EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 14.10.2009 
SEC(2009) 1336 
COMMISSION STAFF WORKING DOCUMENT 
 
MONTENEGRO 2009 PROGRESS REPORT  
 
  
accompanying the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
Enlargement Strategy and Main Challenges 2009-2010
 
{COM(2009) 533 final} 
 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
1.1. Preface................................................................................................................... ....... 4 
1.2. Context ................................................................................................................... ...... 4 
1.3. Relations between the EU and Montenegro................................................................. 5 2. Political criteria .......................................................................................................... .. 6 
2.1. Democracy and the rule of law .................................................................................... 6 2.2. Human rights and the protection of minorities .......................................................... 13 2.3. Regional issues and international obligations............................................................ 18 3. Economic criteria ....................................................................................................... 20 3.1. The existence of a functioning market economy ....................................................... 20 3.2. The capacity to cope with competitive pre ssure and market forces within the Union
............................................................................................................................... ..... 25 
4. European standards .................................................................................................... 27 4.1. Internal market ........................................................................................................... 27 
4.1.1. Free movement of goods............................................................................................ 27 4.1.2. Movement of persons, services and right of establishment ....................................... 29 
4.1.3. Free movement of capital........................................................................................... 30 4.1.4. Customs and taxation ................................................................................................. 31 4.1.5. Competition............................................................................................................. ... 32 
4.1.6. Public procurement .................................................................................................... 32  
4.1.7. Intellectual property law ............................................................................................ 33 4.1.8. Social policies, employment and public health policy............................................... 34 4.1.9. Education and research .............................................................................................. 35 4.1.10. WTO issues ............................................................................................................. ... 36 
4.2. Sectoral Policies......................................................................................................... 36 
4.2.1. Industry and SMEs..................................................................................................... 36  
4.2.2. Agriculture and fisheries............................................................................................ 37 4.2.3. Environment............................................................................................................. .. 38 
4.2.4. Transport policy ........................................................................................................ . 40 
 
EN 3   EN 4.2.5. Energy .................................................................................................................. ...... 42 
4.2.6. Information society and media................................................................................... 43 4.2.7. Financial control....................................................................................................... .. 44 
4.2.8. Statistics .............................................................................................................. ....... 44 
4.3. Justice, freedom and security ..................................................................................... 45 4.3.1. Visa, bordermanagement, asylum and migration....................................................... 45 4.3.2. Money laundering ...................................................................................................... 47  
4.3.3. Drugs................................................................................................................... ....... 49 
4.3.4. Police.................................................................................................................. ........ 49 
4.3.5. Fighting organised crime and terrorism ..................................................................... 50 4.3.6. Protection of personal data......................................................................................... 52 
STATISTICAL ANNEX .......................................................................................................... 53 
 
EN 4   EN COMMISSION STAFF WORKING DOCUMENT 
Montenegro 2009 Progress Report 
1. INTRODUCTION  
1.1. Preface 
Since March 2002 the Commission has reported re gularly to the Council and the Parliament 
on progress made by the countries of the Western Balkans region. 
The Commission issued progress reports fo cusing exclusively on Montenegro since 2006. 
This report: 
– briefly describes relations betw een Montenegro and the Union; 
– analyses the political situati on in Montenegro in terms of democracy, the rule of law, 
human rights, protection of minorities and regional issues; 
– analyses the economic situation in Montenegro; 
– reviews Montenegro’s capacity to implement European standards, i.e. to gradually 
approximate its legislation and policies to the acquis , in line with a Stabilisation and 
Association Agreement and the Eu ropean Partnership priorities. 
This report covers the peri od from early October 2008 to mid-September 2009. Progress is 
measured on the basis of decisions taken, legisl ation adopted and measures implemented. As a 
rule, legislation or measures which are bei ng prepared or awaiting parliamentary approval 
have not been taken into account. This approach  ensures equal treatmen t across all reports and 
permits an objective assessment. 
The report is based on information gather ed and analysed by the Commission. Many 
additional sources have been used, includi ng contributions from the government of 
Montenegro and from the EU Member States, European Parliament reports1 and information 
from various international and non-governmental organisations.  
The Commission draws detailed conclusions regarding Montenegro in its separate 
communication on enlargement2, based on the technical analysis  contained in this report. 
1.2. Context 
Montenegro is a potential candidate for EU membership. The Stabilisation and Association 
Agreement between Montenegro and the EU was signed in October 2007. An Interim Agreement was signed on the same date a nd entered into force in January 2008. The 
                                                
 
1 The rapporteur for Montenegro until September was Mr. Marcello Vernola. Since September, the new 
rapporteur is Mr. Charles Tannock. 
2 Enlargement Strategy and Main Challenges 2009-2010 (COM(2009) 533 of 14.10.2009). 
 
EN 5   EN Commission delegation in Montenegro has been operational sin ce November 2007. In 
December 2008 Montenegro applied for membersh ip of the European Union. In April 2009 
the Council decided to implement the proce dure laid down in Article 49 of the Treaty on 
European Union. Accordingly, the Commission was requested to submit to the Council its 
Opinion on the application by Montenegro. Th e Commission started work on its Opinion by 
sending Montenegro a comprehensive list of ques tions relating to the Copenhagen criteria and 
the conditions set for the stab ilisation and associ ation process. This report in no way 
prejudges the analysis to be made by the Commission in its Opinion on Montenegro’s 
application for EU membership. 
1.3. Relations between the EU and Montenegro 
Montenegro is participating in the Stabilisation and Association Process . Implementation of 
the Interim Agreement (IA) has continued. Ratification of the Stabilisation and 
Association Agreement (SAA) progressed. By 1 Septembe r 2009 22 EU Member States had 
confirmed ratification of the SAA. Montenegro is continuing to implement its commitments under the SAA and to prepare for full implementation of the SAA once it is ratified. This is a key priority of the European Partnership. Th e bodies provided for by the Interim Agreement 
operated smoothly.  
The EU is providing guidance to the Montenegrin authorities on reform priorities as part of 
the European Partnership .
3 Implementation of the European  Partnership by Montenegro is 
progressing. Dialogue on European  integration issues continue d in the enhanced permanent 
dialogue and in the bodies provided for by the Interim Agreement. In March 2009 a political 
dialogue  was held between the EU (troika) and Montenegro. 
The visa facilitation and readmission agreements between Montenegro and the European 
Community continued to be implemented. In the framework of the visa liberalisation  
dialogue, Montenegro has made important progress in the area s of justice, freedom and 
security and has fulfilled the majority of the roadmap benchmarks. Therefore, the Commission proposed in July 2009 lifting the visa ob ligation for Montenegrin citizens. This 
proposal is subject to Montenegro meeting the outstanding criteria before the Council of the 
EU takes its decision, after consulta tion of the European Parliament. 
As a potential candidate for EU membershi p, Montenegro aligned itself with 121 CFSP 
declarations from a total of 128 relevant decl arations adopted by the EU during the reporting 
period. 
Since 2007 Montenegro has been receiving pre-accession  financial assistance  from the 
Instrument for Pre-Accession Assistance (IPA), which is being implemented by the European 
Commission delegation in Podgor ica since September 2008. Montenegro has continued to 
prepare for decentralised management of EC aid. 
In 2009 a total of €33.3 million was allocated to M ontenegro. The main focus areas are rule of 
law, including justice and police reform, labour and safety at work, environmental protection 
railways, State financial management and audit, and alignment to internal  market legislation. 
EU financial support has been provided to civil society development under the Civil Society 
Facility. Under the national IPA programme for 2009, €2.2 million have been earmarked for 
                                                
 
3 Council Decision 2007/49/EC. 
 
EN 6   EN projects aiming to enhance civil society organi sations contribution to the social, economic and 
political development of Montenegro, in areas such as social welfare, special education, 
preventive health, inter-cultural dialogue, transparency and accountability of the public 
administration, judiciary and parliament.   
In response to the economic crisis, an IPA crisis package  has been created, comprising €200 
million for the Western Balkan region which are expected to leverage investments of at least €1 billion, co-financed by the pa rtner financial institutions. Th e country will benefit from a 
share of multi-beneficia ry funds for competitiveness, SMEs , energy efficiency and banking 
sector regulation. In addition, the country benefits from Montenegro-earmarked multi-
beneficiary funds to accelerate the infrastructure investments. €5 million were committed to 
the Infrastructure Project F acility for a project on water infrastructure in mountain 
municipalities.  
Provisional application of Prot ocol 8 of the SAA started in  November 2007. As a result, 
Montenegro can join Community programmes which are open to Western Balkan countries. 
Montenegro participates in the 7th Framework Programme fo r research and technological 
development and in the specific programme on en trepreneurship and innovation, which is part 
of the Competitiveness and I nnovation Framework Programme (2007-2013). Montenegro is at 
the final stage of its prepara tions to participate in the European Community’s Culture 
Programme. 
2. P
OLITICAL CRITERIA  
This section examines the progress made by  Montenegro towards meeting the Copenhagen 
political criteria, which require stability of institutions guaranteeing democracy, the rule of 
law, human rights and respect fo r and protection of minorities . It also monitors regional 
cooperation, good neighbourly relations with enla rgement countries and Member States and 
compliance with international oblig ations, such as cooperation w ith the International Criminal 
Tribunal for the former Yugoslavia (ICTY). 
2.1. Democracy and the rule of law 
Constitution Establishment of the legal and institutional set- up required for an independent country, which 
is a key European Partnership priority, is almost  complete. One of the last pieces of legislation 
required, the Law on State Property which regu lates ownership and tr ansfer of State and 
municipal property, was adopted. The deadline for adoption of le gislation provided for by the 
Law on Implementation of the Constituti on was further extended to April 2010.  
Parliament 
In January 2009 parliament adopted  a decision to call early el ections, which were held in 
March 2009 . According to the international election observation mission led by the 
OSCE/ODIHR, the elections met almost all international and European commitments. However, remaining shortcomings and challenges  still need to be addressed. The electoral 
framework has to be harmonised with the C onstitution, including on minority representation. 
Further work is also needed on ensuring full se paration between State an d party structures in 
the electoral administration and ensuring transp arent allocation of parliament seats. A new 
 
EN 7   EN Law on State Property provides a framework en suring clear separation of State and party 
premises, including during elections, but has yet to be implemented.  
Voter turn-out in the parliamentary elections was less than in the previous elections but 
remained high at 66%. The coalition for Eu ropean Montenegro led by outgoing Prime 
Minister Milo Djukanovic in creased its majority and won 48 out of 81 seats.  
There has been some progress in the work and functioning of parliament. Work on 
strengthening political consensus, particularly on European integration issues, has continued. 
The National Council for EU Integration conti nued to contribute to  EU integration. The 
government reported on progress with EU integr ation at every session of the Committee for 
International Relations and European Integration.  This further raised the level of involvement 
of this committee in the integration process. As regards control mechanisms, this committee 
called ministers to hearings on several occasions .  
Parliament adopted 124 laws, which is a 30% increase compared to 2007. This intense 
activity is welcome as Montenegro continues to complete its legal framework following 
independence and taking into account alignment with the acquis communautaire . However, 
parliament's capacity to scrutinise legislati on and monitor its implementation needs to be 
enhanced. 
In December 2008 a new set of rules on organisati on of the parliamentary administration were 
adopted. The rulebook provides for establishm ent of six more ‘bureaus’ within the 
Parliament's Administration Serv ice, including a Bureau for EU Integration. One of its tasks 
is to give an independent assessment of alignment of draft legislation with the acquis . The 
new rules provide for increasing the parliament ary administration’s human resources. A part 
of these resources has already been made availabl e. Further efforts have been made to provide 
for staff training.  
Steps have been taken to improve use of the working bodies and observance of the rules of 
procedure. Efforts have been made to bring pa rliament closer to ci tizens, for example by 
means of visits and brochures. Parliament continued its work on oversight of defence and security bodies, inter alia  by organising a hearing of the di rector of the police in December 
2008. This practice needs to continue and ex pand. Civilian and democratic oversight of 
defence and security bodies is a key pr iority of the European Partnership.  
The Committee for International Relations and EU Integration has upgrad ed its contacts with 
the European Parliament. It holds the chairman ship of the conference of the parliamentary 
committees for EU integration of Western Ba lkan countries for 2008-2009. In this context, 
Montenegro successfully hosted a well-attended regional parliamentary conference in Cetinje 
in March 2009. 
Parliament’s work and operation still need to be consolidated in seve ral areas. Planning needs 
to be improved. Inspection and control mechan isms are underused. The supervisory role of 
parliament generally remains weak.  
At present administrative and ot her resources required for par liament’s work, including expert 
support, remain insufficient. Staff and expe rt support for committees are rudimentary.  
The temporary solution for TV coverage of parliamentary debates, following the 
disagreement between the government and oppos ition on this topic, expired in March 2009. 
 
EN 8   EN No solution has been proposed for the new parliament’s mandate. Until then public TV 
committed to cover parliamentary debates in line  with an earlier arrangement with political 
parties.  
Neither the newly established Bureau for EU integration nor the Committee for International 
Relations and EU Integration yet have sufficient capacity to scrutinise independently alignment of draft legislation with the EU acquis .  
Further progress remains necessary on mature and consensual functioning of parliament. 
From October 2008 to March 2009 two opposition pa rties boycotted parliamentary work due 
to the government’s recognition of the independence of Kosovo
4. This boycott hindered 
contribution of a diversity of views for development of new legislation. 
Overall , there have been some improvements in the functioning of parliament. The 
parliamentary parties’ overall commitment to work ing on the basis of cons ensus, in particular 
on EU integration, remains a so lid basis for further democra tic development. The National 
Council for EU Integration has ye t to achieve its full potential Further efforts are needed to 
enhance parliament’s efficiency as a legisl ative and oversight body.  Aligning electoral 
legislation with the Constitution remains a priority. 
Government 
Following the March 2009 parliamentary electio ns, a new government headed by the outgoing 
Prime Minister was elected by parliament in June 2009. It ha s three Deputy Prime Ministers 
(DPMs), amongst them a new DPM fo r the political syst em, four new ministries (Ministry for 
EU integration, Ministry for Environment and Ur ban Planning, Ministry of Labour and Social 
Welfare and Ministry of Health).  
Building on the 2009 work programme of the previous government, the new government 
programme gives priority to European and Euro-Atlantic integration, dealing with the 
consequences of the economic crisis and ensuring sustainable growth in Montenegro, including raising the st andard of living, balanc ed regional development and key infrastructure 
projects. The fight against orga nised crime and corruption along w ith judicial reform continue 
to be government priorities.  
The government maintained a strong pace for adoption of new legislation. Stakeholders, 
including civil society and international or ganisations, were continuously involved in 
developing new legislation. Ho wever, new legislation has not always been based on a 
thorough needs assessment and on identification of priori ties and of means for full 
implementation. 
The management structures of most governme nt bodies, including mi nistries, have not 
substantially changed and in many cases remain over-centralised. Further strengthening of the 
middle-management level would make decision-m aking more effective. The human resources 
of the Secretariat for EU Inte gration (SEI) and line ministries have not been substantially 
improved, due to government cost-cutting meas ures in response to the economic crisis. 
Progress remains necessary on monitoring implementation of policies and laws and receiving feedback. 
                                                
 
4 Under UNSCR 1244/1999. 
 
EN 9   EN The Deputy Prime Minister and th e SEI consistently raised the profile of the EU integration 
process and related requirements as Monteneg ro moved forward with its EU membership 
application. The SEI made some  progress on issues related to  translation of EU texts and 
efforts have been made to harmonise vocabul ary used by State bodies on EU issues. A plan 
was adopted to improve government cross-ch ecking of draft legisl ation with the EU acquis  by 
means of an article-by-article check by the SE I. In June 2009 the SEI was converted into a 
fully fledged Ministry for Eur opean Integration and the post of the De puty Prime Minister 
was converted to Minister for European Integr ation to head the new ministry. The new set-up 
is expected to streamline coordina tion on European integration issues. 
Awareness of EU integration issues within lin e ministries was furthe r raised by organising 
round tables on EU affairs for civil servants. Th e EU offices in line ministries have become 
more effective as they have grown more familia r with the demands of their role. In general, 
the standard of contributions by the Montenegrin au thorities to regular meetings with the 
European Commission under the stabilisation and association process has been maintained. 
As regards local government, the 2009 action pl an on local government reform was adopted 
in March 2009. A joint central/local government  commission reviewed draft legislation on 
local governance. However, implementation of  reforms remains limited. Implementation of 
the 2008 local government action plan, under the supervision of a joint central/local 
government commission, has not advanced very far. No report on impl ementation of the 2008 
action plan has been adopted. 
Overall , the government has continued to put together  the structures needed as a result of 
independence. The framework for coordination of  European integration activities has been 
made more effective. Human resources in mi nistries and relevant agencies to address 
European integration issues need to be furt her strengthened. Local self-government reform 
remains a key challenge. 
Public administration 
Some progress has been made  on upgrading the country’s ad ministrative capacity and on 
reforming the public administration, a key European Partne rship priority.  
A Law on State Property a dopted in January 2009  defined State and muni cipal property and 
clarified the ownership of premises used by St ate bodies. A Law on Conflic ts of Interest of 
Public Servants adopted in December 2008, provid ed a detailed definition of public officials 
and increased transparency requirements in the public administ ration. A commission to 
oversee compliance with the new Law was a ppointed in July 2009. A Law providing for 
internal audit units in government bodies wa s adopted in November 2008, but implementation 
has not yet started.  These legal provisions strengthen the overall framework for transparency 
and accountability. Establishment of the centr al human resources register by the human 
resources management authority (HRMA) is almost complete. The HRMA continued to 
conduct training programmes for civil servants  Recruitment procedures to the public 
administration are generally based on public vacancy announcements, but the concept of merit-based recruitment and promotion of civil servants is not provided for in the legislation and is not implemented in practice. Several activ ities have been organi sed to raise awareness 
of job opportunities in  the public sector.  Overall, the HRMA lacks the administrative capacity 
to promote and monitor implementation of the Civil Service Law.  
 
EN 10   EN The Ombudsman’s Office dealt with 541 comp laints in 2008, around 80 % of which were 
resolved. As in previous years, the majority c oncerned the work of cour ts, in particular the 
long duration of court proceedings, followed by  the public administration, the prosecution 
service and municipalities. Mo st recommendations made by the Ombudsman’s Office were 
followed up. A Deputy Ombudsman for children's rights has been appointed in July 2009. 
However, the Law on the Ombudsman has still to  be fully aligned with the Constitution. 
Further enhancement of the office's capacities is  required, as well as an improvement to its 
premises' accessibility.  
Implementation of the national training strategy for munici palities has begun. However, 
implementation of the 2008 local government ac tion plan has been limit ed, while progress on 
building up local authorities’ administrative and management capacity remains slow. No 
progress has been made on municipalities’ capacity for financial management, including budgeting, public procurement and allocation of grants. Lack of computerisation in many 
municipalities hinders effi ciency and increases the risk of corruption.  
Overall , some progress has been made on strengt hening the legislative framework for the 
public administration. There was some progress on human resources management but, due to 
the government’s cost-cutting measures, there has been no overall strengthening of human 
resources. Significant efforts are required to establish a professional, accountable, transparent 
and merit-based civil service, free of political interference. Further reform is required in the fields of financial control, public procurem ent and licensing procedures. To this effect, 
internal control mechanisms need to be esta blished throughout the pu blic administration. 
Efforts need to continue to prepare fully  for implementation of the SAA by upgrading 
administrative capacity in the areas covered by the agreement.  
Judicial system 
Montenegro has made progress in  the area of judicial reform , a key European Partnership 
priority. The action plan to implement the 2007–2012 judicial reform strategy has been 
further followed up. The second report on implemen tation of the action plan was adopted in 
March 2009. 
A Law on the Constitutional Court has been a dopted with the objec tive of clarifying the 
precise scope of the court's mandate. The new Criminal Procedure Co de (CPC) intended to 
increase the overall efficiency of the prosecution ha s been adopted. In pa rticular, it extends 
the powers of the public prosecution office, ma kes prosecution more efficient by placing the 
pre-trial procedure in the hands  of the public prosecutor, intr oduces a reversed burden of 
proof for confiscation of criminal assets and ex tends use of special investigative measures to 
corruption crimes. Preparatory work on the a pplication of the CPC has started, including 
specialised training for prosecu tors, judges and the police.  
Progress has been made on implementation of key legislation intended to increase the 
professionalism and independence of judges an d prosecutors. The Prosecutorial Council was 
elected, adopted its rules of procedure and beca me operational. The remaining vacancy in the 
Judicial Council, nominated by the pa rliamentary opposition, has been filled.
 Both the Judicial 
and the Prosecutorial Councils have begun to esta blish a track record of decisions on selection 
of judges, deputy prosecutors and prosecutors  and on disciplinary proceedings. During the 
reporting period, nine judges have been suspended and one has been dismi ssed by the Judicial 
Council. Progress has also been made  in reducing the backlog of cases. 
 
