial Governance in Montenegro

Montenegro is developing a functional market economy and is implementing reforms in order to create a favorable and attractive investment climate, necessary for economic growth. The country has developed the Economic Reform Program (ERP) – the key strategic document for medium-term macroeconomic and fiscal programming, and for EU accession.

PMCG, in consortium with ADE – Aide à la Décision Économique, under the European Commission project – Support to the Assessment of Macroeconomic Impact of Structural Reforms (under Lot 11 framework) – will work with the Government of Montenegro, in particular with the Ministry of Finance, to improve financial governance and to prepare strategic documents for EU accession.

The project team will work with the Ministry of Finance and other relevant line ministries while selecting, evaluating and assessing the impact of the structural reforms, proposed in the ERP.

Based on in-depth analysis, the team will develop a new macroeconomic model and dynamic Computable General Equilibrium (CGE) – a model used to forecast government revenues and outlays, and to project the effects of policy changes on the government budget and other macroeconomic indicators. It will also conduct capacity building activities for staff at the Ministry and will develop manuals for using the models. By the end of the collaboration, the Ministry staff will participate in a study tour in one of the EU member states to enhance their skills and capacity in the usage of models and forecasting.

As a result of the project, the Government of Montenegro will obtain a more accurate macroeconomic model and strengthen its capacity to use them effectively. This will allow the Government to monitor the implementation of the structural reform measures and their impact, as well as the path of the accumulated impacts of the policy change over a certain time period.