By Adnan Prekic – Podgorica
At the beginning of the year Montenegro was indebted 241 million euros at the international and domestic markets. With the new borrowing, the public debt of Montenegro currently stands at 2.24 billion euros, or 67.4 percent of the gross domestic product. At the end of last year, the national debt has reached 1.93 billion euros, to which one must also add the guarantees of 463 million euros of the loans in which the state was the guarantor. If one divides this responsibility with the number of residents in Montenegro we come to the conclusion that state indebted average citizen 3,612 euros.
In the eight years since the independence, the montenegrin state debt has increased threefold, while the gross domestic product in the same period has not even doubled. At the end of 2006, when Montenegro renewed its independence, the public debt amounted to 701.1 million EUR and was 38.3 percent of the GDP, while today with the guarantees it amounts to 2.24 billion or 67.4 percent of the GDP. At the end of last year the national debt reached to 1.93 billion euros, and the guarantees to 483 million euros. For instance, in 2006 each Montenegrin citizen owed 1,130 euros, while now owes 3,612 euros. The internal debt amounts to 500 million euros, while the international one amounts to 1.4 billion euros. At the end of 2006 the government debt stood at 701 million euros, and it is now 2.24 billion. At the end of last year the national debt has reached to 1.93 billion without the guarantees, which amounted to 483 million euros.
An additional problem for the montenegrin economy is the manner in which the borrowed money was spent. The largest portion went to consumption and a very small amount on infrastructure projects. Economists criticize that in the period of borrowing there no energy facilities have been built, nor has the construction of a highway began.
The International Monetary Fund in the end of 2013 analyzed the montenegrin debt, arguing that in four years the Montenegrin government debt will increase from the current 58 to 73 percent of the GDP. Government projections are different, estimating that the national debt will grow only this year at 56.9 percent of the GDP, and that next year will signal its decline due to the reduction of economic growth induced by large-scale projects such as tourist resorts in Lustica and Kumboru, construction of highway, and a power cable for Italy. During 2014 Montenegro intends to commence construction of the highway to Serbia; a project that will require additional borrowing in the amount of 800 million euros.
The IMF had previously warned that the planned borrowing for the highway will lead to an alarming increase of the debt, but the government thinks that economic growth will moderate this effect.
Montenegro’s debt situation is not much different from other countries in the region. Croatian public debt continued to grow in 2014, reaching 68 percent of the gross domestic product. Serbia’s public debt at the end of April amounted to 20.596 billion, which is 62.7 percent of gross domestic product. General government gross debt in Hungary in 2014 reached 84.6% of the GDP.