EN 11   EN The overall professional capacity of judges and prosecutors has been strengthened by training, 
including on anti-corruption. So me training on carrying out inve stigations has been provided 
to prosecutors. Special departments in the high courts for combating organised crime, 
corruption, war crimes and terro rism established in Septembe r 2008, started dealing with 
cases. The capacity of the special prosecutor’s  office for fighting orga nised crime has been 
bolstered by additional deputy pros ecutors, training and equipment. 
Investigation and court proceedings in M ontenegro's limited number of domestic war crimes'  
cases have made headway. An out-of-court settle ment has been made regarding the survivors 
and families of the victims of deportations of  Bosnian civilians in 1992 and compensations 
have been awarded.  
However, there have been no further developments on supplementing the Constitution with 
implementing provisions in line with European  standards covering th e judiciary and the 
prosecution service, where there still is political  interference. Serious concerns regarding the 
independence of judges and prosec utors persist. Scope for polit ical influence exerted on the 
prosecution exists through the a ppointment of the Prosecutorial Council by parliament and the 
parliament’s powers to appoint and dismiss th e State prosecutors. The unclear division of 
responsibility for supervision of the courts between the Ministry  of Justice and the Judicial 
Council, the participation of the Minister of Justice as a me mber of the Judicial Council and 
the election and dismissal of th e president of the Judicial C ouncil by parliament, constitute 
further causes for concern regarding the independence of the judiciary.  
The efficiency of the judicial system needs to be further enhanced. Judicial enforcement 
procedures remain inefficient while lengthy cour t procedures remain a cause for concern. The 
misdemeanour reform strategy needs to be implemented in a way which will avoid creating further backlogs. The new Law on the Right to Trial within Reasonable Time, granting 
compensation to citizens whose trial exceeds a se t time-frame, has entered into force, but a 
track record has yet to be established. The reli ability of court data needs to be improved. The 
computerised case management system has ye t to be introduced in all courts. Random 
allocation of cases in courts has not yet been fully implemented and computerised.  
Training programmes to prepare the prosecution service for its role in the pre-trial procedure 
under the new Criminal Procedure Code must be further pursued. Modern techniques for 
financial investigations are still insufficiently  used. The special pros ecutor’s office needs 
further strengthening in the form of expert ise, qualified support staff and equipment. The 
capacity of the Ministry of Justice for judici al cooperation has been somewhat strengthened. 
However, its internal organisation and proce dures, skilled human resources and IT systems 
need to be further improved. The ongoing reform of the juvenile justic e system has yet to 
yield results.  
Overall , Montenegro is moderately advanced in th e area of judicial reform. There has been 
some progress through the enhancement of the legal framework and the implementation of 
legislation. Further efforts are required for the consolid ation of the independence, 
accountability, integrity and efficiency of the judicial system.  
Anti-corruption policy  
There has been progress in the fight against co rruption, which is a key European Partnership 
priority.  
 
EN 12   EN The strategic framework for fighting corruption has been fine-tuned to place greater emphasis 
on monitoring implementation of anti-corrupti on measures from the action plan against 
organised crime and corruption. The national commission for monitoring implementation of 
the action plan produced its fourth and fifth report. 
The legal framework for the fight against corr uption has been strengthened with the adoption 
of the new Criminal Procedure Code in July  2009, the Law on Prevention of Conflicts of 
Interest in Performing Public Functions in  December 2008, the Law on Internal Financial 
Control in November  2008 and  the Law on Financing the Election Campaigns for the 
President, Mayors and Presidents of Munici palities of Montenegro in January 2009.  
Progress has been made on further enhancing pr eventive and investigative anti-corruption 
bodies. The resources of the Directorate for Anti-Corruption Initiatives (DACI) have been 
strengthened and its co-operation with the police has been enhanced. Furthermore, it 
intensified its training activit ies for administrative bodies and the public, as well as the 
realisation of reports and researches rela ted to corruption. The human resources and 
equipment of the special prosecutor’s offi ce for fighting organised crime, corruption, 
terrorism and war crimes have been built up. The specialised high court units for organised crime and corruption have also been reinforced . Anti-corruption training is available to the 
police, border police, customs of ficers, prosecutors and judges.  
Internal control departments within the Police Directorate are starting to build a record of 
action against corruption. During the reporti ng period, twelve corruption charges were 
brought against thirteen polic e officers as a result of  internal i nvestigations.  In the judiciary, 
criminal charges for corruption and abuse of office were brought against three judges. 
DACI, NGOs and the media conduc ted activities to ra ise awareness of corruption. Two NGOs 
actively participated in the work of the national commission for fighting corruption and organised crime and in screeni ng related draft legislation  
However, corruption continues to be a cause of concern in Montenegro. The national action 
plan against organised crime and corruption needs to be compiled on the basis of risk 
assessments and to include priorities for acti on. The country’s national legislation is not yet 
fully aligned with the international anti-corr uption instruments ratified by Montenegro. Some 
Group of States against Corruption (GRECO ) recommendations have yet to be fully 
implemented. Anti-corruption actio n plans on the level of local administration have been 
adopted by eleven out of t 21 municipalitie s but implementation has begun only in two. 
Montenegro still lacks strong and independent supervisory au thorities to evaluate asset 
declarations and financing of political parties and to monitor and exercise control over expenditure in the public sector, notably on public procurement, spatial planning and 
privatisation. A supervising authority to monitor and ensure compliance with the Law on the Financing of Political Parties and the Law on the Financing of Election Campaigns for the President, Mayors and Presidents of Municipalitie s of Montenegro is yet to be established. As 
a result, political parties' compliance with the law is only supervised in relation to allocations provided by the state budget. Pr ivate donations remain uncontroll ed, due to the absence of a 
supervising authority. The new Law on the Preven tion of Conflict of Interests in Performing 
Public Functions, adopted in December 2008 includes some improvements but also has some serious shortcomings and loopholes. Most importa ntly, it provides for a significant exemption 
for parliamentarians, who are allowed to hold executive powers in public companies or 
executive agencies. The appointme nt of the supervising authorit y by the parliament raises a 
 
EN 13   EN cause for concern. Further, the sanctioning pow ers of the Commission are limited in scope, as 
well as legally problematic especially with regard to politicians. The new Commission has 
been appointed in July 2009. Its Rules of Procedure are yet to be adopted.  
The administrative bodies for detecting and inves tigating corruption still lack sufficient staff 
with appropriate skills. This applies to the Po lice Directorate’s intern al control unit and unit 
for combating organised crime and corruption and, to  a lesser extent, to the prosecution 
service. 
A track record of corrup tion cases in courts is being built but the number of final convictions 
remains low. The investigativ e capacity of law enforcement bodies remains weak due to 
shortfalls in expertis e, specialised equipmen t and working condition s. There is still a 
significant lack of expertise in modern financia l investigation. In 2008 and the first quarter of 
2009, the Police Directorate for organised cr ime and corruption carried out financial 
investigations in five cases which had elemen ts of corruption. Inter-a gency cooperation needs 
to be further enhanced, as it is still based primarily on bilateral agreements and informal arrangements. A national coordination unit, in tended to bring togeth er the expertise and 
databases of the police, customs authorities,  tax authorities and the administration for 
prevention of money-laundering and financi ng of terrorism is yet to be created. 
Overall , good progress has been made on strengthe ning the strategic, legislative and 
administrative framework. However, corrupt ion remains prevalent in many areas and 
continues to be a particularly serious problem. The commitment of the authorities has not yet 
been backed by consistent implementation of anti-corruption legislation. While there is a 
positive trend, investigation capacities and co-ord ination of law-enforcement agencies remain 
weak. There is insufficient supervision in the areas of financing of political parties and 
conflict of interests. A solid track record of convictions in corrupti on cases remains to be 
established, particularly in cases of high-level corruption. 
2.2. Human rights and the protection of minorities 
Observance of international human rights law As regards ratification of human rights instruments, some progress has been made. In 
March 2009 Montenegro ratified the Optional Pr otocol to the UN Convention against Torture 
(OPCAT) Montenegro applied to join the UN Human Rights Council in February 2009. In 
June 2009, it signed the Council of  Europe Conventions on Exerci se of Children's rights, on 
Protection of children against sexual exploitation a nd sexual abuse and on the Adoption of 
children. It has not yet ratif ied the Council of Europe C onvention on the avoidance of 
statelessness in relation to State succession and the UN Convention on the rights of persons 
with disabilities and its optional protocol. 
In January 2009 Montenegro appointed a government agent before the European Court of 
Human Rights.  
Regarding  promotion and enforcement of human rights , direct implementation of 
international human rights standards remains rest ricted to cases of conflicts with domestic 
legislation. The Constitution contains no explic it provision that ratifie d international human 
rights treaties should be applied in compliance w ith the practice of inte rnational bodies in 
charge of interpreting them. The applicati on of the European Convention on Human Rights 
(ECHR) with regard to the period before i ndependence has not yet been fully clarified. 
 
EN 14   EN The right to appeal on the basis of the European Convention on Human Rights against 
violations which occurred prio r to Montenegro’s independenc e has not yet been clarified. 
During the reporting period, the European C ourt of Human Rights (ECtHR) issued one 
judgement finding that Monteneg ro had violated the ECHR. A total of 249 new applications 
were made to the ECtHR since October 2008. As of September 2009, there were 404 cases 
pending before the Court. 
Overall , Montenegro has made some progress on improving observance of international 
human rights law. Further efforts to align legislation with inte rnational human rights standards 
and to improve judicial enforcement are needed. 
Civil and political rights 
Some progress has been made on prevention of torture and ill-treatment and the fight 
against  impunity . The government adopted an action plan for the prevention of torture, 
which aims to improve the conditions of detainee s, prisoners or patients  in neuro-psychiatric 
institutions.  
Allegations of torture and ill-treatment during arrest and detention continue to be reported. In 
2008, the Ombudsman received a higher number of co mplaints about police ill-treatment than 
in the previous year. In six cases,  the Ombudsman recommended disciplinary proceedings or 
criminal investigations against police officers. Civil society organisations  reported an increase 
in alleged police assaults in 2008. Overall, tortur e and ill-treatment remain a sporadic problem 
in Montenegro. 
The disciplinary procedure for abuse of office a nd exceeding official powers defined in the 
Law on Civil Servants and Public Employees is not fully observed. A need remains to strengthen internal control mechanisms and take steps to accelerate judicial intervention. 
International standards and judi cial practice for combating torture need to be fully applied. 
As regards access to justice , the long duration of  court procedures remains a cause for 
concern. The right of citizens to a trial within reasonable time is protected by law,  yet due to 
deficiencies in the procedure, most claims ha ve been rejected. Free legal aid remains limited. 
The Law on Free Legal Aid has not yet been ad opted. The overall backlog of court cases has 
been reduced, but further efforts are necessary.  
Some progress has been made regarding the  prison system.  New facilities for specific 
categories of detainees have been opened. Vi deo monitoring of detention areas has been 
introduced in some police units. Some progre ss has been made on monitoring of detention 
facilities by external bodies. 
However, most detention facilities in Montenegro are not yet differentiated and specialised for 
specific categories of detainees. Detention facili ties lack sufficient capacity for all detainees. 
Conditions in some police detention facilities ar e unsatisfactory. Staff in  detention facilities 
lacks training. Reform of the probation/parole system remains pending. Overall, conditions of 
detention facilities are not yet in line with international standards and as recommended by the 
Ombudsman.  
Some progress can be reported on  freedom of expression. A lengthy trial of a high-profile 
murder case of a daily newspaper owner has been concluded and a conviction has been made. Some progress was also achieved on investigati on of violence against j ournalists. However, 
 
EN 15   EN there is still cause for concern. New incide nts of mistreatment have been reported. 
Defamation cases against journalists continue to  be used as a means of exerting pressure 
against independent journalism and courts im pose disproportionate fines in such cases. 
Intimidating statements by state officials on the role of media and NGOs are a cause of 
apprehension. The Law on Free Access to Public Information is still being implemented with 
uneven results. 
There were set-backs in the implementation of  the Law on Electronic Communications due to 
the delay in establishing the Agency for El ectronic Communications and to a disagreement 
between the Agency for Electronic Communicati ons and the Broadcasting Agency on powers 
regarding frequency allocation. Delays in freq uency allocation procedures raise concerns 
about political interference. Th e independence of the members of  the governing council of the 
Agency for Electronic Communications remains questionable, as they are appointed by the 
government. Implementation of the Law on Electronic Communications remains 
unsatisfactory. Media transparency remains insufficient.  
Regarding freedom of assembly and association , there are no restric tions to report.  
Some progress has been made on the role of civil society organisations . Several NGOs 
continue to have a high public  and political profile. A strate gy for cooperation between the 
government and NGOs was adopted in January 2009. Civil society organisations continue to 
be consulted by the government and are repres ented in the National Council for European 
Integration. However, the mechanism by whic h civil society members are elected to the 
National Council for European Inte gration has to be clarified. 
The number of registered NGOs has increased to  4,600, but only a small minority of them are 
active. Civil society groups do not yet partic ipate in the Radio/Television Council of 
Montenegro. 
As regards  freedom of religion , relations between the ma jor religious groups (Orthodox, 
Islamic and Roman Catholic) remain satisfactory. However, the conflict between the Serbian and Montenegrin Orthodox churches in Monten egro over official recognition and property 
ownership continues.  
Overall , there has been some progress in the area of civil and political  rights. However, 
further efforts are necessary on prevention of ill-treatment, freedom of expression and access 
to justice. The capacity and di fferentiation of detention facil ities need to be enhanced.  
Economic and social rights 
Limited progress has been made on protection of women’s rights, including the issue of 
domestic violence and protection of victim s. A government campaign on violence against 
women was launched in 2008. The speed of processi ng cases in courts and the attitude within 
the police teams specialising in family violence have improved somewhat.  
The number of cases of domestic violence report ed to the police is still small. However, 
domestic violence remains wide spread. The Law on Protection fr om Violence in the Family 
has still not been adopted. There is a lack of  financial support for organisations providing 
services to victims or for the victims themselv es. The protection given to victims of violence 
remains unsatisfactory and municipal social ca re centres still need to be improved. Sexual 
harassment, as defined in the Labour Law, needs to be duly prosecuted. 
 
EN 16   EN In the field of gender equality, some progress has been achieved. Implem entation of the action 
plan for gender equality (2008-2012) has st arted. The Office for Gender Equality has 
established a forum for dialogue with civil society and a university pilot project on gender 
studies. Government ministries  and bodies have started revi ewing documents from a gender 
equality angle. Women remain well represented at working and middle management levels in 
the public administration. A law which will prohibit discrimination based on gender is 
pending. 
Women remain underrepresented in decision-ma king processes and in leading positions both 
in the public administration and in the privat e sector. Only 6% of top positions in the 2006-
2009 government mandate were occupied by women.  In the new government mandate there is 
one woman in a ministerial position. In parl iamentary elections in  March 2009 only 14% of 
candidates were women, while in the new parlia ment only 11% of members of parliament are 
women. More than 80% of the illiterate popu lation are women. Overall, the Law on Gender 
Equality has not yet resulted in mainstreaming ge nder equality policy in parliament, ministries 
and across the public administration. Effort s in this field must be intensified.  
In practice, limited progress has been made on women’s rights. Women remain 
underrepresented in top public and private sector  positions. It is necessary to continue 
improving protection against and raising awar eness of gender-based discrimination, in 
particular on the labour market. 
Limited progress has been achieved concerning children’s rights . A Deputy Ombudsman for 
children’s rights has been appoi nted in July 2009. The counc il on child rights has begun to 
meet on an ad hoc basis. A loca l day-care centre for children w ith disabilities was opened and 
three local centres are being c onstructed. Efforts were made to improve school enrolment of 
Roma children and avoid their marginalisation.  
However, further reforms remain necessary. Th ere is still a gap between the goals of the 
national strategy on development of child a nd social protection an d implementation in 
practice. The Law on Child and Social Protection has not yet been brought into line with the 
UN Convention on the Rights of the Child and w ith international prac tice. The council on 
child rights has no systematic work programme. Ca pacity to monitor child ren’s rights remains 
weak. Child protection from viol ence is inadequate, as most cases of violence against and 
between children remain unreported. Capacity fo r data collection in the social and judicial 
sectors needs to be further strengthened. Deve lopment of alternative,  community-based care 
services needs to be accelerated. 
Concerning socially vulnerable persons and/or persons with disabilities, some progress 
has been achieved. Laws on travel concessions for people with disabilities and on movement 
of blind persons with the assistance of guide dogs were adopted. Construction of a centre for 
professional rehabilitation and inte gration of people with disabil ities and of several centres for 
disabled children has begun. However, th e Law on Professional Rehabilitation and 
Employment of Disabled People, which places  an obligation on employers to adapt their 
premises to the needs of employees with disabilities, is not sufficiently enforced. 
Regarding labour rights and trade unions,  the Law on Strikes was brought into line with the 
Constitution, expanding the right to strike  to public administration employees.  
 
