European Commission and World Bank: we cannot yet assess the “Euro model” without the government’s fiscal accounts

The European Commission (EC) and the World Bank (WB) told Vijesti they cannot yet assess the announced “Euro model” program and its possible effects on Montenegro’s public finances. As Vijesti reports, the EC will only be able to do so once the government officially submits the proposal with fiscal and economic impact projections, while the World Bank said it is analyzing the possible effects of the proposed reforms, but the process is still ongoing.

Vijesti asked both international partners whether they were familiar with the “Euro model”, whether the government had consulted them, and how they assess fiscal and economic sustainability — particularly the minimum-wage hike and the remaining abolition of pension (PIO) contributions.

The essence of the “Euro model”, proposed by Prime Minister Milojko Spajić, according to Vijesti: from the new year, the minimum wage for jobs requiring basic or low education reaches 1,000 euros, 1,250 euros for secondary education and 1,400 euros for higher education. The plan also foresees municipalities losing part of their revenues from personal income tax, property tax, motor vehicle tax and gambling taxes. As Vijesti writes, the Finance Ministry did not take part in drafting this reform.

The EC, via the EU Delegation in Montenegro, told Vijesti it knows the proposal, understands it is still under consideration and that the government is consulting stakeholders — and that, once officially informed, it will be able to assess the reform.

The World Bank told Vijesti the dialogue with the government is ongoing and it is analyzing the effects with the competent institutions, but — as the process is still underway — it cannot publicly comment on the package of measures.