COMMISSION STAFF WORKING DOCUMENT MONTENEGRO 2015 REPORT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS EU Enlargement Strategy
Date: 2015-11-10
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Montenegro, accession criteria, accession negotiations, pre-accession strategy

EUROPEAN 
COMMISSION 

Brussels, 10.11.2015  
SWD(2015) 210 final 

COMMISSION STAFF WORKING DOCUMENT 

MONTENEGRO  
2015   REPORT  

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

EU Enlargement Strategy 

{COM(2015) 611 final} 
{SWD(2015) 211 final} 
{SWD(2015) 212 final} 
{SWD(2015) 213 final} 
{SWD(2015) 214 final} 
{SWD(2015) 215 final} 
{SWD(2015) 216 final} 

EN 

   EN 

 
 
 
 
  
 
 
 
Table of Contents 

1.  

INTRODUCTION....................................................................................................... 4 

1.1.   Context  ............................................................................................................. 4 
1.2.   Summary of the report....................................................................................... 4 

2.  POLITICAL CRITERIA............................................................................................. 6 

2.1.   Democracy ........................................................................................................ 6 
2.2.  Public administration reform............................................................................. 9 
2.3.   Rule of law ...................................................................................................... 12 
2.4.   Human rights and protection of minorities...................................................... 19 
2.5.   Regional issues and international obligations ................................................. 21 

3.  ECONOMIC CRITERIA .......................................................................................... 23 

3.1.  The existence of a functioning market economy............................................. 23 
3.2  The  capacity  to  cope  with  competitive  pressure  and  market  forces  within 

the Union ......................................................................................................... 27 

4.   ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP...................... 30 

4.1.   Chapter 1: Free movement of goods ............................................................... 30 
4.2.  Chapter 2: Freedom of movement for workers ............................................... 31 
4.3.  Chapter 3: Right of establishment and freedom to provide services............... 31 
4.4.  Chapter 4: Free movement of capital .............................................................. 32 
4.5.   Chapter 5: Public procurement........................................................................ 32 
4.6.  Chapter 6: Company law................................................................................. 35 
4.7.  Chapter 7: Intellectual property law................................................................ 35 
4.8.  Chapter 8: Competition policy ........................................................................ 36 
4.9.  Chapter 9: Financial services .......................................................................... 37 
4.10.  Chapter 10: Information society and media .................................................... 37 
4.11.  Chapter 11: Agriculture and rural development.............................................. 38 
4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy........................ 39 
4.13.  Chapter 13: Fisheries....................................................................................... 40 
4.14.  Chapter 14: Transport policy........................................................................... 40 
4.15.  Chapter 15: Energy.......................................................................................... 41 
4.16.  Chapter 16: Taxation....................................................................................... 42 
4.17.  Chapter 17: Economic and monetary policy ................................................... 42 
4.18.  Chapter 18: Statistics....................................................................................... 43 
4.19.  Chapter 19: Social policy and employment .................................................... 45 
4.20.  Chapter 20: Enterprise and industrial policy................................................... 46 
4.21.  Chapter 21: Trans-European networks............................................................ 47 
4.22.  Chapter 22: Regional policy and coordination of structural instruments........ 48 
4.23.  Chapter 23: Judiciary and fundamental rights................................................. 49 
4.24.  Chapter 24: Justice, freedom and security ...................................................... 62 
4.25.  Chapter 25: Science and research.................................................................... 67 

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4.26.  Chapter 26: Education and culture .................................................................. 68 
4.27.  Chapter 27: Environment and climate change ................................................ 69 
4.28.  Chapter 28: Consumer and health protection .................................................. 70 
4.29.  Chapter 29: Customs union ............................................................................. 72 
4.30.  Chapter 30: External relations......................................................................... 72 
4.31.  Chapter 31: Foreign, security and defence policy........................................... 73 
4.32.  Chapter 32: Financial control .......................................................................... 74 
4.33.  Chapter 33: Financial and budgetary provisions............................................. 76 

Annex I – Relations between the EU and Montenegro ..................................................... 77 

Annex II – Statistical Annex ............................................................................................. 79 

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1.  