EN 17   EN In the area of anti-discrimination policies,  adoption of the Law on Prohibition of 
Discrimination is still pending. Lesbian, gay, bisexual and transgender (LGBT) people are 
marginalised and discriminated ag ainst in Montenegrin society.  
Regarding property rights , a Law on Private Property Rela tions was adopted in March 2009. 
It provides for equal treatment of foreign ci tizens with Montenegrin citizens on acquiring 
movable and immovable propert y. A Law on State Propert y, which clearly defines the 
property belonging to the Stat e and municipalities, was adopted. However, property 
restitution has been slow. The Ombudsman’s Of fice reported fewer complaints regarding 
restitution of property in 2008, than in previous years. 
Overall , there has been limited  progress in the area of econo mic and social rights. Major 
legislation such as the La w against Discrimination and  the Law on Protection from violence 
in the Family is yet to be adopted. Domes tic violence remains a cause for concern. The 
protection of women against all forms of violence needs to be considerably strengthened. 
Implementation of strategies and legislation addressing vulnerable  groups needs to be 
accelerated. 
Minority rights, cultural right s and protection of minorities 
Overall, minority rights are respected. Ther e is a broad and adequate legal framework 
safeguarding them, including cultural rights,  on the basis of the constitution. Yet, the Law on 
Minority Rights and Freedoms has not yet been harmonised with the Constitution regarding minority representation. While preserving the ex isting tolerance and mutual respect between 
Montenegro’s varied ethnic groups , there is a need to adopt le gislation in order to address 
outstanding issues in this area. Also the constitutional provision on ‘proportionate 
representation’ of national minorities in public services  needs to be clarified. 
Montenegro needs to resolv e the status of around 16,200 displaced persons from Kosovo. 
Their re-registration has been announced by th e authorities. Displaced persons from Kosovo 
face great difficulties in gaining access to empl oyment, due to restrictions imposed by the 
Law on Employment and Work of Foreigners. Construction of accommodation for displaced 
Roma from Kosovo was initiated in June 2008. Overall, displaced persons from Kosovo live 
in very difficult economic and social conditions partly due to their unresolved legal status. 
Another particular cause for concern is the situation of the Konnik refugee camp close to 
Podgorica.  
A re-registration of displaced persons from Cr oatia and Bosnia and Herzegovina which has 
been recently completed, has found 5,648 of them residing in Montenegro. A legal framework to address their status has been put into place. Displaced persons can either be registered as 
refugees if they fulfil the requirements of th e Law on Asylum, and subsequently be able to 
apply for Montenegrin citizenship, or as fore igners with permanent residence under the Law 
on Foreigners. Montenegro must ensure the effective implementation of these laws. Between March 2008 and September 2009, a total of 270 displaced persons acquired Montenegrin 
citizenship by naturalisation. The European Partnership priorities  regarding abolition of all 
discriminatory provisions in key fields, affec ting refugees and displ aced persons and creating 
the conditions for integration of those who c hoose to remain in Montenegro, have not yet 
been fulfilled. 
The situation of the Roma, Ashkali and Egyptian  (RAE) communities remains a cause for 
concern. A census conducted by the national st atistical office in October 2008, has found a 
 
EN 18   EN total of more than 10,000 RAE in  Montenegro. However, this figure is disputed by Roma 
representatives. The government  is cooperating with interna tional organisations and civil 
society groups on projects to improve the s ituation of the RAE popula tion in line with the 
strategy under the Decade of Roma inclusion in itiative. Regarding access  to education, there 
has been some progress on enro lment of RAE pupils in primary and secondary schools and on 
addressing marginalisation in schools. Th e Ministry of Education and Science  has dispersed 
RAE pupils across schools to avoid segregation,  introduced a policy of affirmative action to 
secure acceptance of RAE students in seconda ry schools, conducted an awareness-raising 
campaign to encourage acceptance of RAE pup ils, and special training for teaching RAE 
pupils.  
However, further efforts are needed to im prove the situation of the RAE population. As 
regards education, scholarship funding for RAE students remains at a token level and almost 
fully dependent on external donors. The unemployment rate among the Roma population remains around 80%, while the illiteracy rate  is around 70% and even higher among women. 
There remains a lack of appropriate housi ng for the RAE community. Although the strategy 
recognises the lack of documentation and civ il registration amongst th e RAE population, only 
limited efforts have been made, in the form of encouraging local authorities to register the 
RAE population. It is estimated that a big percentage of th e RAE population currently lack 
birth or citizenship certificat es. The social and economic situ ation of the RAE population in 
Montenegro remains a cause for serious concern. They face marginalisation and lack of integration into society.  
Overall , there has been some progress on st rengthening the framework for minority 
protection. However, implemen tation is still lagging behind, inter alia , due to the lack of 
reliable data and a relatively limited budget. Mont enegro must effectively resolve the status of 
displaced persons and work on improving their access to economic and social rights, which 
remains limited. Roma continue to face very difficult living conditions and discrimination, 
particularly regarding access to education, social protectio n, health care, employment and 
adequate housing. 
2.3. Regional issues and international obligations 
Satisfactory cooperation with the International Criminal Tribunal for the former 
Yugoslavia (ICTY), a key European Partnership priority, is continuing.  
Investigation and court proceedings in M ontenegro’s limited number of domestic war crimes  
cases made headway or were concluded in coope ration with other countries in the region. The 
"Kaluđerski Laz" and "Morinj"
5 trials are continuing. In Ap ril 2009 investigation of the 
"Bukovica"6 case was completed. The government agreed to pay an out-of-court 
compensation settlement to the survivors and families of the victims of deportations of Bosnian civilians in 1992. Several persons have b een indicted for this crime. An investigation 
was opened by the Chief Prosecutor in 2009 concerning possible war crimes by former Yugoslav army pilots in Dubrovnik in the 1990s. 
                                                
 
5 In the "Kalu đerski Laz" case, charges have been brought  against eight people. The victims were 
civilians of Albanian origin. In the "Morinj" detention camp case, charges have been brought against six persons. 
6 In the Bukovica case, charges have been brought against seven persons. The victims were civilian 
muslims. 
 
EN 19   EN Montenegro maintains the 2007 bila teral immunity agreement with  the United States granting 
exemptions from the jurisdiction of the International Criminal Court . This does not comply 
with the EU Common Positions on the integrity of  the Rome Statute or the related EU guiding 
principles on bilateral immunity agreements. M ontenegro needs to align with the EU position. 
Montenegro adopted a Law on Cooperation with the ICC in July 2009. 
There has been lit tle progress in the  Sarajevo Declaration process  which aimed to finalise 
the regional refugee return  process by the end of 2006 . While Montenegro continued to work 
to a greater or lesser extent on its roadmap, there has been limited discussion on implementation issues on either a bilateral or a regional basis. 
Regional cooperation  and good neighbourly relations  form an essential pa rt of the process of 
moving towards the European Union. Montenegro  is actively particip ating in regional 
initiatives, including the South East Europ ean Cooperation Process (SEECP) and will take 
over its chairmanship in 2010-2011. Montenegro is also actively invo lved in the Regional 
Cooperation Council (RCC). In 2009 Montenegro holds the chairmanship of the Central 
European Free Trade Agreement (CEFTA) and al so participates in the Energy Community 
Treaty and the European Common Av iation Area Agreement (ECAAA).  
The Regional School for Public Administration (ReSPA) in Danilovgrad near Podgorica has 
become operational. 
Montenegro has continued to foster good bilateral relations with other enlargement 
countries and neighbouring EU Member State Italy. Cooperation with neighbouring 
countries intensified pa rticularly in the areas of cross- border cooperation and science and 
technology.  
Relations with Albania  have developed further. Agreem ents on cooperation in science and 
technology and in culture  were signed and concrete steps against organised crime taken. The 
construction of the joint border crossing point at Muriqan/Sokobine was completed.   
Relations with Bosnia and Herzegovina  have further intensified. Following the signature of 
the Agreement on cross-border cooperation, joint border patrols have been set up. Agreements 
on cooperation in the areas of culture, educ ation and science as well as a readmission 
agreement have been signed.  
Cooperation with Croatia has been further strengthened. An agreement on protection of 
minorities was signed. The joint working group on resolving property issues  and the council 
on economic relations both held meetings. An  agreement on cooperation in science and 
technology was signed. Progress has been achieved towards settling the b ilateral border issue 
between Croatia and Montenegr o. The two countries have been co-operating on preparing 
their submission to the International Court of Ju stice on delimiting the border at Prevlaka. The 
temporary border agreement is functioning well. 
Cooperation with the former Yugoslav Republic of Macedoni а has been strengthened. An 
agreement on dual citizenship was signed, as we re agreements on cooperation on EU affairs, 
air traffic, tourism, agriculture and protecti on in the event of natural disasters. Defence 
cooperation has been intensified. Negotiations  on an agreement on social security are 
ongoing.  
 
EN 20   EN Relations with Serbia  continue to be affected by the Montenegrin decision to recognise 
Kosovo’s independence . The Montenegrin Ambassador was declared persona non grata  in 
October 2008 . A new Ambassador was accredited to  Belgrade in September 2009. 
Cooperation in the defence sector was good and the Serbian Minister for Defence visited 
Podgorica in February 2009. The Montenegrin President visited Belgrade in May 2009. 
Economic cooperation remains good. On the basis of a bilateral agreement, Serbian diplomatic and consular missions in some c ountries continue to provide services to 
Montenegrin citizens. Negotiations on dual c itizenship are ongoing but progress has been 
limited. Agreements on judicial coope ration and joint border patrols  were signed. Police 
cooperation in the fight against organised cross-border crime was strengthened. Talks on 
border demarcation are ongoing.  
Relations with  Turkey have remained good. Agreements we re signed on free trade and on 
bilateral defence cooperation. 
Bilateral relations with Italy, Montenegro's neighbouring EU Member State, have further 
developed. The EU is Monteneg ro’s main trading partner. 
Overall , Montenegro has further impr oved its active cooperation in the region, by intensifying 
its participation in multilateral initiatives and organisations and by further fostering bilateral 
relations. 
3. E
CONOMIC CRITERIA  
In examining the economic developments in Montenegro, the Commis sion’s approach was 
guided by the conclusions of the European C ouncil in Copenhagen in June 1993, which stated 
that membership of the Union requires the exis tence of a functioning market economy and the 
capacity to cope with competitive pressure  and market forces within the Union. 
3.1. The existence of a functioning market economy 
Economic policy essentials  Montenegro submitted its third Economic and Fi scal Programme (EFP), covering the period 
2009-2011, by the end of January 2009. However, its assumptions became very quickly outdated due to the crisis. Yet, the fiscal stra tegy of the government continued to focus on 
keeping the budget deficits with in 3% of GDP in both 2009 and 2010 despite the negative 
impact of the crisis and the cost of the meas ures adopted to mitigate its effects. Meanwhile, 
the government coalition partners overcame some  of the previous discrepancies of views on 
economic policy. Overall , the domestic consensus on economic policy essentials has been 
maintained. 
Macroeconomic stability  
The economy continued to grow st rongly at around 8% in real te rms in 2008 driven by strong 
demand and, on the supply side, by construction and services. However, at the end of 2008 
industrial output contracted on  the poor results of manufactur ing, and the metal industry in 
particular. This sector suffered from declin e in external demand in the context of the 
international crisis and the subs equent collapse of commodity pr ices. In the first half of 2009 
the economy contracted by 3.5%, as the negative e ffects of the crisis extended to several key 
sectors (i.e. basic metals, financial servi ces, and construction). Industrial production 
 
EN 21   EN contracted on average by 20% year-on-year in the first six months of 2009, as manufacturing 
output went down by 33%. Only three manufac turing industries (chemicals, foodstuffs and 
printing) and the utility sector expanded in the first half of the year compared with the previous one. On the other hand, after a bad spring the tourism industr y recovered during the 
summer. Yet, as a consequence of the robus t economic growth witnessed during most of 
2008, Montenegro’s per capita inco me, measured in purchasing power standards (PPS), rose 
to 46% of the EU27 average, comp ared with 41% a year earlier. Overall , after the high 
growth in 2008, the economy contracted in 2009 ma inly due to the impact of the global crisis 
on the real economy. 
In 2008, the current account deficit remained ve ry large at 29% of GDP, despite the strong 
cutback in merchandise imports (45% year-on-year) in the last quarter of the year due to the sharp deceleration of the banks’ lending activity.  The surplus of the balance of services was 
on a declining trend. The factor  income balance deteriorated in 2008, as compensation paid to 
the increasing number of foreign workers out paced incomes from Montenegrins working 
abroad. The cool-down of the real estate mark et in 2008 resulted in a decline of FDI inflows 
by 17.4% year-on-year. Yet, the sizeable outflows  associated to this market also decreased, 
which contributed to sustain net FDI levels at 17% of GDP. Foreign loans increasingly 
covered the financing gap of the current accoun t deficit. The moderation of both domestic 
demand and imports related to foreign investme nts continued during the first half of 2009, 
resulting in a significant narro wing of the trade defi cit by 36.6% year-on-year and a moderate 
contraction of the current account deficit to 22 % of GDP (annualised). Th e faster decrease of 
FDI outflows by 53.2% over the year  offset the decline in infl ows (16.6%), so that on a net 
basis FDI still expanded to 16%  of GDP, covering 80% of th e current account deficit. 
Overall , as a consequence of the crisis, the large current account deficit declined until June 
2009, while net FDI remained resilient. 
The labour force survey (LFS, according to the ILO definition) revealed that the 
unemployment rate declined by 3 percentage po ints to 16.8% during 20 08. More recent data 
from the Employment Agency shows that th e official unemployment rates for 2009 also 
continued contracting until end-August. Mean while employment continued growing during 
2009 by some 5% year-on-year. The unbalanced re gional distribution of the workforce and its 
limited mobility remain a rigidity factor, favouri ng continued inflows of foreign workers. Yet, 
the government relies on the significant share of temporary non-resident workers to cushion 
imbalances on the local labour market. Overall , labour market indicators improved on 
favourable seasonal effects, desp ite diminishing economic activity. 
In 2008 macroeconomic stability wa s also challenged by high pr ices. Yet, after peaking in 
August 2008 close to 10%, the average annual in flation declined to 7. 4% by the end of the 
year. The consumer price index further slowed  down to 2.1% year-on- year in July 2009 as 
housing and transport prices exerted a downward pr essure. With the euro as sole legal tender
7 
the room for autonomous monetary policy rema ined limited. The Central Bank of Montenegro 
(CBCG) continued to use prudential requirements,  in particular reserve requirements, as 
intervention tools. The CBCG has been very active  trying to preserve the stability of the local 
                                                 
7 Montenegro unilaterally uses the euro as legal tender , without participating in the euro area. In October 
2007 the Council adopted a declaration on the de facto  use of the euro in Montenegro which is due to 
exceptional circumstances. 
 
EN 22   EN financial system. In autumn 2008 the growth of broad money supply8 turned negative due to 
serious withdrawals of  bank deposits. The CBCG intervened  by urgently adopting a set of 
measures for protecting the banking system, cons isting in a full guarantee for deposits and the 
possibility of government credit support for eventual liquidity shortfalls of banks. Overall , 
inflation has been decelerating as the economy cooled down. 
The lending activity of commercial banks  expanded by 23% year-on-year in 2008, as 
compared with 165% a year before. The mode ration was initially the consequence of the 
Central Bank measures to br ing the lending boom down to su stainable levels. The credit 
portfolio reached 83% of GDP in 2008 up from 80% a year  earlier, while bank deposits 
declined by 6.7% year-on-year. During the first ha lf of 2009 the liquidity  shortage triggered 
by the withdrawal of deposits constrained the lending capacity  of the banking sector. The 
contraction of deposits reached 11.7%, while cr edit growth dropped by 5.9% since the start of 
the year. Overall , the liquidity of the banking system was challenged by the problems in the 
second largest lender and the effect s of the global financial crisis. 
In 2008 the budget execution yielded a surplu s of 0.5% of GDP. Consolidated public 
expenditures increased significantly, reachi ng 44% of GDP from 41% of GDP in 2007, 
boosted by rising transfers to soci al security institutions and to  households. This expansionary 
increase in spending commitments put additional  pressure on fiscal policy as of early 2009, 
when the local repercussions of the crisis re sulted in lower fiscal revenues than planned. 
Nonetheless, the authorities reacted promptly  by curtailing spending and still maintaining a 
budget surplus of 0.4% of GDP in the first  half of 2009. The government revised the 2009 
budget in July, notably by reducin g capital investments, expend itures in goods and services 
and planning wage cuts in public administration, in order to maintain the deficit at 2.6% of 
GDP. Loans from foreign private banks were s ubscribed and a minority stake in the power 
utility (EPCG) was sold to a foreign partner. Ho wever, other fiscal risk s, in particular the 
contingent liabilities linked to the restruct uring packages for the metal industries and the 
liquidity problems in the banking sector. Overall , public finances have  come under increased 
pressure in 2009, but the authorities managed to limit the deficit by curtailing spending, 
borrowing and selling assets. 
In 2008 the public debt remained broadly unchanged in GDP terms at 26.8%. Public debt 
further increased in the first half of 2009 to 28.4% of projecte d annual GDP. Public domestic 
debt increased by 9% since the beginning of th e year, while the public external debt grew 
faster, by 15% since end-2008, mostly due to i nvestments in infrastructure co-financed by 
international financial institutions. Duri ng the third quarter of 2009, the government 
subscribed two loans worth 3.4% of GDP from foreign private banks for financing the state 
budget, bringing public debt above 30% of GDP at the end of the year. Overall , debt 
obligations are rising due to in frastructure spending and loan s to finance the emerging budget 
deficit.  
Macroeconomic policy has been driv en to a large extent by the fi nancial crisis. It focused on 
implementing a more prudent fiscal policy an d accelerating structural reforms in several 
sectors. For instance, developi ng a more market-oriented appr oach to highway construction 
by involving the private sector th rough Public-Private Partnershi ps (PPPs), reducing the fiscal 
                                                 
8 The broad measure of money (M21) aggregate consists of deposits of banks with the Central Bank and 
demand and term deposits with banks and the Central Bank, in euros and other currencies, including 
deposits of the central government. 
 
