Montenegro became an independent state in 2006. This event represents the foundation of the country’s resolute policy towards Euro-Atlantic integrations, which gained momentum in 2017 when Montenegro joined NATO. The country is currently scheduled to join EU in 2025 according to the EU’s strategy for the Western Balkans.
The country took a bold move in 1999 to adopt German Mark as its official currency, followed by conversion to Euro in 2012. This made Montenegrin economy more resistant to monetary shocks and appealing to foreign investments. However, Montenegrin economy was affected by the global economic crisis. Another factor that contributed to economic recession that started in 2008 was Montenegro’s dependency on tourism. As a result, after 2008, when it reached one of the greatest GDP growths in the region at the rate of 7.2%, the country faced a major blow with the GDP rate sinking down to -5.8% in 2009. As other countries in the region, Montenegro has been since then on a recovery route, with the continuous GDP growth from 2013. The economic recovery was largely based on foreign direct investments that generated 15% to 20% of the national GDP in the period 2013-2017.
Notwithstanding its political orientation towards EU, Montenegro generously welcomed investors from the east, particularly Russia and United Arab Emirates, and, as of more recently, Turkey. Notwithstanding, in 2014, however, Montenegrin government aligned its foreign policy with the EU and imposed sanctions on Russia over the Ukraine crisis.
Montenegrin Government introduced fiscal measures in 2016 under a five-year consolidation plan. The main goal is to decrease fiscal deficit by reducing public expenditures mainly on the account of state administration and social services. Simultaneously, greater fiscal discipline has been imposed on tax payers. Nevertheless, Montenegro’s public debt continued to rise mainly due to large public investment in the construction of Bar-Boljare highway. As a result, the Government increased VAT at the beginning of 2018 from 19% to 21%. The aim is to lower public debt from 66.5% of GDP in 2018 to 59.7% in 2020.
BDK Advokati in Montenegro
Our firm started doing transactions in Montenegro in 2005, when we advised the Government of Montenegro on a successful privatization sale of Montenegrin Telekom to Deutsche Telekom’s subsidiary Magyar Telekom. We continued to advise Montenegrin Government on the plans to privatize Thermal Power Plant “Pljevlja” and Coal Mine “Pljevlja”, as well as on a plan to issue a concession for design, construction and operation of 240 MW hydro-power plant on the Morača River. In 2008, after an enviable track record in the country, we opened our Podgorica office. Since then, we have been advising some of the most prominent foreign investors in infrastructure, energy, hospitality and gaming sectors, such as Turkish companies Toscelik, Dogus, Ziraat bank, US Aecom, Italian Eni, Spanish Iberostar, French Akuo and NCH Capital. We have also advised public companies and the state, most notably power transmission operator CGES on its joint venture with Italian Terna and the Government of Montenegro on its planned re-privatization of the electricity incumbent EPCG.
We are truly one firm in all jurisdictions in which we operate, and our Montenegrin team is fully integrated into the BDK eco-system. Our experts from the Belgrade office work along side our Montenegrin colleagues on Montenegrin transactions that require special know how developed in our largest, Belgrade office. At the same time, our Montenegrin colleagues who have special expertise in industries well developed in Montenegro, such as hospitality and gaming, assist colleagues from other BDK jurisdictions on deals involving these industry sectors.