EN 23   EN burden on labour to increase competitiveness, or developing the legislative framework for the 
financial system with the adoption of legisla tion based on EC Directiv es. The Central Bank 
has also contributed to macroeconomic stabili ty by timely adapting monetary policy to fast-
evolving circumstances. In 2008 the CBCG intr oduced a restrictive po licy to reduce the 
exposure of the economy to the surge of a cr edit bubble. In 2009 it reversed its path, easing 
reserve requirements to release more liquidity into the financial system. Overall , structural 
reform policies combined with a timely adaptati on of the fiscal and monetary policy to the 
international crisis impact, are contributing to recovery. 
Interplay of market forces  
The share of the private sector in the economy is  very large as the pub lic sector is mostly 
reduced to network industries (utilities and tr ansport). Moreover, the influence of the public 
sector in price dynamics is pr actically limited to the energy sector. The energy regulator 
establishes electricity prices in relation to production cost thresholds. In June 2009, the 
Administrative Court annulled th e energy regulator’s decision to increase electricity prices. 
As a result, some €20 million from the overhead  prices are being returned to consumers 
gradually by decreasing prices for electricity until  the debt is settled. The privatisation process 
also suffered from the global crisis as some successful bidders failed to conclude a sales 
agreement. This was notably the case with the auctions of the tobacco  retailer Duvankomerc, 
and the publisher Pobjeda. A few publicly owned companies failed repeatedly to attract interest from investors, such as the appl iances factory Obod or the insurance company 
Lovćen. In these cases, new privatisation met hods are proposed and companies are being 
slated for sale again. Further progress has been recorded in the privatisation of key energy and 
transport systems. The government sold a mi nority stake in the power utility (EPCG), 
providing the possibility for the new partner to acquire majority  control of the company after 
five years. The railway transportation company and the port of Bar have already established 
their freight units as complete ly independent companies, prep aring their privatisation through 
concession deals. However, restructuring of the aluminiu m and steel plants remains a 
considerable challenge. Overall , the privatisation process is  quite advanced and state 
intervention in the economy has remained limited except for temporary rescue operations in strategic sectors such as  basic metals and banks. 
Market entry and exit 
The Council for the elimination of business ba rriers, established in mid 2008, continued its 
activity in 2009. Achievements in the releva nt period included the simplification of 
administrative procedure for obtaining cons truction permits and reviewing technical 
documentation and enhancement of transparency through the relevant authorities' obligation 
of publishing related documentation on their we bsite. The operation of new trade outlets does 
not require any longer municipa l license but a simple announcement of intent for record 
purposes. In addition, the author ities have also established a website for ga thering online 
requests from entrepreneurs to remove furt her barriers. However, electronic signature 
legislation still needs to be implemented in or der to benefit from the full potential of online 
business and administrative transactions. Market exit procedures have been reduced to six 
months on average. In the firs t half of 2009, in spite of the crisis, registration of new 
enterprises continued at an  average of 212 new limited lia bility companies per month 
compared with 284 during 2008. During the first five months of 2009 the Commercial Court 
registered 134 bankruptcy procedures, a simila r number to that recorded during the same 
period a year before (138). The backlog of  ongoing cases decreased to 139, practically 
converging with the number of newly opened f iles. Additionally, 284 companies applied for 
 
EN 24   EN voluntary liquidation under the La w on Insolvency, and were subs equently removed from the 
registry of the Commercial Court. Overall , market entry has improved and exit procedures 
have been further streamlined. 
Legal system 
Three key pieces of legislation regulating property rights were adopted in 2009. The 
Concession and the State Property Laws introd uced more comprehensible concession rights 
on public properties and resources, with the possibil ity of extension of su ch contracts up to 90 
years. The Property Relations Law provides the same treatment to foreign citizens as to 
nationals for acquiring mova ble and immovable property, a lthough some limitations still 
remain for foreigners purchasing agricultural  land, for which the ne w law provides long-term 
leasing as an alternative. Recourse to the judi cial system increased as previous reluctance to 
resolve commercial disputes thr ough official circuits is fading  away, also due to the negative 
effects of the crisis. During the first half of 2009 the Commercial Court received 5,200 cases 
(compared with 1,279 a year before). However, the large informal sector is fuelled by weaknesses in tax and expenditure policies, as well as in law enforcement, including the fight against corruption and organised crime. The info rmal sector remains an important challenge, 
as it reduces the tax base and the efficiency of economic policies. Overall , the new property 
laws improved legal certainty facilitating fore ign investors’ engageme nt in large projects. 
However, the fight against corruption and tackling the large informal economy remain major challenges. 
Financial sector development 
The size of the banking sector in terms of assets stabilised at  99% of GDP by the end of 2008, 
compared with 106% a year earlier. However, banks assets further contracted to 88.7% of 
GDP by end-June 2009 as depos it withdrawals and negative lending growth persisted. The 
sector remained highly concentrated, with th ree banks holding 63.9% of the banking sector’s 
assets and 58.8% of total deposits. Excessive ri sk taking by Prva Banka -the second largest 
bank- without due concern for prudent banking pr actices, resulted in st ability risks for the 
whole sector. Faced also with th e effects of an international cr isis threatening the domestic 
market, the Central Bank together with the g overnment adopted several measures for the 
protection of the banking system. A full guarant ee for all deposits, and the possibility of 
government credit support for liqui dity shortfalls or for recapitalisation were granted. In an 
attempt to improve positions of both lenders and debtors and to create more space for bank lending activities, the CBCG also introduced add itional measures to create more favourable 
conditions for loans restructuri ng and further reduced the rate  of mandatory reserves on 
existing deposits to 10%, with no reserve requi rements for new deposits. The government also 
intervened by providing a credit support of € 44 million (about 1.3% of 2008 GDP) to Prva 
Banka in exchange for this bank's shares placed as collateral. The bank has meanwhile managed to repay 75% of the loan. The with drawal of deposits se t off in October 2008, 
occurring at a rate of 18% until February 2009, moderated to an average monthly contraction 
of 0.2% in the second quarter of 2009. As a result, during th e first half of 2009 the banking 
system lost deposits for some 5.7%  of GDP, most of it from th e two biggest banks. End-June 
2009, the average capital adequacy ratio came dow n to 11.9%, close to the stipulated 10% 
minimum level, while the ra tio of non-performing loans
9 climbed to 8.9%, compared with 
                                                 
9 Considering the Central Bank of Montenegro’s stricter classification of past-due loans as any loan that 
is past due for more than 61 days, compared w ith the Basel II classification of after 90 days. 
 
EN 25   EN 3.9% a year before. In June 2009 the average weighted effective lending interest rate peaked 
at 9.38%, while the weighted average deposit e ffective interest rate s recorded 3.80%, down 
from 9.40% and 4.10% respectively in December 2008. Overall , the stability of the financial 
system was maintained under very difficult circumstances. 
The domestic insurance market further expande d by a more modest 18% year-on-year in 
2008, following a 28.7% expans ion of billed premiums a year  before. End 2008 there were 11 
companies active in the sector, after several ne w firms entered the market. The sector remains 
highly concentrated, with one company holding  a 61% market share. The industry accounts 
for some 3% of GDP and is pr imarily made up of compulsory insurance. Its life insurance 
segment is developing fast from a very low ba se and accounted in 2008 for some 12% of total 
premiums (compared with 4.5% a year before ). The leasing market continued its rapid 
expansion in 2008, increasing contract value by  42.2% year-on-year, re presenting 4.9% of 
GDP (compared to 4.1% a year before). The majority  of leasing contracts re late to real estate 
and vehicle purchases. The two stock exchanges showed signs of recovery in May 2009 as the 
markets were positively influenced by the sale of a minority stake in the power utility EPCG. 
In May, after more than one year  of continuous deterioration, th e aggregate capitalisation rose 
to 147% of GDP, from 116% in the previous month. Overall , while the non-banking financial 
sector continued expandi ng, capital markets went th rough a severe correction. 
3.2. The capacity to cope with competitiv e pressure and market forces within the 
Union 
Existence of a functioning market economy Quick responses to a fast-changing and diffi cult global economic environment prevented a 
deep deterioration of macroeconomic stabil ity, as employment was preserved, prices 
moderated and the public deficit was contai ned. Macroeconomic stability was seriously 
challenged by an expansionary fiscal stance in 2008, followed by liquidity problems in the 
banking sector, and current continge nt liabilities in the metal s ector. Apart from direct support 
to metal smelters and one bank, the author ities’ rescue plans focused on accelerating 
structural reforms and preserving the stability  of the financial system. To this end, the 
government provided credit guarantees to interna tional banks for extending loans to domestic 
lenders which freely decided on th e final allocation of credit. Overall , the functioning of 
market mechanisms was challenged by the ma gnitude of adjustments taking place in the 
external accounts and the financial sector. 
Human and physical capital 
In the context of still persistent labour  demand, several educational reforms were 
implemented to align the supply side with mark et requirements, not least the Law on National 
Vocational Qualifications, and the strategies for introducing didactic software in education and for establishing the qualification fram ework. For young managers having already 
graduated, the Agency for Employment (ZZZ) t ogether with the Directorate for Small and 
Medium-Sized Enterprises (SMEDA) implemen ted practical training programmes. The 
Agency continued its activities with academic institutions, providing professional guidance, 
but also adopting programmes for the integration of minorities into the workforce as well as to improve work participation rates, esp ecially in the poorer northern region. Overall , the skills 
mismatch remains an important issue. In some  labour intensive sectors the country needs to 
resort to foreign workers to sustain economic growth. 
 
EN 26   EN Gross fixed capital formation (GFCF) as a sh are of GDP reached 24% in 2007. Estimates for 
2008 suggest a ratio of 30% of GDP. Almost 40%  of FDI invested in 2008 went into real 
estate, 30% in domestic companies and banks and a similar amount in intercompany debt 
(namely foreign banks towards local subsidiari es). Public capital sp ending increased in 2008, 
reaching 9.3% of GDP, compared with 6.7% a year  earlier. However, during the first half of 
2009, further moderation in credit expansion and budget spending cuts reduced capital formation. Overall , worsening economic conditions did no t stop restructuring in energy and 
transport as well as the launch of major conces sions for private investments in tourism and 
highways. 
Sectoral and enterprise structure  
The crisis exacerbated the weakness of the ma in industries of the country –basic metals 
production– already hampered by excessively high production costs. To restructure and 
address the structural problems of the aluminiu m smelter, and the more cyclical ones of the 
steel mill, the government provided credit guarantees and a redundancy programme to 
proceed with technological upgrades and labour cu ts. In the energy sector, after the separation 
of the transmission unit from the power company (EPCG), establishing tariffs for the use of 
the network and the adoption of secondary le gislation, all necessary  preconditions were 
formally met for the development of competition and establishment of the electricity market. 
Meanwhile, the government sold in July a minorit y stake in the utility, retaining a 55% share. 
The new partner may later acquire majority control in EPCG subject to successful 
implementation of the investment programme. The railway transportation company and the 
port of Bar separated their freight units, thus preparing the ground for th eir privatisation also 
with a view to securing the n ecessary capital for their modern isation. The national air carrier, 
Montenegro Airlines, implemented the first stage of its restructuring by transformation into a 
shareholder company. Overall , a significant restructuring of strategic enterprises and sectors 
is underway. 
The structure of the economy c ontinued shifting towards servic es. More than 70% of total 
employment during 2008 was recorded in services. Public administration employees
10 in total 
services decreased by 2%, while the private sect or witnessed an increas e of 4% year-on-year, 
driven by large increases in th e number of hotel and restaurant workers, but also  transport and 
financial activities. Yet the larg est share of tertiary labour rema ins wholesale and retail trade 
(20% of total labour). The industr ial sector represente d 22% of the total wo rkforce, but is on a 
declining trend. The participation of workers in agriculture, forestry and fishing represented 
some 8% of total employment. Overall , most of the advertised employment vacancies (63%) 
concerned jobs in tourism, c onstruction and trade sectors, co nfirming that the economic shift 
to these activities continues. 
Small and medium-sized enterprises  (SMEs) are proving their resilience as the number of 
bankruptcies in 2009 remained at the same le vel as a year before although the number of 
unpaid invoices reported by th e Central Bank payment system  has been rising. The SME 
sector represents some 60% of GDP and em ploys 67% of the total workforce. Most 
companies (77%) have less than 10 employees and deal largely in retail  and repair services. 
They still face a number of persistent difficultie s, such as revolving existing loans, obtaining 
municipal permits or the absence of spatial planning documents. Overall , SMEs went through 
                                                 
10 Including: public administration, social insura nce, education, health  and social workers. 
 
EN 27   EN very difficult conditions, conf ronting increasing payment arre ars, diminishing demand and 
stricter conditions to obtain bank loans. 
State influence on competitiveness 
Government intervention in the economy expande d with the adoption of several initiatives in 
support of those sectors most affected by the crisis, namely banking and metallurgy. Since the 
start of the crisis until mid-2009 state guarantees amounted  to 9% of GDP, of which 42% 
were for loans to the aluminium complex KAP and the bauxite mine RBN (partially 
renationalised), 47% to banks and 8% to the steel mill Niksic. The measures approved to 
protect banks depositors benefite d both local and fore ign lenders operating in the country. The 
authorities also adopted a prog ramme reducing electricity prices for the most vulnerable 
categories of the population, as well as for SMEs. In addition, the major industrial companies (the steel mill and the aluminium factory) saw their temporary subsidies for the purchase of electricity extended on condition of  achieving major restructuring. Overall , increased state 
intervention occurred as a reac tion to the unfolding crisis. 
Economic integration with the EU  
As a consequence of the crisis the annualised level of openness of the economy decreased in 
the first half of 2009 to 50.6% of  GDP, from 83% a year earlier. The main foreign destination 
for domestic products remains the EU, which accounts for 57.8% of the total (down from 
64.6% in 2008), followed by CEFTA countries  (40.2%, up from 3 3.4% in 2008). The 
reversed trend was confirmed for imports, wh ich mostly originate from neighbouring CEFTA 
countries (53.3%, up from 50% a year before), followed by th e EU (38.2%, down from 41.4% 
in 2008). Overall , trade openness remained high, although th e severe contraction of the metal 
industry brought down the main export of the count ry, traditionally oriented to the EU market. 
4. E
UROPEAN STANDARDS  
This section examines Montenegro's capacity gradually to approximate its legislation and 
policies to the acquis related to the internal market, sectoral policies and justice, freedom and 
security, in line with the Stabilisation a nd Association Agreement and the European 
Partnership priorities. It also analyses Monten egro's administrative capacity. In each sector, 
the Commission's assessment covers progres s achieved during the reporting period and 
summarises the country's overa ll level of preparations. 
4.1. Internal market 
4.1.1.  Free movement of goods 
Some progress can be reported on standardisation . The internal rules and procedures have 
been drafted for the Institute for Standardis ation (ISME) which is responsible for planning, 
developing, approving, publishi ng and maintaining Montenegrin standards and related 
documents. ISME has increased its staff to 16 and moved to new premises which provide the 
necessary working conditions. Besides the data base developed under the former State Union, 
Montenegro is currently developi ng its own database of nationa l standards. ISME has so far 
adopted about 1,800 Montenegrin standards, of wh ich 85% are European standards. ISME has 
begun to develop a network of technical comm ittees involving all the main stakeholders 
(professional associations, scientists and government  authorities) in the most relevant sectors. 
 
EN 28   EN In July 2009 ISME became an affiliate member of the European Committee for 
Electrotechnical Standardisation (CENELEC). 
Limited progress can be reported with conformity assessment . The government has adopted 
by-laws implementing the Law on Technical Requirements and Conformity Assessment. These include decrees on methods and procedures  for conformity assessment of products and 
procedure of notification in the area of technical regulations, standards and conformity 
assessment procedures. Enquiry points for technical  regulations and standa rds have yet to be 
established.  
Limited progress can be re ported in the field of accreditation . The new Law on Accreditation 
was adopted in July 2009. The Accreditat ion Body of Montenegro (ABM) signed a 
contractual agreement with the European co-o peration for Accreditation (EA) in November 
2008 and became an associate member of the International Laboratory Accreditation 
Cooperation (ILAC) in April 2009. It received a nu mber of applications but accredited no new 
bodies. Improving coordination with other parts of the quality infrastructure and enhancing 
the administrative capacity of the ABM itself ar e preconditions which must be met before the 
quality infrastructure can function properly.  
Some progress has been made as regards metrology . A new Law on Metrology was adopted 
in December 2008. A by-law on legal units of m easurement was also adopted in February 
2009. The Bureau of Metrology has a staff of 28 out of the 34 pl anned. The bureau became an 
associate member of WELMEC (European Cooperation in Legal Metrology) in April 
2009.Conditions in five laboratorie s (for mass, length, electrical quantities, temperature and 
pressure) are still not up to the required standard.  
There has been limited progress in the area of market surveillance . The administrative 
capacity of the Market Inspectorate and of the other authorities carrying out market 
surveillance activities has been strengthened. Ho wever, by-laws necessary to implement the 
Law on General Product Safety have not been adopted yet. Among these are also rules on 
methods of exchange of information on dangero us products which would set the legal basis 
for the Market Inspectorate to become the futu re national contact point  for the RAPEX system 
in the future. Further efforts are needed to rais e administrative capacity in this field, to 
develop and implement a market surveillance  strategy with adequate coordination and 
cooperation between relevant authorities, to  create a market surveillance information 
exchange system and to introduce modern risk  assessment techniques for market control.  
Good progress was made in the area of consumer protection. The focus was on 
implementing the national consumer protecti on programme (NCPP) and the corresponding 
action plan. The government adopted a report on th e first year of implementation of the NCPP 
(April 2008–March 2009). Cooperation with NGOs  dealing with consumer protection was 
strengthened as a result of implementation of the NCPP and for the first time the State 
provided funds to NGOs for consumer protecti on-related activities. Twenty members of the 
arbitration board on consumer pr otection, the body in charge of  out-of-court settlement of 
disputes, were appointed in December 2008 for a four-year mandate. The first case was 
handled and other cases are now before the board waiting for deci sion. Awareness-raising 
activities on the existe nce and purpose of the arbitration board are needed, along with further 
development of the capacity of board members.  
Overall , preparations in the area of free moveme nt of goods continued, even though they are 
not very advanced in the area of market survei llance. Montenegro still needs to strengthen its 
 
EN 29   EN institutional and administrative capacity furthe r, improve cooperation between the relevant 
State institutions and accelerate tr ansposition of the product-specific acquis  into its national 
legislation. 
4.1.2.  Movement of persons, services  and right of establishment 
Further progress has been made on movement of persons  and access to the labour market. 
The Law on Employment and Work of Foreigners , regulating the movement of labour force 
by introducing a work permit system with annua l quotas entered into force in January 2009. 
By-laws necessary for the impl ementation were adopted, includ ing one to fix the quota of 
work permits for foreigners in 2009. The Law on  Foreigners relating to terms and conditions 
of entering, movement and stay of fo reigners was adopted in December 2008. 
As regards coordination of social security , the social insurance agreements ratified between 
Montenegro and Luxembourg, Hungary and Sw itzerland brought significant improvements 
for Montenegrins working abroad. 
In the process of finalising negotiations fo r accession to the World Trade Organisation 
(WTO), Montenegro ensured extensive liberalisation as regards freedom to  provide services . 
Work permits and quotas as foreseen by the mentioned Law on Employment and Work of Foreigners apply also as precondition for indi vidual cross-border serv ice-providers. No work 
has been done on the distinction between th e arrangements applicable to cross-border 
provision of services by EU operators in Monten egro and to service-providers established in 
Montenegro.  
There has been some progress in the banking sector. Following adoption of the Law on 
Banks, the Central Bank adopted a further set of related by-l aws to be implemented by all 
banks by March 2009. In particular, the minimum capital adequacy ratio was increased from 8% to 10% and the system for reporting by bank s was improved by direct connection with the 
Central Bank. The Central Bank concluded memo randa of understanding with a number of 
home supervisors of foreign banks, covering seve n of the nine countries which operate bank 
subsidiaries in Montenegro. In  response to the global econom ic crisis, in October 2008 the 
government adopted a Law on Measures for Prot ection of the Banking System and related 
implementing legislation, to be applied unt il the end of 2009. The law provides for a full 
government guarantee for the deposits of physical and legal persons. In addition it provides the possibility of government guarantee for inte r-bank loans against sh ares as collateral, 
government credit support, Central Bank short te rm loans and provision of additional capital 
or obligatory capital provision for individual banks.  These last are also allowed to temporarily 
use of up to 50% of their mandatory reserves. 
Further alignment with the acquis  is still required, in partic ular regarding the Capital 
Requirements Directive. Further strengthening of administrative capacity is still needed, 
particularly of supervisory cap acity with an increased focu s on risk-based supervision, 
consolidated supervision and cross-sector a nd international cooperation, including with home 
supervisors. 
The institutional framework for supervision of  the non-banking financial sector continued to 
improve. Thirteen by-laws related to the umbrella laws on insurance and several by-laws related to securities were adopt ed. The agency for insurance s upervision recruited additional 
staff, bringing the total to 10 out of the 17 plan ned. Further recruitment of staff and upgrading 
of implementation capacity are needed. In Fe bruary 2009 the Securities Commission signed 
 
EN 30   EN the Multilateral Memorandum on Cooperation with the International Organisation of 
Securities Commissions (IOSCO). 
As far as postal services are concerned, a st rategy for the postal sector was adopted in 
December 2008. 
Limited progress can be reported on the right of establishment. The Property Relations Law 
introduced the same treatment to foreign citiz ens as to nationals for acquiring movable and 
immovable property, however with some limita tions for agricultural land, providing for long-
term leasing as an alternative ( See points 3.1 The existence of a functioning market economy, 
and 4.1.3. Free movement of capital ). No progress can be reported on recognition of 
professional qualifications. An updated operational plan for elimination of business barriers 
has not yet been developed. 
No further progress can be reported regarding company law . A Law on Insolvency 
Procedures is at the drafting stage and the dr aft Law on Takeovers of Joint Stock Companies 
is before the government.  
Some progress has been made in the areas of  accounting and auditing. Amendments to the 
Law on Accounting and Auditing introduced, inter alia,  requirements on the transparency of 
reporting, quarterly electronic reporting and supervision. The new law provides for 
establishment of an accounting and auditing co uncil, an advisory body to promote accounting 
and auditing regulation and good practices. Th e government adopted a strategy and action 
plan to promote financial reporti ng. However, gaps remain in establishment of an independent 
public oversight system. The division for acco unting and auditing in the Finance Ministry 
currently carries out inspections but is understa ffed. The planned supervisory authority has yet 
to be established. 
Overall , in the areas of free movement of persons , services and right of establishment, 
Montenegro partly meets the targets and priorities set. 
4.1.3.  Free movement of capital 
There has been further progr ess in the field of free  movement of capital. A Law on State 
Property and a Law on Property Relations we re adopted in February 2009. Conditions for 
acquisition of movable and immovable proper ty have been clarified, however some 
restrictions remain on foreign natural and legal persons owni ng property in Montenegro and 
therefore the new legal framewor k does not yet allow treatment co mpletely equivalent to that 
given to Montenegrin nationals . Limits are imposed on acquis ition of ownership rights over 
inter alia forests and forest land, agricu ltural land, cultural monume nts of special importance, 
real estate within one kilometr e of the land borde r or islands.  
With reference to payment systems , a new Law on National Payment Operations was 
adopted in October 2008, regula ting transfers of funds, inter-b ank transfer settlements, 
electronic means of payment and establishmen t and control of payment operations. Twelve 
related by-laws were also adopted.  
Overall , Montenegro has met the priorities and object ives set in the area of free movement of 
capital.  
 
EN 31   EN 4.1.4.  Customs and taxation 
Further progress was achieved in the area of customs . The customs tariff nomenclature was 
harmonised with the 2009 EU Combined Nomencla ture and duties were reduced in line with 
the Interim Agreement. The Convention on Te mporary Admission (Istan bul Convention) was 
ratified. Fees for customs services have been harmonised with Article VIII of GATT, but not 
yet with the SAA and the acquis .  
In relation to the previo us year the total amount of duties and taxes collected  by the customs 
administration increased by 6.5%. New division a nd database for dealing with infringements 
of intellectual property ri ghts has been set up within the customs administration ( See point 
4.1.7 Intellectual property law ). A joint border crossing point with Albania became 
operational in June 2009. Further training on rule s of origin, valuation of imported goods and 
protection of intellectual pr operty rights was organised for both customs officers and 
economic operators. An agreement on integrated border management has been signed with the police and the health administration. Monten egro signed with Serbia an agreement on 
facilitating border controls on goods transported by rail. An agreement on mutual assistance 
on customs matters with Moldova was signed a nd ratified by parliame nt. Montenegro also 
participates in a regional proj ect in order to exchange pre-a rrival customs information with 
neighbouring countries, in order to facilitate trade and enfo rce customs legislation. To 
enhance cooperation with EU customs admini strations and the Commission, Montenegro 
asked to join the Community’s Customs 201 3 Programme. The customs administration 
currently employs 579 staff out of the 669 pl anned. Recruiting and re taining staff is a 
recurring problem, which weakens the administra tive capacity of the institution. No business 
or IT strategy has been adopted. 
Overall, legislative alignment with the acquis  is well on track and the customs administration 
has been able to manage implementation of th e SAA. However, further alignment is still 
required in areas such as origin, transit a nd simplified procedures, customs valuation and 
customs fees. A business and IT strategy needs to be developed and atten tion needs to be paid 
to strengthening the administrative capacity in terms of project management skills and quality 
assurance. The fight against corruption remains a key priority. 
Further progress can also be reported on taxation . With reference to direct taxation, personal 
income tax was reduced from 15% to 12%. In  the case of corporate taxation, legislative 
amendments cut the tax rates on dividends from  15% to 9% and eliminated double taxation of 
profits paid by subsidiaries to parent companies.  As for indirect taxation, amendments to the 
Law on Excise and related by-laws  improved alignment with the acquis , in particular on 
increasing excise on cigarettes, other tobacco products and mineral oils with effect from 
October 2009. The legislation is, however, not yet completely aligne d with the European 
standards. This applies, in particular, to th e excise arrangements for energy products and 
small producers of alcoholic beverages, to zero or reduced VAT rates or special VAT 
schemes and to the principles of the code of  conduct for business taxation which have not yet 
been implemented. Amendments to the Law on Administrative Taxes improved alignment 
with Article VIII of GATT. 
In 2008 the gross tax and contributions collected by the tax administration  were 26.5% 
higher than in 2007. In the first quarter of 2009 they were 10.5% higher than the planned 
budget revenue. A project is under way to intro duce both a single tax re gistration form and a 
single tax return form. To improve operation of its tax system, Monteneg ro asked to join the 
Community’s Fiscalis 2013 Programme. The ta x administration currently employs 613 staff 
 
EN 32   EN out of the 744 planned. Its main needs rema in additional long-term recruitment and 
professional training. IT strategy is in place. Pr oject management skills and quality assurance 
methods have not yet been introduced. 
Overall , alignment with the acquis  is on track, although further al ignment is still required. 
Further progress towards modernising the tax admi nistration is also needed, with particular 
emphasis on tax collection and controls, including e ffective use of risk analysis. The effort to 
reduce informal economy needs to continue. A bus iness and IT strategy needs to be developed 
and project management skills and qual ity assurance have to be introduced. 
4.1.5.  Competition 
Limited progress can be reported in the field  of anti-trust . Efforts are still required to adopt 
the new Law on Competition Protec tion, to further improve the ex isting legislation, transform 
the existing Administration for Competition protection (ACP) into a fully independent Competition Protection Authority (CPA) and establish a system of deterrent fines. Implementing rules are also still to be adopted.  
Between October 2008 and August 2009 the ACP d ecided twelve merger cases and examined 
two case of abuse of a domina nt position. The ACP is gradua lly improving its capacity with 
the aid of training courses. Out of a planned st aff of thirteen, the ACP currently employs ten. 
Its administrative capacity needs to be further enhanced to allow it to exercise its future 
investigation, decision-making and sanction powe rs and eventually secure full professional 
and financial independence. Additional efforts ar e also required to raise public awareness of 
competition policy.  
Further progress can be re ported in the area of State aid . The government adopted a new draft 
Law on State Aid Control in Ap ril 2009 and prepared a series of by-laws with the aim of 
further alignment with the acquis .  
The State Aid Control Commission (SACC) c ontinued strengthening its administrative 
capacity with the aid of training. From Oc tober 2008 to August 2009 the SACC took eleven 
decisions and three conclusions. A department fo r control of state aid was set up within the 
Finance Ministry in November 2008. It curr ently employs three persons. However, the 
capacity of both the SACC and the state aid department  still needs to be strengthened to 
enable them to assess complex state aid cases autonomously and to play an ac tive and visible 
role in the design of government support to na tional operators. A preliminary inventory of 
state aid schemes was compiled, but  additional efforts are requir ed in order to complete it.  
Overall , Montenegro partially meets its target s in the area of competition. Further 
improvement of the framework for protecti ng competition and upgrading of the relevant 
administrative capacity are require d. In particular, the State ai d control system needs to be 
strengthened and the capacity of the SACC and the State aid department needs to be enhanced. 
4.1.6.  Public procurement 
Some progress has been made in the public pr ocurement system, notably in the form of 
adoption of implementing legislation, training to support contracting entities and awareness-
raising in the private sector.  
 
EN 33   EN A new Law on Concessions was adopted in January 2009. However, it falls short of the 
requirements of the acquis .  
Improvements have been made with regard to  transparency. The St ate Commission for the 
Control of Public Procurement Procedures (PPC ) publishes its decisions and all complaints on 
its website. All tenders are currently published on the Public Procurement Directorate’s (PPD) 
website. There has been no progress toward s introducing electronic procurement.  
The 2006 Public Procurement Law established a complex framework for qualification of 
bidders and documentation requirements. The tw o key institutions – the PPD and the PPC – 
currently employ 15 and 8 staff respectivel y. They both require additional staff. 
Administrative capacity in gene ral needs further upgrading, in particular as regards anti-
corruption activities and integrity. Procurement officers and procurement departments within 
the contracting entities have not yet been  sufficiently developed. The new Law on 
Concessions does not distinguish clearly betwee n concession contracts and public contracts. 
Further work is needed on the definitions  for works concessions and the relevant 
implementing legislation has yet to be adopted. The Concession Committee should be set up to handle complaints about the award of conce ssions, keep a concession register and approve 
the use of certain procedures . Additional efforts are need ed to introduce a separate 
procurement system for utilities and fully transp ose the Utilities Directive. The introduction of 
e-procurement needs to be started and central ised procurement seriously considered by the 
authorities. Overall , Montenegro partially meets its targets in the area of public procurement. 
Further efforts are needed to align the legislat ion with European standards and to build up the 
administrative capacity.  
4.1.7.  Intellectual property law 
Some progress has been made in the field of intellectual property rights  and industrial 
property rights . The legislative framework has been improved with the adoption of a Law on 
Patents which is generally in line with international and EU standards. Implementing legislation remains to be adopted. Amendments  to the Regulation conc erning the validity of 
existing intellectual property rights were made to  eliminate legal gaps related to the validity of 
national IP rights and to bring the procedures  into line with international agreements. 
Following the amendments to th e Decree on the fees for cust oms services, since January 2009 
holders of IPR are not required to pay a fee for processing requests for IPR protection. A 
uniform request form is being in troduced to ensure equal treatm ent by the customs authorities, 
in compliance with the model laid down by Commission Regulation 1891/2004. An 
agreement on the extension of European patent s to Montenegro was signed with the European 
Patent Office (EPO) in February 2009 allowing  the validity of European patents on the 
territory of Montenegro but has not been ratified yet. 
The Montenegrin Intellectual Property Office (MIPO) is gradually improving its capacity. 
Also, a division for intellectua l property was established in the customs administration. It 
prepared an information brochure for the publ ic on customs measures to protect IPR and 
combat counterfeiting and piracy. In Septembe r 2008 an intellectual property database, based 
on the UK model, was installed ( See point 4.1.4 Customs and taxation ). Customs staff dealing 
with IPR attended a number of training courses a nd international conferences. As for judicial 
protection, the Podgorica commercial court es tablished a specialised intellectual property 
division.  
 
EN 34   EN However, an IPR strategy is not yet in place  and further strengthening of the legislative 
framework remains necessary. The administrative  capacity of the MIPO is insufficient, 
especially in terms of human resources, as it currently employs 17 out of the 22 staff planned, 
premises and IT capacity (network, databases and registers). The mark et inspectorate also 
needs further strengthening, including establishmen t of a specialised un it to deal with IPR 
infringements and the hiring of specialised ma rket inspectors. Further measures are also 
required to develop an information system connecting the various bodies involved and 
supporting the data exchange and to introduce m odern risk assessment for performing market 
control. The number of police staff dealing with IPR infringements is still insufficient. Specialised training needs to be provided for judg es working in this sector. Further efforts are 
needed to improve overall cooperation a nd coordination between enforcement bodies, 
including the Market Inspectorate, and also cooperation with rights-holders. 
Overall , preparations in the area of IPR protection ar e at an early stage, in particular with 
regard to the institutional and enforcement cap acity for dealing with complex IPR cases and 
public awareness of protection of  intellectual property rights. 
4.1.8.  Social policies, employment  and public health policy 
In the area of social policies , as regards labour law the legal framework remains the 2008 
Labour Law. 
The legislation on health and safety at work has yet to be brought in line with European 
standards. A Law on Labour Inspection was adopt ed in December 2008, but the capacity of 
the Ministry of Labour and Social Welfare,  including its labour inspection department, 
remains weak. There are currently 11 safety at work inspectors in charge of labour inspection. 
With regard to tripartite  social dialogue, the government decided to establish an agency for 
peaceful settlement of labour disputes, as re quired by the Labour Law, but it is not yet 
operational. In April 2009, the Social Council si gned a memorandum on social partnership in 
view of addressing the impact of the global eco nomic crisis. A working group for monitoring 
the economic crisis was established in June 2009 that can propose measures to the Social 
Council in case of severe distur bances on the labour market. Neve rtheless, the role of social 
partners in the decision making process remain s limited. Amendments to the Law on Strikes 
gave public servants the right to strike. Collect ive labour disputes are generally not solved by 
mutual agreement. Bipartite social dialogue need s to be further developed, in particular at 
national and sectoral levels. 
As regards social inclusion and anti-discrimination , reliable data and comprehensive analyses 
are needed to provide a sound basi s for social inclusi on policies. Particular attention needs to 
be paid to territorial aspect s of poverty. Fighting poverty a nd promoting social inclusion 
needs to be further prioritised. Several laws  governing the rights and status of disabled 
persons have been adopted, but have yet to be  implemented. As regards anti-discrimination, 
little progress can be no ted on the adoption of a comprehens ive anti-discrimination law. ( See 
also point 2.2 Human rights and th e protection of minorit ies, section on so cial inclusion, anti-
discrimination and equal opportunities. ) 
As regards social protection , the Law on Basic Social Benef its was amended and the Law on 
Pension and Invalid Insurance was adopted . Implementation of the strategies for social and 
child protection, for social protection for the elde rly and for the inclusion of disabled persons 
in Montenegro together w ith the related action plan for 2008 and 2009 remains slow.  
 
EN 35   EN In the field of employment policy , a small decrease in unemployment was reported by the 
Employment Agency despite the contrac ting demand resulting from the crisis . The two large 
activation programmes implemented early 2009 have  contributed to counteract the impact of 
the crisis on unemployment. Their longer term  impact needs to be  carefully monitored. 
Structural unemployment, uneven regional employment, undeclared work and skills 
mismatches are still problems that are insufficiently addressed. The Employment Agency produces unemployment statistics and the Na tional Statistical Offi ce (MONSTAT) conducts 
the labour force survey in line with the releva nt legislation. The Mini stry of Health, Labour 
and Social Welfare has been divi ded into the Ministry  of Health and the Ministry of Labour 
and Social Welfare. 
In the area of public health policy , laws were adopted on emer gencies, health inspection, 
drug abuse, health-related databases and heal th inspections. Strategies on fighting chronic 
non-contagious diseases and managing medical waste were put in place. 
However, currently the healthcar e system does not meet the needs of the population. Further 
efforts are needed to reform primary health centres, improve health service quality and patient safety and provide equal access to healthcare. Legislation concerning human blood and tissues 
and cells quality and safety, t obacco control and reporting of communicable diseases is not 
yet fully aligned with European standards and has not yet been implemented. Guidelines for 
implementation and action plans still need to be  developed. There are still significant gaps 
with regard to communicable diseases (an earl y warning and response system is not yet in 
place). Cancer screening is currently not or ganised, traceability of human blood and tissues 
and cells quality and safety is lacking and the blood transfusion system needs to be reformed. 
The budget for health policy remains very limited .  
In the field of mental health, fu rther efforts are needed to crea te community-based services as 
an alternative to institutionalised  healthcare, together with speci fic healthcare for children and 
young people with mental health problems. Ad equate financial re sources and trained 
healthcare personnel are needed to improve the quality of health services in this area. 
Overall , Montenegro has continued to address its priorities in the ar ea of employment and 
social policies. However, compliance with Eur opean standards needs to be further improved 
and the country’s capacity to implement the new legislation effectively needs to be enhanced. 
With the exception of labour market analysis, mo re reliable statistics for social policies are 
needed as a basis for further intervention. Furt her efforts are also required to strengthen 
administrative and institutional capacity in the area of public health. 
4.1.9.  Education and research 
As regards access to education , primary and secondary school enrolment rates remain high. 
Four new private universities have been estab lished specialising in management of traffic and 
communications, humanities, information tech nology and international tourism and hotel 
management. 
The Ministry for Education and Science has be en reorganised and now employs 72 staff out 
of the 99 planned. The government adopted a st rategy for the establishment of a Montenegrin 
qualification framework (MQN) for 2008-2010 and a strategy on introducing educational 
software in schools. In December 2008, a Law on National Professional Qualifications was 
adopted.  
 
EN 36   EN Further steps were taken to upgrade the quality assurance system for universities. A quality 
assurance system is now in operation at the University of Montenegro. The faculties of 
Business Management, of State and European  Studies, and of Fore ign Languages at the 
Mediterranean University have been re-accredit ed, while two other private universities are in 
the process of re-accreditation. 
Future challenges in the field of education incl ude finalising the establ ishment of the National 
Qualifications Framework, improving recogniti on of informal learning, strengthening the 
links between higher education and voca tional training and the labour market.  
In the field of culture, Montenegro has fina lised talks for inclusion in the Community’s 
Culture Programme as of 2010 and has established a cultural contact point to promote the programme and assist potential applicants. 
As regards research , a special department dealing with science, research and technological 
development was established within the Minist ry of Education and Science. Montenegro 
participated actively in the Seventh EC Fram ework Programme for research and technological 
development (FP7). It nominated observers  for various programme committees and the 
European Strategy Forum on Research Infrastr ucture and managed its financial contribution. 
Information days on FP7 were organised in or der to encourage par ticipation and several 
cooperation projects are under way. Montenegro ha s also been very ac tive in international 
cooperation in the Steering Platfo rm for the Western Balkan count ries. However, more efforts 
could be made to involve small and medium-s ized enterprises and on Marie Curie projects.  
Based on the strategy on scientific research activities for the peri od 2008-2016, Montenegro 
has taken a number of steps towards integratio n into the European Research Area, such as 
introduction of a young researcher programme. 
Overall , further progress has been ma de in the fields of educati on and culture. There has been 
good progress on research, particularly on streng thening the institutiona l framework and on 
participation in FP7. 
4.1.10.  WTO issues 
Montenegro's legislation has been brought in  line with WTO requirements. The country 
concluded all its bilateral nego tiations with working party members in 2008 and the country’s 
accession conditions were agreed. However, Mont enegro’s accession to the WTO continues 
to be blocked by a Ukraine request for radical tariff reductions and wide-ranging 
commitments in access to services markets, in cluding many sensitive sectors, which was only 
made in December 2008.  
Efforts are required to strengthen the management  and administrative capacity necessary for 
proper implementation of the commitments made to WTO members. 
4.2. Sectoral Policies 
4.2.1.  Industry and SMEs 
Some slight progress can be reported on SME  policy. Montenegro remains committed to 
applying the European Charter for Small Enterprises. It is also a full member of the Entrepreneurship and Innovation Programme (EIP) under the Competitiveness and Innovation 
Framework Programme (CIP). A local consorti um led by the European Information and 
 
EN 37   EN Innovation Centre joined the En terprise Europe Network in November 2008. An interactive 
SME website came into operation at the beginn ing of 2009. It allows  the introduction of 
online requests for re moval of barriers .  
Further legislative progress was made toward s simplifying administrative procedures and 
shortening the time taken for reviewing tech nical documentation an d issuing construction 
permits and certificates of occupancy. The la w on craftsmanship was adopted in July 2009.  
The network of nine business centres was expande d by adding two more, one in Plav the other 
in Kolasin. An IT business incubator has co me into operation in Podgorica, with four 
businesses assisted up to now. A business star t-up centre was established in Bar to support 
newly established SMEs in cooperation with lo cal business and educati onal establishments.  
However, the regulatory impact assessment for the new legislation has not yet been 
established. No progress was made in extend ing the silent-is-consen t principle to other 
spheres of public administration apart from business registration. 
The process of developing Montenegro's indu strial strategy has no t advanced and the 
administrative capacity for industr ial policy remains weak. An ope rational plan for removal of 
business barriers for 2009 has not been adopted. No progress can be reported on establishment 
of a credit guarantee fund (CGF) for SMEs. No progress has been made on cluster policy. 
Implementation of the strategy for lifelong entrepreneurship learning for 2008-2013, which 
envisages introducing entreprene urial learning as a key skill  in primary and secondary 
schools, is at an early stage.  
Overall , Montenegro has started to address its priorities in th e area of industrial policy and 
has partly met them as regards SME policy. However, further efforts are required to remove barriers to business, especially at local leve l, including speeding up licences and permits and 
fully implementing measures such as a CGF, incubators and clusters. 
4.2.2.  Agriculture and fisheries 
Some progress was achieved on agriculture and rural development policy . Laws on 
agriculture and rural development and on an  agricultural census were adopted by the 
parliament in July 2009. Amendments to the To bacco Law and to the Law on Fertilisers were 
also adopted. Montenegro ratified the Internat ional Plant Protection Convention in December 
2008.  
The government adopted a nati onal programme for food producti on and rural development for 
the period 2009-2013 . This builds on the strategy for food production and rural development 
and further aligns Montenegro ’s agricultural policy with th e EU agricultural policy. The 
budget for agriculture and rural development was increased by 20% compared with 2008. A 
pilot census conducted in October 2008 successfu lly tested the instruments for the main 
agricultural census which was postponed to April 2010. 
Direct support continued to be provided to the livestock sector in the form of headage 
payments. Different models for support for th e plant production sector (modernisation of 
production of vegetables in gr eenhouses, direct support per h ectare to seed-potato growers 
and certain cereal growers and production support for tobacco growers) also remained in 
place for several thousand beneficiaries, as did investment support for primary production. 
 
EN 38   EN A phytosanitary administration  was established in the Ministry  of Agriculture, Forestry and 
Water Management and experts to work on rural development issues were recruited. 
However, administrative capacity as regards rural development within the Ministry of 
Agriculture remains very limited and further upgrad ing is needed in order to start preparation 
for the IPARD framework. Staffing needs to be augmented.  
In the area of food safety, veterinary and phytosanitary policy, adoption of implementing 
regulations improved legislative alignment with the acquis  and the institutional framework. 
The phytosanitary administration came into ope ration and currently employs 18 staff out of 
the 28 planned. In accordance with the Law on Plant Variety Protection, a department for 
plant variety protection was established within the phytosanitary administration. 
Regarding food safety, the government adopted implementing regulations on control of food 
of plant or animal origin a nd a residue monitoring programme . The Law on Ratification of the 
International Plant Protection Convention wa s adopted. The phytosanitary administration 
established a department for food safety.  
The veterinary administration was restructured  in November 2008 and a department for public 
health was established. In accordance with the Veterinary Law, the 2008 annual health 
protection programme was implemented an d a programme for 2009 was adopted. The 
recently established veterinary administration co ntinued to upgrade its administrative capacity 
and the veterinary diagnostic laboratory improved its equipmen t and staffing. Assessment of 
agri-food establishments for compliance with EU requirements has started. 
The government adopted a nati onal strategic plan for the fisheries  sector for 2009-2013 which 
sets objectives for the development of aquacultu re and marine fisheries, including scientific 
assessment of fish stocks. The number of staff responsible for fisheries in the Ministry of 
Agriculture has been increased. A draft Law on Marine Fisheries is before parliament. 
Overall , some progress can be reported on the stre ngthening of the legal framework, however, 
implementation of legislation still needs to be enhanced. Further strengthening of the 
administrative capacity of bodies  in charge of phytosanitary  policy and food safety is 
required. An integrated food safety system stil l needs to be established. The administrative 
capacity of the Ministry of Ag riculture, Forestry and Water Management, in particular as 
regards rural development, needs to be strengthened. 
4.2.3.  Environment 
Progress has been made as regards horizontal legislation . The government adopted a national 
environmental policy setting out national priorities and addressi ng cross-cutting issues, such 
as the need to bring gradually all environmen tal protection issues to gether under a single 
ministry. The decree on the am ount of fees, the manner of cal culation and payment of fees 
related to the pollution of the environment has been brought in line with the provisions of the 
Interim Agreement to the SAA ( See point 4.2.4 Transport Policy ). Alignment of the relevant 
environmental legislation with the acquis  is moderately advanced. A national committee for 
approval of clean development mechanism pr ojects was established. The Espoo Convention 
on Environmental Impact Assessment in a Transboundary Context and the Aarhus 
Convention on Access to Informa tion, Public Participation in Decision-Making and Access to 
Justice in Environmental Matters were ratified. Further efforts are required on implementation and enforcement of legislation. 
 
EN 39   EN In the area of air quality , considerable work is under way,  but little tangible progress has 
been achieved. Amendments to the Air Quality Law aiming to improve harmonisation with EU standards and a rulebook on air quality assessment are being developed, but alignment towards four directives on air quality, laying down the remaining definitions and air quality 
standards, needs to be finalis ed. Regarding air quality assess ment, emission inventories need 
to be prepared. The national and local emi ssion inventory for 2006 wa s updated in October 
2008. Implementing legislation on air quality is also required. Gaps to be filled include 
identifying conglomerations and zones, esta blishing a monitoring pr ogramme and database 
and making data available to the public. 
Limited progress has been made in the field of waste management . Financial and 
administrative limitations delayed implementa tion of the Waste Management Law from 
1 November 2008 to 1 January 2010. Further work  is required to de velop the necessary by-
laws. Implementation of the strategic plan fo r waste management continued. A regulation was 
published on the criteria, amount and method of  payment of fees for waste management. 
Feasibility studies and environmental impact assessments on six regional sanitary landfill 
locations were finalised and projects are bei ng designed. However, alignment with European 
standards needs considerable strengthening and acceleration, in particular concerning the 
landfill Directive and the waste shipments regulation.  
Limited progress can be reported on water quality . A Law on Water Management and 
Financing was adopted. In spite of some progres s, the degree of alignment to the Drinking 
Water Directive remains very low. Alignment w ith European standards needs to be improved 
substantially. Further efforts are required to improve impl ementation and enforcement.  
Some progress can be re ported in the field of nature protection . A Nature Protection Law 
established the legal framework for Natura 2000 . Related by-laws have not yet been adopted. 
A number of international conventions and agre ements were ratified, e.g. the Convention on 
the Conservation of European Wildlife and Natural Habitats (Bern Convention), the 
Convention on the Conservation of Migratory Species of W ild Animals (Bonn Convention), 
the Agreement on the Conservation of Cetacean s of the Black Sea, Mediterranean Sea and 
Contiguous Atlantic Area (ACCOBAMS), the European  Landscape Convention and the 
Convention on the Protection of Underwater Cultural Heritage. A Law on Mountain Trails 
and amendments to the Law on National Parks we re adopted. A decision  on establishment of 
the Nature Protection Institute was adopted. Furt her awareness-raising efforts are needed in 
this field. Inspection measures and sanction s have not yet been adopted. The level of 
alignment has improved, but implementati on and enforcement remain challenges. 
Preparations in this area  are at an early stage.  
Some progress can be reported on industrial pollution cont rol and risk management , 
although there are no signs of transposition of the Mining Waste Directive. The Convention 
on Transboundary Effects of Industrial Accidents was ratified.  Montenegro has aligned with 
almost all the relevant legislation , but implementation and enfor cement remain challenges.  
There was no progress in the areas of chemicals and genetically modified organisms 
(GMOs) . Implementation and enforcement in both fiel ds remain weak. Preparations in these 
areas are at an early stage. 
There was no progress on noise  abatement.  
 
EN 40   EN Further efforts are need ed to strengthen the administrative capacity  of all institutions 
involved in environmental policy-making and enforcement. 
Following establishment of the new government, responsibility for the environment and 
spatial planning was assigned to  the new Ministry of the E nvironment and Spatial Planning. 
Previously it had been divided between the Mi nistry of Tourism and the Environment and the 
Ministry of Economic Development (spatial pl anning). This redistribu tion of powers did not 
affect the administrative capacity in  these areas, which remains limited.  
An Environmental Protection Agency (EPA), with a wide range of responsibilities in 
implementing and enforcing environmental le gislation, was forma lly established by 
government decree. A director was appointed  and an operating budget allocated for 2009. So 
far the EPA has employed 14 permanent staff out  of the 60 or so pl anned. In particular, 
environmental impact assessment (EIA) need to be properly carried out by the EPA whenever 
legally required and in proper coordination between  all relevant authorities, including in cases 
(such as small-scale energy projects or in conne ction with the implementation of the spatial 
plan) where a local authority issues the permit and decides on the scope  and final approval of 
EIA. Proper inspections need to be made possibl e at all levels, central and local. The limited 
resources of the EPA raise serious concerns abou t the ability of the new agency to perform its 
functions. 
The sharing of responsibility for the water sect or between the Ministry  of the Environment 
and Spatial Planning and other ministries must be clarified. Coordina tion between the bodies 
involved in environmental protecti on issues, particularly in insp ection activities, needs to be 
improved. There has been a considerable increase  in the number of inspections conducted by 
the ecological inspectorate. However, the  lack of implementation capacity at local level and 
poor coordination between central and local gove rnment are continuing to limit enforcement 
capacity. Further upgrading of th e administrative capacity of the ecological inspectorate is 
necessary.  
The government established ‘Project Consu lting’ (PROCON), a company in charge of 
managing projects in the field of  communal services and envir onmental protection, primarily 
providing related logistical support to municipalities.  
Overall , Montenegro has made some progress on legislative alignmen t with European 
standards. However, implementation and enfo rcement need to be further strengthened. 
Particular attention needs to be paid to stre ngthen administrative cap acity and to establish 
effective inspection services. Work on awarenes s-raising on environmen tal protection issues 
needs to be continued. Environm ental protection, in particular in coastal areas and national 
parks, remains a cause for concern. 
4.2.4.  Transport policy 
In the field of trans-European transport networks,  Montenegro has continued to actively 
participate in the implementation of th e 2004 Memorandum of Understanding on the 
development of the South East Europe Core Regional Transport Network, and in the South 
East Europe Transport Observatory (SEETO) pa rticularly by updating and implementing the 
Multi-annual Plan 2009-2013. Continue d cooperation in the framework of SEETO and further 
improvement in the quality of the existing ro ad and rail infrastructure are needed. 
 
EN 41   EN On road transport , Montenegro continued to allow unr estricted Community transit traffic 
through its territory. The decree amending the am ount of fees, the manner  of calculation and 
payment of fees related to the pollution of th e environment, so called "Eco-tax", has been 
brought in line with the Interim Agreement to the SAA. The amen dment ensures eco-tax 
proportionality for foreign heavy goods ve hicles entering Mont enegro territory.  However, 
proportionality of the same tax applying to othe r EU vehicles coming to Montenegro and not 
covered by the Interim Agreement remains a concern.  Amendments to the Law on Road 
Traffic Safety were adopted. In January 2009 Montenegro became a member of INTERBUS. 
Progress in the road haulier sector was lim ited both on adoption and on implementation of 
harmonised legislation. The Law on Contra cts for Carriage by Road was adopted by 
parliament.the Law on Digital Tachographs rema ins to be drafted. Th e draft strategy to 
improve road traffic safety has yet to be adopted. The traffic safety situation remains 
unsatisfactory and additional prev ention measures are necessary. 
In the field of rail transport, unbundling of the railway company into an infrastructure 
company (Montenegrin Railway Infrastructure ) and an operator (Ra ilway Transport of 
Montenegro) was followed by establishment of th e commissions for privatisation of the newly 
established companies. A borde r-crossing agreement was concl uded with Serbia in March 
2009, but it appears not to be in lin e with EU open acces s provisions ( See point 4.1.4 Customs 
and taxation ). However, no progress was reported on im plementation of rail safety rules. The 
Railway Directorate which under the new government regulations, will take over 
responsibility for the rail transport department fr om the Transport Direct orate has not yet been 
set up. 
In the field of maritime transport,  there is limited progress to report. Restructuring of the 
national port at Ba r through privatisation wa s launched. The port was divided into five limited 
liability companies. Privatisation will be implem ented in two phases. The first phase, putting 
out to tender the Marina Bar port authority, started. The new regulator, the Port 
Administration provided for by the Law on Ports, has not yet been set up. On safety issues, 
the rate of detention of Montenegrin vessels in the area covered by the Paris memorandum of 
understanding reached an appalling 33% in 2008, indicating clear flag State insufficiencies 
that need to be addressed. Security i ssues also require pa rticular attention.  
There are no developments to report in the fields of inland waterways and combined 
transport . 
Concerning air transport , alignment of national legi slation on aviation with the acquis  
progressed. The 2008 Law on Civil Aviation came in to force with effect from February 2009. 
Bilateral air services agreemen ts have been signed with the former Yugoslav Republic of 
Macedonia and initialled with Croatia and Sw itzerland. However, the Law on Civil Aviation 
needs to be amended in line with the recommendations made in the 2008 ECAA assessment report to ensure compliance with the Europ ean Common Aviation Area (ECAA) Agreement. 
A civil aviation safety committee has still no t been established and this is preventing 
implementation of a civil aviation safety progr amme. The Montreal Convention has yet to be 
ratified and Montenegro has not yet become a full member of the European Joint Aviation 
Authorities (JAA). Relations with the European  Aviation Safety Agency (EASA) have been 
put on a formal footing by a working arrangeme nt signed on 7 July 2009. The administrative 
capacity of the relevant authoriti es is not yet up to the standard s for proper enforcement of the 
aviation acquis.  Despite Montenegro serious  engagement in the recen t set up of air traffic 
national bodies, staff available is limited. A dditional efforts are necessary to ensure the 
appropriate level of alignment with European standards.  Montenegro's participation in the 
 
EN 42   EN Single European Sky Committee and in the Impl ementation of the Single European Sky in 
South Eastern Europe (ISIS) Programme will be beneficial in this regard. 
Overall , Montenegro’s preparations are moderately  advanced in the ca ses of road and rail 
transport, but still at an early  stage for air and maritime transport. Progress on safety aspects 
and a systemic approach to development of tran sport is still limited. Considerable efforts are 
required to establish adequate admini strative capacity and implement the acquis . 
4.2.5.  Energy 
Regarding security of supply , the new Energy Law remains to be  adopted. It will address oil 
stocks, security of electricity and gas supply and cogeneration.  
Regarding the internal energy market , in line with the national energy development 
strategy, an action plan for the period 2008-2012  was adopted in Oct ober 2008. It reflects the 
general objectives of the EU’s energy policy. The electricity market was opened for all non-
household consumers with effect from 1 Ja nuary 2009. The regulator has adopted rules on 
qualified buyers of electricity, on designation  of the public electricity supplier and on 
approval of market rules.  
Progress on restructuring the State electricity  company (EPCG) has continued. Following the 
decision to unbundle EPCG, five daughter compan ies were established. The Company Law 
was amended to allow unbundling of transmission and the setting-up of a transmission 
company and a holding company – EPCG AD. Four  of the five daughter companies, dealing 
with generation, supply, distribution and constr uction, remain part of the holding company. 
The transmission joint stock company was fully  unbundled in April 2009. EPCG AD is being 
partly privatised by means of a capital increase and sa le of 18.3% of its shares to Italian 
power company A2A. In the next stage, the plan is to turn the four remaining companies into independent joint stock companies. Restructur ing is due to be completed by the end of 2009. 
Decisions to award eight  concessions to build and operate small hydroel ectricity plants were 
adopted. A decision determining feed-in tariff s from small hydroelectricity plants was 
adopted. 
Preparation are being made for putting out to tender construction of large hydroelectricity 
plants, based on a concession.   
There has been little tangible progress in relation to renewable energy .  
Several programmes and awarenes s-raising campaigns to promote energy efficiency  were 
conducted as part of the Montenegrin Year of  Energy Efficiency. The adoption of the Law on 
Energy Efficiency remains hereby of key importance.  
A Law on Nuclear Safety  and Radiation Protection has been adopted in August 2009. 
Within the Environmental Protection Agency  a regulatory body responsible for protection 
against ionising radiation was establ ished. However, alignment with the acquis  would require 
improvement of the regulatory infrastructure and enhancement of its technical capacity. The existence of hundreds of radioactive lightning rods  spread all over the country still constitutes 
a radiological thread that needs to be addressed.  
Overall , some progress can be reported in some energy sectors. Steps have been taken 
towards meeting the requirements of the Ener gy Community Treaty, such as the opening of 
 
EN 43   EN the electricity market for non-household cons umers, but further efforts are required. 
Promoting energy efficiency and rene wable energy sources is crucial. 
4.2.6.  Information society and media 
Some progress has been made on electronic communications and information 
technologies. The liberalisation of the sector has cont inued. Even though narrowband is still 
predominant for connecting to the internet, as of January 2009 the broa dband penetration rate 
was 5.5% and alternative operato rs held around 20% of this important growth market. The 
mobile penetration rate was 184%.  
The Agency for Electronic Communications and Postal Services (EKIP), established by the 
Law on Electronic Communications, has come in to operation. Its statutes, work programme 
and operational and financial plans were adopte d. The agency increased its human resources. 
Rulebooks on the annual fees for numbers and addr esses and on use of radio frequencies have 
been adopted. Rules on (higher) annual fees fo r numbers and addresses as well as for the use 
of frequencies were adopted. So  far no comprehensive market an alysis has been performed by 
EKIP. However, the Law on Electronic Communi cations defines significant market power 
(SMP) operators in its transition articles and accordingly new licences were issued to these 
operators. In 2009 EKIP launched the market anal ysis and designation of operators holding 
SMP process. 
However, implementation of the Law on Electr onic Communications was delayed by the late 
nomination of the new board and the executive director of the Elect ronic Communications 
Agency. The procedure for appointing the members of the board remains a cause for concern regarding their independence. The late estab lishment of the agency delayed adoption of 
implementing legislation, including rulebooks on number portability and local loop unbundling. The administrative capacity of the de partment for telecommunications policy in 
the Ministry of Transport, Maritime Affa irs and Telecommunications remains weak. 
There has been no progress towards enhancing consumer protection. There have been further developments regarding information society services . A new 
Ministry for the Information Society was esta blished on 3 January and turned into the 
Ministry for Economic Policy and the Informa tion Society with the formation of the new 
government in June 2009. It is responsible for information and communication technology 
initiatives in all government bodies. An in formation society strategy for 2009-2013 was 
adopted in February 2009. Laws on personal data protection and on personal names were 
adopted. However, the Conditional Access Dir ective has not yet been transposed. Human 
resources at the Ministry for Economic Policy and the Information Society are still weak. Electronic signature legislation is in the process of implementation.  
In the area of audiovisual policy and the media, a Law on Public Serv ice Broadcasting was 
adopted in December 2008. It abolished th e steering committee of Radio Television 
Montenegro (RTCG) and transferred its power s to the RTCG Council, which has nine 
members appointed by parliament. However, the political independence of the public service broadcaster has to be ensured. Licence fees for radio and television were abolished. RTCG is 
now financed from the State budge t. It receives 1.2%  of the annual budget. This provides the 
public broadcaster with stable financial resources.  
 
EN 44   EN The responsibilities of the Ag ency for Electronic Communicatio ns and of the Broadcasting 
Agency under the Law on Electronic Communicatio ns regarding frequency licensing remain 
unclear. A disagreement between the two agencies regarding thei r competences contributed to 
delays in allocating a frequenc y to a private TV station.  
Overall , some progress has been made regarding the information society and the media. 
However, progress in this sector has been hi ndered by the late impl ementation of the Law on 
Electronic Communications. Concerns remain about the independence of the Electronic 
Communications Agency. Disagree ments on responsibility for fr equency licensing are giving 
rise to concern and related competences and pr ocedures require urgent  clarification. Further 
strengthening of the legislati on and related implementing regulat ions is needed. Greater focus 
needs to be put on implementing the national in formation society strategy. The effectiveness 
and independence of the public service broadcaster need to be ensured. 
4.2.7.  Financial control 
Some progress can be reported in the area of public internal financial control  (PIFC), in line 
with Montenegro’s PIFC policy paper. The Law on PIFC was adopted in November 2008, 
followed by implementing legislation focusing on financial management and control (FMC) 
systems and internal audits (IA) in the public sector.  A Central Harmonisation Unit for both 
FMC and IA is in place and internal audit uni ts are being set up in line ministries. Further 
efforts are required, however, to draft new and align existing implementing legislation. 
Considerable awareness-raisi ng at all levels of the admi nistration and training remain 
necessary.  
In the area of external audits,  progress can be reported. Th e numbers of qualified State 
auditors and of audits undertaken are incr easing. The State Audit Institution is steadily 
developing its administrative capac ity to ensure efficient extern al audit. Parliament adopted 
the institution’s annual report for the period fr om October 2007 to October 2008, accepting all 
the proposed conclusions.  
Overall , Montenegro’s preparations in the fields of  PIFC and external audit are at an early 
stage.  
4.2.8.  Statistics 
There has been some progress on statistical infrastructure . The government adopted a 
development strategy for statistics for 2009-2012. The new strategy gives the Statistical 
Office of Montenegro (MONSTAT) the coordinati ng role for developing a statistical system 
in compliance with the European Statistics Code  of Practice. However, an action plan and 
financial resources for implementing the strategy  are still not available. The Statistical Law 
needs to be revised to match th e objectives of  the strategy.  
Currently MONSTAT employs 135 people, out of  203 posts allocated by the organisation 
chart adopted in April 2008. The process of filli ng the new posts has been constrained by the 
lack of office space. Management capacity rema ins relatively weak, with three positions for 
assistant directors vacant for a whole year. Retaining skilled staff remains a problem. 
Some progress was made on data dissemina tion policy. A release calendar for 2009 was 
published on MONSTAT’s website in December 2008. A multiannual statistical work programme for 2009-2013 was adopte d, providing the basis for th e annual plans. Efforts are 
 
EN 45   EN required to implement the annual plans effec tively. A memorandum of understanding remains 
to be signed with the Central Bank to ensure provision of timely and high-quality statistics, 
particularly in relation to GDP in accordance w ith ESA 95, the European System of Accounts.  
Progress in the field of classifications and registers has been limited.  
As regards sector statistics , progress can be reported. MONSTAT conducted the pilot 
population and housing census in June 2009. The pilot agricultura l census was conducted in 
2008 and the agricultural census law was adopte d in July 2009. The preparations for the 
agricultural census in April 2010 are well advanced. Some  progress has been made on 
business statistics, but generally the availability  of business statistics, especially short-term 
statistics, needs to be improve d. Efforts are still needed to ensure that the 2011 population and 
housing census is carried out in a timely manne r in line with EU standards. As regards 
macroeconomic statistics, cooperation with th e customs administration has improved, leading 
to better timeliness and quality in the monthly external trade statistics. The consumer price 
index is now published monthly. Compliance w ith ESA 95 has progressed, but much remains 
to be done. MONSTAT still does not produce qua rterly national accounts. The quality and 
timeliness of data need to be improved; annual national accounts should be published by 
September, in line with EU standards. Transmi ssion of trade data to Eurostat needs to be 
improved. 
Overall , some progress can be reported in the area of  statistics and Montenegro has started to 
address its targets. However, its administrative capacity remains weak and the legislative 
framework needs to be further improved and co mpleted. Substantial efforts remain necessary 
in all areas in order to improve  compliance with EU standards. 
4.3. Justice, freedom and security 
4.3.1.  Visa, bordermanagement, asylum and migration 
Good progress has been made in the area of visa policy and in the wider framework of the 
visa liberalisation dialogue. In particular, Mo ntenegro has taken important steps towards the 
benchmarks set in the road map for visa liberalisation and met the majority of them, allowing 
the Commission to include Montenegro in its  proposal of July 2009 for visa free travel. 
Montenegro has established sound procedures fo r applying for and issui ng travel documents, 
supported by suitable technology and equipmen t. By September 2009, it has issued 122,190 
new biometric passports in line with EU and in ternational standards. Replacement of old-style 
travel documents by new biometric passports is  expected to be completed by the end of 2009. 
The Law on Foreigners entered into force in January 2009. A new Vi sa Regulation, based on 
the Schengen rules, entered in to force in March 2009. The visa policy is not yet fully in line 
with European standards. Montenegro still has limited capacity for issuing visas in the 
Ministry of Foreign Affairs and at its few diplomatic and consular missions. There is no 
electronic database or other IT system linking c onsular offices issuing visas with the Foreign 
Ministry. Processing applicati ons on paper hinders effective control of applicants, in 
particular when visas are issued at border cr ossing points. The sector for migration, visas and 
readmission in the Ministry of the Interior and Pu blic Administration needs to be reinforced in 
terms of both expertise and human resources. Mont enegro has started to address its priorities 
in the area of visa policy, but fu rther work is required. As regards  border management , 
Montenegro made progress. It has continued to  implement its integrat ed border management 
(IBM) strategy and the associated action plan . Cross-border cooperation is working well 
under both formal and informal arrangements.  The border police carr y out regular joint 
 
EN 46   EN patrols with the Albanian border police and th e Croatian police. Reconstruction of the Bozaj 
border crossing point (BCP)  was completed and work has star ted on reconstruction of the 
Dobrakovo BCP. The Sukobin-Muriqan joint BCP with Albania was opened in June 2009. 
There has been some improvement in the equi pment at BCPs, although the availability of 
integrated passport readers remains limited and there are no devices for taking fingerprints.  
At the end of 2008 a memorandum of understa nding on cooperation on IBM, was signed 
between the Ministry of the Interior and Pub lic Administration, the Po lice Directorate, the 
Customs Directorate, the Vete rinary Directorate and the phyt osanitary administration. A 
working arrangement with FRONTEX was si gned in June 2009. Five additional border 
crossing points were connected to the Police Dir ectorate’s central databa se and have access to 
the Interpol database. 
However, new legislation on Stat e border control, including bor der surveillance, and related 
implementing legislation which will ensure  further alignment with the Schengen acquis  have 
yet to be adopted. The border demarcation with Serbia and Kosovo is still pending. 
Surveillance systems are lacking at both the bl ue and green borders and the equipment used 
for border checks is not yet adequate. A basic tr aining curriculum for border police needs to 
be established. Further development of specia lised and advanced training for experienced 
border police staff (with special reference to in telligence personnel) is needed in order to 
boost the capacity to prevent and detect cros s-border crimes. Inter-a gency cooperation on 
border management requires further improvement  by establishing a national coordination unit 
or multi-agency information centre, in partic ular to allow on-line sharing of information 
between institutions for their day-to-day work. Progress can be reported in relation to establishment of a risk analysis system. However, more trained intelligence officers are required at all levels. Linking all border crossi ng points into a network with online access to 
the national database and to the Interpol da tabase must be addressed as a priority. 
Overall , Montenegro has made good progress on addr essing priorities in the area of border 
management but needs to maintain the pace of reforms. 
Limited progress has been made in the area of asylum, although the legislative and 
institutional frameworks are almost complete . The Law on Asylum provides a broad spectrum 
of rights. There are very limited numbers of asylum-seekers in Montenegro: in 2008 there 
were seven and to date in 2009 there have been 13.  
In practice, asylum-seekers and recognised ref ugees face certain obstacl es, including difficult 
access to the labour market. The mixed judicial/a dministrative nature of the State Asylum 
Appeal Commission needs to be clarified. The la w provides for no judicial  recourse against its 
decisions. Its staff requires training on asylum issues. Construction of the planned reception 
centre for asylum-seekers has not yet begun. Cu rrently accommodation for asylum-seekers is 
provided by the bureau for the care of ref ugees. Proper implementation of the asylum 
legislation needs to be ensured, including du e examination of asylum applications and 
provision of judicial review in the event of refusal. 
Overall , Montenegro has started to a ddress priorities in the area of asylum. However, further 
efforts are needed on implementation of legislation. 
Some progress has been made on migration . The Law on Foreigners and the Law on 
Employment and Work of Foreigners have been in force since January 2009. The Law on 
Foreigners broadly reflects the principles la id down in the Directiv e on common standards 
 
EN 47   EN and procedures for returning illegally staying third-country nationals. A number of 
implementing laws related to the Law on Foreig ners need to be adop ted. The border police 
department for foreigners and fighting illegal migration and th e Ministry of the Interior’s 
department for migration, visas and readmission deal with migration issues. The strategy for 
integrated migration management for 2008- 2013 and the action pl an for 2008-2009 were 
adopted in November 2008. A council for monitori ng implementation of the strategy has been 
established. No problems have been obser ved with implementation of the readmission 
agreement between Montenegro and the Europe an Community. At the end of 2008 Albania, 
Bosnia and Herzegovina, Croatia, Montenegro , the former Yugoslav Republic of Macedonia 
and Serbia signed a memorandum of understa nding on setting up a system for sharing 
statistical data on illegal migration and part icipating in the regional system of advance 
notification. 
However, the human resources and specialis t knowledge on migration issues within the 
Ministry of the Interior need to be strengthe ned. Cooperation with othe r public institutions, in 
particular with the Employment Office, on unl awful employment of migrants remains weak. 
Integration of migrants and reintegrati on of Montenegrin nationals readmitted under 
readmission agreements have not yet been suffi ciently addressed. Furthe r progress is needed 
on collection of data on migration. Detentio n facilities for those foreign nationals who 
illegally overstay are not yet adequate. 
Montenegro needs to ensure effective impl ementation of the legal framework aimed at 
resolving the status of displa ced persons from Bosnia Herze govina and Croatia and resolve 
the status of displaced persons from Kosovo. 
Overall , there has been good progress in the area of  migration. Further efforts are needed on 
implementation of legislation and enhancement of administrative capacity and institutional 
cooperation. The issue of in ternally displaced persons  needs to be resolved. 
4.3.2.  Money laundering 
Some progress has been achieved in the fight against money- laundering. Legislation 
implementing the Law on the Prevention of Money-Laundering and Terrorist Financing was 
adopted in December 2008. These two regulati ons put in place rules and procedures for 
reporting cash transactions over €15,000 and suspic ious transactions an d for organising data-
keeping, data protection, complia nce officers’ professional traini ng and internal control within 
the entities reporting to the anti-money-laund ering administration. In March 2009, one further 
piece of implementing legislation was adopted on drafting guidelines for risk analysis for the 
purpose of preventing money laundering and terror ism financing. Police and prosecutors have 
received training on identifica tion and detection of money- laundering and confiscation of 
criminal assets. 
The directorate for prevention of money-laundering and terror ism financing is maintaining 
databases on suspicious transactions, cash tr ansactions over a given threshold and court-
registered real estate sales c ontracts. Analysts from the di rectorate also have access to 
statistical reports on deposits  and withdrawals and on investor s in capital markets. However, 
the Directorate lacks an important software data base (IBASE), which w ould facilitate national 
and international cooperation and exchange of  data with law enforcement agencies. It 
currently employs 25 staff of the foreseen 34 posts. A reporting entities register makes it 
possible to monitor reporting trends. The scope of reporting entities has been extended but the 
number of suspicious transact ions reported decreased over 2008. 
 
EN 48   EN The requirements for identification of beneficial owners by the reporting entities, especially 
by casinos and estate agencies, have been ti ghtened up and one report of a suspicious 
transaction has already been rece ived from an estate agency. 
However, Montenegro’s effectiveness in fightin g money-laundering needs to be enhanced. Its 
legislation is not yet fully in line with th e UN Convention against Transnational Organised 
Crime and the UN Convention against Illicit Tr affic in Narcotic Drugs and Psychotropic 
Substances. A quarter of the anti-money-laundering administra tion’s posts have not been 
filled; staff turnover is high and remuneration low.  The statistics produced are not yet reliable. 
A clear set of management statistics needs to be agreed so that the appropriate data are 
collected on a routine basis. 
During 2008 only one report of a suspicious transaction  was made by a money service bureau 
and none by lawyers or notaries. Tighter control needs to be exer cised over funds invested in 
real estate. Only five of the eleven commerc ial banks in total submitted STRs in 2008 and 
2009 and about half of all STRs originate from two banks. Reporting entities’ understanding of their obligations to report to the anti- money-laundering administration needs to be 
improved, as does supervision of compliance by reporting entities. This calls for greater 
capacity in the anti-money -laundering administration. 
The March 2007 list of indicators for identifying suspicious customers and transactions needs 
to be updated. The capacity for a risk-based appro ach to dealing with su spicious transactions 
reported to the anti-money-laundering administra tion and the resulting implementation record 
remain weak. The necessary guidelines are not yet in place. Analysts with the necessary 
training are needed for the directorate. 
The capacity of the police and the prosecution service to investigate cases of money-
laundering remains insufficient. Only a small,  though increasing number of money-laundering 
cases were forwarded to the prosecution servic e by the police. The pr osecution service still 
lacks expertise in this field. In 2008 three financial investigations were conducted by the 
police in cooperation with the special prosecutor for fighting organised crime. There is a need 
to strengthen the human resources further, alon g with the expertise and technical capacity of 
the police and prosecutors, particularly for fi nancial investigations . Between September 2008 
and August 2009 there was no  conviction on money-laundering.  
The capacity for conducting financial investigati ons and awareness of their importance in the 
anti-money-laundering administration, the police and the prosecution service needs to be 
improved. More effective inter-agency coopera tion is necessary to reduce bureaucracy and 
ensure regular feedback on investigations. This  will require, amongst other things, revision of 
the current memoranda on cooperation between the anti-money-laundering administration, the 
police and the prosecutor’s office. 
Overall , Montenegro has continued to address it s priorities, but money-laundering remains a 
serious problem linked to organised crime and corruption. Clear determination to prevent and 
combat money-laundering is needed. The fall in th e number of investigations and of reports of 
suspicious transactions and the fact that th ere were no convictions for money-laundering are 
causes for concern.  
 
EN 49   EN 4.3.3.  Drugs 
Montenegro has made some progress in the fight against drugs. The national strategic 
response to narcotics and the associated action plan are being implemented under the 
coordination of a new National Drugs Office. For the first time a survey on the use of alcohol, 
tobacco and drugs was conducted in line with  the EU method. Preventive activities have 
continued. Police and customs officers have re ceived training on contro l of precursors and 
smuggling of drugs. A drug manual has been distri buted to border police officers. There was 
an upward trend in seizur es of most types of drugs during the reporting period. International 
cooperation on law enforcement in drug cases has improved. 
However, a Law on Precursors has not still be en adopted. Montenegro remains a key link on 
the transit routes for drugs. Domestic drug co nsumption is increasing. The capacity of the 
police to fight drug-related crime continues to be insufficient. The police department 
responsible for combating drug-related crime is still not properly staffed and equipped. 
Instruments such as witness protection and unde r-cover agents are infr equently used, partly 
due to the inherent difficulty of using such tools in a very small, socially tightly-knit country. 
The National Drug Office has b ecome operational but is understaffed. The planned national 
information unit on drugs, which will be responsible for collecting and documenting 
information on drug addicts, has yet to be esta blished. Problems pers ist with prevention of 
drug addiction and with treatment and rehabilitation of addicts. Inter-agency and international 
cooperation on law enforcement needs to be strengthened. 
Overall , Montenegro has started to address its main  priorities, but further action is needed. 
The institutional framework for fighting drug-re lated crime has been reinforced and seizure 
levels have increased. However, drug traffickin g, in particular by groups engaged in organised 
crime, remains a serious cause for concern. Drug abus e is continuing to rise  and there is still a 
lack of reliable statistics.  
4.3.4.  Police 
Some progress was made in the area of polic ing and police reform over the reporting period. 
The internal reorganisation continued. Staff ha s been receiving extensive training. The Police 
Academy continued to build its capacity for gene ral and specialised trai ning for various levels 
of staff, including specialised training for crimin al and border police. A track record is being 
established in the area of internal control. Disciplinary measures have been imposed on 124 police officers while from February to July 2009, criminal charges were brought against 27 
police officers. Pilot implementation of intel ligence-led policing has st arted in two regional 
police units – Bar and Budva, including the outpo st of Ulcinj. A pilot project on community 
policing has also been successf ully implemented in all re gional police units. A modern 
forensic centre has started wo rk. New equipment was provided to the police and new police 
uniforms were introduced. 
The police have been actively pa rticipating in international police cooperation and a number 
of joint operations conducted. Under the C onvention on Police Cooperation for South-East 
Europe (Vienna Convention), the Monteneg rin police were involved in cross-border 
cooperation and exchanged intell igence with the poli ce services of nei ghbouring countries. 
However, the professional capacity of the police still needs to be improved, in particular as 
regards use of modern investig ation and analysis techniques,  the availability of basic 
infrastructure and equipment and a comprehens ive IT network. Equipment and facilities need 
 
EN 50   EN to be upgraded, in particular for the organise d crime department. Police staff specialising in 
the fight against organised crime need to remain focused on this field rather than diverted to other tasks. Operational effectiveness and secu rity require that dissemination of intelligence 
and operational data n eed to be based on th e ‘need to know’ princi ple rather than on 
hierarchical channels  of communication.  
Data maintenance rules and compilation of statis tics in the Police Directorate need to be 
improved. The overall number of policemen re mains high compared with crime rates. The 
police internal control unit needs to be furthe r strengthened. The overall reform of the police 
needs to continue with the a doption of a new Law on the Police,  taking into account the new 
Criminal Procedure Code and strengthening pol ice integrity and understa nding of the role of 
the police as a provider of services to the publ ic. Control of access to weapons and explosives 
needs to be tightened up. The strategic cooperation agreement w ith Europol has been ratified 
in August 2009.  
Overall , police reform in Montenegro is moderately advanced. 
4.3.5.  Fighting organised crime and terrorism 
Some progress can be repor ted in the fight against organised crime . In February 2009 the 
second Additional Protocol to the European Convention on Mutual Legal Assistance in 
Criminal Matters entered into force. The government adopted th e fourth and fifth report on 
the action plan for implementation of the pr ogramme for fighting corruption and organised 
crime. Progress has been made on implemen tation across a large num ber of areas, although a 
considerable number of measures have been only partially implemented  or not yet applied. 
The national commission on fighting organised crime and corruption and its tri-partite 
commission continued their activities on cas e monitoring and on harm onising statistics and 
methods of analysis. 
The newly adopted Criminal Procedure Code considerably strength ens the legislative 
framework for fighting organised crime and corruption.  The number of deputies and 
administrative staff in the special prosecutor’s office for fighting organi sed crime, corruption, 
war crimes and terrorism was increased. The rele vant departments in the two high courts have 
also been strengthened with the aid of specialised training. Th e number of investigations and 
indictments of organised crime cases increased and a higher number of final convictions were 
secured, including in a high-profile case concerni ng the murder of a journalist. The authorities 
have been actively participating in inte rnational judicial and police cooperation.  
The Police Directorate’s unit for fighting or ganised crime and corruption conducted six 
financial investigations in  2008 and brought six criminal charges. Three financial 
investigations were initiated  between January and April 2 009, of which one concerned an 
organised crime case. The invest igative and operational capacity  of the special verification 
unit responsible for collecting and analysing in telligence was further developed and the unit 
was equipped with new computers.  
However, efforts are still needed to ensure effective implementation of delayed measures 
under the action plan for fighting organised crime and corruption. Future strategic priorities 
and activities need to be base d on a thorough and comprehensive assessment of the real needs 
and threats related to organised crime and corruption, taking into account the resources 
available for implementation. The quality of statistics needs to be substantially improved in 
order to be able to track tre nds in organised crime and corr uption. Coordination, at national 
 
EN 51   EN level, of international judicial cooperation n eeds to be formalised and improved. The working 
procedures, staff and technical equipment of the bodies in charge of in ternational cooperation 
on law enforcement, in particular the internatio nal police cooperation unit, need to be further 
enhanced . If the legislative provisions allowing conf iscation of criminal assets are to be 
effective, police and prosecutors need further trai ning in financial investig ations, so that they 
can trace criminal assets and present related evidence before the courts. The State Agency, which will have the task of dealing with confis cated criminal assets, was established in July 
2009. Enhanced efforts are needed to ensure th e necessary institutional and administrative 
capacity to make it operational. 
The Police Directorate’s organise d crime unit is understaffed and has no staff at local level. 
The working conditions of this unit are inadequate and its prof essional skills need further 
upgrading, especially with regard  to modern investigation t echniques, including financial 
investigation, which is not yet pe rceived as one of the main tool s for tackling organised crime, 
corruption and money-laundering. 
The surveillance capability of the Police Director ate’s special verification unit is insufficient 
to conduct investigations effectively, because of  the shortage of skilled staff and some special 
equipment. Plans to develop a number of practi cal tools for law enforcement practitioners -
such as a manual on application of special  investigative techniques and a manual on 
intelligence-led policing - have st ill to be implemented. Training and expertise, particularly on 
financial investigative methods, need to be  improved significantly, as do equipment and 
premises.  
A cooperation agreement between the Police Di rectorate and the prosecutor’s office was 
signed in June 2009. However, implementati on of other planned measures, aimed at 
formalising the existing informal inter-agenc y cooperation and exchange of information, 
needs to continue. Operational cooperation between law enforcement agencies could be 
improved by the establishment of a national coor dination unit allowing direct exchanges of 
information and intelligence between the poli ce and the tax, customs and money-laundering 
administrations. To ensure greater efficiency, gradual development of the necessary expert 
skills and processing procedures is neede d, together with production and systematic 
dissemination of intelligence and information which will support the full-time work of the 
unit. 
During the reporting period, convicti ons in organised crime have in creased. In order to attain 
better results, consistent use w ill have to be made of new legal tools, along with recruiting 
additional specialised police and prosecution staff , streamlining procedures, strengthening 
inter-agency cooperation  and providing specialised training. 
Overall , the institutional, legal and administrativ e capacity for fighting organised crime has 
been strengthened. The improvements to the legi slation on criminal procedure are a major 
step in the right direction. Howe ver, the capacity of the police a nd judiciary to deal with such 
cases remains limited. The ineffi ciencies in prosecution, trial and sentencing of organised 
crime in Montenegro remain a serious cause for concern. 
There has been good progress in the fight against the trafficking of human beings . 
Montenegro is continuing to be used primarily  as a transit country. The 2009 action plan to 
implement the strategy to fight trafficking in human beings was adopted in December 2008. It 
includes measures against the trafficking of children. The Council of Europe Convention on 
Trafficking of Human Beings entered into for ce in November 2008. Facilit ies are in place to 
 
EN 52   EN support and protect victims of trafficking. Sh elters and victim assistance schemes are 
continuing to be run by NGOs and financed by  the government. Their existing capacity is 
presently sufficient given the low number of vi ctims of trafficking (f our persons in 2007 and 
three in 2008).  The office of the national coordinator on trafficking in human beings has 
carried out extensive work on prevention and pub lic awareness-raising to combat trafficking. 
Specialised training has been pr ovided to relevant institutions at national and local levels. 
Cases concerning trafficking in human beings have been inve stigated and concluded with 
convictions.  
Further measures are necessary to enhance the ca pacity of the authorities to identify potential 
victims. The need for changes to the existing le gislation on illegal migration will have to be 
examined from this angle. 
Overall , Montenegro has advanced in the area of  the fight against tr afficking in human 
beings, though efforts need to continue.  
Limited progress has been made on strengthen ing coordination between and the capacity of 
the law enforcement agencies for fighting  terrorism . The special counter-terrorism unit 
within the Police Directorate r eceived further training and cont ributed to police operations, for 
example by protecting persons and consignmen ts of money. A nationa l strategy against 
terrorism still needs to be adopted.  
Overall , Montenegro's framework for fight against terrorism is at an early stage of 
preparation. 
4.3.6.  Protection of personal data 
Some progress was achieved, in the form of a doption of the Law on Protection of Personal 
Data at the end of 2008. The Law entered into for ce but changes to the le gislation as aiming at 
ensuring the independence of the supervisory authority have not yet been adopted. The 
President and members of the C ouncil of the authority were not  appointed within the time 
frame set out by the law.  
Personal data protection has not yet substant ially improved. Montenegro still needs to 
harmonise its data protection le gislation fully with the EU acquis . The newly adopted law 
does not give sufficient independence to the su pervisory authority. The supervisory authority 
and the necessary information systems are not yet in place. Other legislation also needs to be 
aligned with the Law on Persona l Data Protection. The public administration needs to be 
trained on its new obligations re garding personal data protection. 
Overall , Montenegro has started to address some of its priorities in this area.
 
EN 53   EN STATISTICAL ANNEX  
STATISTICAL DATA (as of 14 September 2009)            
Montenegro            
            
Basic data Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Population (thousand)  610 612 615 617 619 621 623 624 625 627 
Total area of the country (km²)  13 812 13 812 13 812 13 812 13 812 13 812 13 812 13 812 13 812 13 812 
            
National accounts Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Gross domestic product (GDP) (million national currency)  : : : : : : : : : : 
GDP (million euro)  : 1 066 1 295 1 360 1 510 1 670 1 815 2 149p 2 808p : 
GDP (euro per capita) 1) : 1 750 2 113 2 208 2 435 2 684 2 912 3 443p 4 484p : 
GDP (in Purchasing Power Standards (PPS)  per capita)  : : : : : : : : : : 
SI: GDP (in PPS per capita, EU-27=100)  : : : : : : 31.0 35.0 41.0 : 
SI: Growth rate of GDP (national currency, at constant prices , % change on previous year)  : : 1.1 1.9 2.5 4.4 4.2 8.6p 10.7p :  
SI: Employment growth (national account s, % change on previous year)  : : :  -19.9e  -8.9e 2.7e  -11.4e  -5.0e 11.7e : 
Labour productivity growth: GDP growth per person employed (% change on previous year)  : : : 21.8 11.4 1.7 15.6 13.6 -1.0 : 
SI: Unit labour cost growth (national accounts, % change on previous year)  : : : : : : : : : : 
SI: Labour productivity (GDP in PPS per person employed, EU-27=100)  : : : : : : : : : : 
Gross value added by main sectors (%)                      
Agriculture  : 12.4 11.9 12.2 11.6 10.9 10.4 10.1p 8.5p : 
Industry  : 19.2 20.7 20.0 19.2 18.7 17.1 16.0p 13.6p : 
Construction  : 4.3 3.9 4.0 3.4 3.5 3.6 4.3p 4.2p : 
Services  : 64.1 63.4 63.8 65.8 66.9 68.9 69.5p 73.7p : 
Final consumption expenditure, as a share of GDP (%)  : 91.9 100.2 105.8 101.0 99.4 99.8 104.2p 104.5p : 
Gross fixed capital formation, as a share of GDP (%)  : 16.9 17.5 14.6 13.3 17.0 18.0 21.9p 24.3p : 
Changes in inventories, as a share of GDP (%)  : 5.5 5.9 4.1 2.1 -0.4 -0.3 3.6p 3.7p : 
Exports of goods and services, relative to GDP (%)  : 36.8 38.4 35.4 30.6 42.0 43.6 49.4p 46.5p : 
Imports of goods and services, relative to GDP (%)  : 51.1 62.0 59.9 47.0 58.1 61.1 79.1p 79.0p : 
            
Industry Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Industrial production volume index (2000=100)  96.0 100.0b 99.0 100.0 102.0 116.0 114.0 115.0 115.0 113.0 
            
Inflation rate Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
SI: Consumer price index (CPI), (total, % c hange on previous year)  : : : : : : : : : 7.4 
            
Balance of payments Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Balance of payments: current account total (milli on euro)  : : : -175 -102 -120 -154 -531 -643 -1 006 
Balance of payments current account: trade balance (milli on euro)  : : : -433 -359 -416 -514 -849 -1 159 -1 490 
 
EN 54   EN Balance of payments current account: net services (million euro)  : : : 100 112 148 196 197 440 403 
Balance of payments current account: net in come (million euro)  : : : 76 88 86 18 31 17 8 
Balance of payments current account: net current  transfers (million euro)  : : : 83 58 62 147 90 59 73 
of which government transfers (million euro)  : : : : : : 6 7 2 9 
Net foreign direct investment (FDI) (million euro)  : : : 76 39 51 381 467 525 568 
Foreign direct investment (FDI) abroad (million euro)  : : : 0 -5 -2 -4 -26 -115 -74 
of which FDI of the reporting economy in EU-27 c ountries (million euro)  : : : 0 0 -1 -3 -78 -71 -58 
Foreign direct investment (FDI) in the reporting economy (million euro)  : : : 76 44 53 384 493 640 641 
of which FDI of EU-27 countries in the report ing economy (million euro)  : : : 69 16 36 318 376 515 447 
            
Public finance Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
General government deficit/surplus, relati ve to GDP (%)  : : : : : : : : : : 
SI: General government debt, relative to GDP (%)  : : : : : : : : : : 
            
Financial indicators Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Gross foreign debt of the whole economy, relative to GDP (%)  : : : : : : : : : : 
Gross foreign debt of the whole economy, relative to total exports (%)  : : : : : : : : : : 
Money supply: M1 (banknotes, coins, overnight depos its, million euro) 2) : : : : 285 291 351 484 592 512 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro) 3) : : : : 403 437 615 1 099 1 557 1 209 
Money supply: M3 (M2 plus marketable instruments,  million euro) 4) : : : : 494 547 867 1 587 2 728 2 339 
Total credit by monetary financial institutions to residents (consolidated) (million euro)  : : : 125 199 279 374 843 2 213 2 7 26 
Interest rates: day-to-day money rate, per annum (%)  : : : : : : : : : : 
Lending interest rate (one year), per annum (%)  : : : : : : : : : : 
Deposit interest rate (one year), per annum (%)  : : : : : : : : : : 
euro exchange rates: average of period - 1 euro = … nati onal currency 5) : : : : 1.000 1.000 1.000 1.000 1.000 1.000 
Effective exchange rate index (2000=100)  : : : : : : : : : : 
Value of reserve assets (including gol d) (million euro)  : : : 55 50 60 173 329 512 360 
            
External trade Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Value of imports: all goods, all partners (million euro)  : : : : : : 974 1 483 2 073 2 527 
Value of exports: all goods, all partners (million euro)  : : : : : : 461 627 487 433 
Trade balance: all goods, all partners (million euro)  : : : : : : -514 -855 -1 585 -2 094 
Terms of trade (export price index / import pr ice index, 1998=100)  : : : : : : : : : : 
Share of exports to EU-27 countries in value of total exports (%)  : : : : : : 53.5 62.2 65.6 61.3 
Share of imports from EU-27 countries in value of total imports (%)  : : : : : : 45.3 45.4 41.3 41.1 
            
Demography Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Natural growth rate: natural change (births minus deaths) (p er 1000 inhabitants)  5.6 6.1 5.5 4.8 4.3 3.4 2.4 2.5 3.0 : 
Infant mortality rate: deaths of children under one year of age per 1000 live births  13.4 11.1 14.6 10.8 11.0 7.8 9.5 11.0 7.4  7.5 
 
EN 55   EN Life expectancy at birth: male (years)  70.7 71.1 71.4 70.9 70.4 71.0 70.4 70.7 71.2 71.2 
Life expectancy at birth: female (years)  76.1 76.3 76.5 75.7 74.9 75.3 74.9 74.8 76.1 76.1 
            
Labour market Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Economic activity rate (15-64): share of population aged 15-64 that is economically active (%) 6) 58.5 60.4 57.1 59.1 58.9 51.7 b 49.9 49.0 53.0 51.9 
SI: Employment rate (15-64): share of population aged 15-64 that  is in employment (%) 6) 39.2 38.5 37.1 37.7 36.2 37.4b 41.0 41 .0 43.0 43.2 
Share of male population aged 15-64 that is in employment (%) 6) 47.3 46.2 45.6 46.6 44.5 46.5b 42.4 41.0 48.0 50.8 
Share of female population aged 15-64 that is in employment (%) 6) 31.4 30.6 29.0 29.0 28.1 28.8b 27.6 29.0 37.0 36.1 
SI: Employment rate of older workers (55-64): share of populati on aged 55-64 that is in employment (%)  : : : : : : : : : : 
Employment by main sectors (%)                      
Agriculture 7) 2.6 3.4 3.1 3.0 1.8 10.9b 8.6 6.8 8.1 7.6 
Industry 7) 22.5 22.4 25.8 26.0 25.7 16.5b 16.3 14.8 13.8 15.3 
Construction 7) 3.0 3.5 2.1 2.1 2.0 3.4b 2.9 4.7 3.8 6.1 
Services 7) 71.8 70.8 69.1 68.8 70.6 69.2b 72.1 73.7 74.3 71.0 
SI: Unemployment rate: share of labour force that is unemployed (%)  19.3 19.3 21.2 20.7 22.7 27.7b 30.3 29.6 19.3 16.8 
Share of male labour force that is unemployed (%)  : : : : : : : : 18.1 15.9 
Share of female labour force that is unemployed (%)  : : : : : : : : 20.9 17.9 
Unemployment rate of persons < 25 years: share of labour force aged <25 that is unemployed (%)  : : : : : : : : : : 
SI: Long-term unemployment rate: share of labour force t hat is long-term unemployed (%)  : : : : : : : : : : 
            
Social cohesion Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Average nominal monthly wages and sala ries (national currency)  164.4 181.0 211.0 149.1 173.9 195.3 213.1 246.0 338.0 416.0 
Index of real wages and salaries (index of nominal wages and salaries divided by the CPI) (2000=100)  99.9 100.0 91.6 109.7 119 .3 130.9 139.7 156.4 179.9 195.2 
SI: Early school-leavers: share of population aged 18-24 having not completed upper secondary education 
and not currently in education or training (%)  : : : : : : : : : : 
            
Standard of living Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Number of passenger cars per 1000 population  184.6 185.3 161.0 166.8 171.8 176.1 190.9 : : : 
Number of subscriptions to cellular mobile telephone se rvices per 1000 population  : : 639.6 775.5 674.4 778.7 872.0 1 127.5 : : 
            
Infrastructure Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Density of railway network (lines in operation, per 1000 km²)  18.1 18.1 18.1 18.1 18.1 18.1 18.1 18.1 : : 
Length of motorways (thousand km)  : : : : : : : : : : 
            
Innovation and research Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
SI: Spending on human resources (public expenditure on education) relative to GDP (%)  : : : : : : : : : : 
SI: Gross domestic expenditure on research & development, relative to GDP (%)  : : : : : : : : : : 
SI: Percentage of households who have Internet access at home (%)  : : : : : : : : : : 
            
Environment Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
SI: Total greenhouse gases emissions, CO2 equi valent (tons, 1990=100)  : : : : : : : : : : 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004)  : : : : : : : 493.8 384.4 : 
 
EN 56   EN  
SI = Structural indicators 
: = not available 
p = provisional value e = estimated value b = break in series 
1) The data are without Financial Intermediati on Services Indirectly Measured (FISIM). 
2) As of 31 December. Instead of standard M1, data  under national definition of M0 are provided. 
3) As of 31 December. Instead of standard M2, data under the nat ional definition of M11 are provided. The monetary aggregate M1 1 comprises M1 increased by the Central Government’s demand deposits 
in euros and other currencies. The monetary aggregate M2 includes  M1 and the non-banking sector’s time deposits with banks, in euros and other currencies, excluding deposits of the Central Government. 
4) As of 31 December. Instead of standard M3, data under the national definition of M21 are provided. Monetary aggregate M21 co mprises M2 increased by the Central Government’s time deposits in euros 
and other currencies. 
5) No official national currency exis ts. Euro is the currency in use. 
6) Age group refers to persons aged 15 or more years. 7) From 2004 onwards, a new methodology, harmoni zed with the EU requirements, is used.  
8) Agricultural area includes: arable l and, area under pastries, fishponds and ponds. 
9) Number of livestock in 1 000 including enterprises and cooperatives and households. 
10) Calculated net quantity in 1 000 tonnes; incl udes enterprises and c ooperatives, and households. 
11) Includes households, ent erprises and cooperatives
. SI: Share of renewable energy in electric ity consumption (%)  : : : : : : : : : : 
SI: Road freight transport as a share of total inland freight tr ansport (modal split of freight transport) (%)  : : : : : : : :  : : 
            
Energy Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Primary production of all energy products (thousand TOE)  : : : : : : : 982 795 1 136 
Primary production of crude oil (thousand TOE)  : : : : : : : : : : 
Primary production of hard coal and lignite (thousand TOE)  : : : : : : : 982 795 1 136 
Primary production of natural gas (thousand TOE)  : : : : : : : : : : 
Net imports of all energy products (thousand TOE)  : : : : : : : -49 87 -25 
Gross inland energy consumption (thousand TOE)  : : : : : : : 933 804 1 111 
Electricity generation (thousand GWh)  2.7 2.7 2.5 2.3 2.7 3.3 2.9 3.0 2.1 2.8 
            
Agriculture Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Agricultural production volume index of goods and services (producer  prices, previous year=100)  106.0 95.0 107.0 106.0 101.0 1 04.0 99.0 102.0 89.0 : 
Total utilised agricultural area (thousand hectare) 8) 518p 518p 518p 518p 518p 518p 517p 517 516 516 
Livestock: cattle (thousand heads, end of period) 9) 180e 179e 178e 183e 175e 169e 118 115 109 106 
Livestock: pigs (thousand heads, end of period) 9) 22e 19e 21e 22e 24e 27e 11 13 10 10 
Livestock: sheep and goats (thousand heads, end of period) 9) 306e 293e 244e 241e 252e 254e 255 249 222 209 
Production and utilisation of milk on the farm (total  whole milk, thousand tonnes) 10) 195e 197e 194e 198e 203e 209e 186 178 17 3 160 
Crop production: cereals (including rice) (thousand tonnes, harvested production) 11) 4p 3p 4p 5p 4p 3p 3p 3 2 3 
Crop production: sugar beet (thousand tonnes, har vested production)  : : : : : : : : : : 
Crop production: vegetables (t housand tonnes, harvested production)  : : : : : : : : : :