INTRODUCTION

1  

1.1.   Context 

The  European  Council  granted  the  status  of  candidate  country  to  Montenegro  in  December 
2010. Accession negotiations were opened in June 20122. The Stabilisation and Association 
Agreement between Montenegro and the EU entered into force in May 2010. In addition to 
EU  accession,  Montenegro's  key  foreign  policy  priority  during  the  reporting  period  was 
securing an invitation to join NATO. Both priorities are linked by the focus on the rule of law: 
progress in this area is a key condition for both processes.  

Eight negotiating chapters were opened during the reporting period. Closing benchmarks were 
set  by  the  EU  for  the  opened  chapters,  providing  guidance  for  future  steps  in  meeting  the 
obligations  of  EU  membership.  Montenegro  has  made  good  progress  towards  meeting 
opening  benchmarks  for  chapters  such  as  Agriculture  and  rural  development,  Energy, 
Employment  and  social  policy,  and  Regional  policy  and  preparation  for  structural 
instruments. Particular attention needs to be paid now to fulfilling the opening benchmarks in 
chapters like Competition policy and Environment and climate change, which are challenging 
for Montenegro.  

1.2.   Summary of the report 

As regards the political criteria, the new electoral legislation, adopted in 2014, needs to be 
fully  implemented,  including  on  the  electronic  identification  of  voters.  There  has  been  no 
political  follow-up  to  the  alleged  abuse  of  public  funds  for  party  political  purposes  ("audio 
recordings affair"). 

Some  opposition  parties  embarked  on  a  boycott  of  parliament  in  September.  A  series  of 
protests  were  also  organised  outside  parliament.  These  eventually  led  to  confrontation 
between the police and protesters, resulting in injuries and damage to property. It is expected 
that all incidents of violence and allegations of excessive use of force during these events will 
be duly investigated. At the same time, all political parties should re-engage in a constructive 
political dialogue in the parliament. 

Some progress was made in improving cooperation between the government and civil society 
organisations, especially concerning the latters' participation in the accession process, where 
civil society continued to play an active role. Conditions conducive to voluntary work, civic 
activism and social entrepreneurship need to be created.  

With regard to public administration reform, Montenegro is  moderately prepared. However, 
its  results  in  ensuring  merit-based  recruitment  and  tackling  politicisation  are  uneven;  this 
should  be  ensured  at  all  levels,  including  for  senior  positions.  On  public  financial 
management, Montenegro needs to bring its accounting standards into line with international 
standards and put in place a strong internal control framework and improve legal compliance.  

The  judicial  system  is  moderately  prepared.  Important  steps  were  taken  to  align  the  legal 
framework  with  European  standards,  increasing  professionalism  and  independence.  The 

1  This  report  covers  the  period  from  October  2014  to  September  2015.  It  is  based  on  input  from  a  variety  of 
sources,  including  contributions  from  the  government  of  Montenegro,  the  EU  Member  States,  European 
Parliament  reports  and  information  from  various  international  and  non-governmental  organisations.  As  a  rule, 
legislation or measures which are under preparation or awaiting parliamentary approval have not been taken into 
account. 
2 To-date, 20 negotiating chapters have been opened, of which two have been provisionally closed. 

4 

 
 
                                                            
emphasis now should be on implementation. In 2014, the backlog of pending cases was not 
significantly reduced. Codes of ethics for judges and prosecutors are aligned with the relevant 
European  and  international  standards.  A  judicial  reform  strategy  (2014-2018)  and  an 
accompanying  action  plan  are  in  place.  The  full  implementation  of  the  new  system  of 
recruitment, professional assessment and promotion is now required. 

In terms of the fight against corruption, Montenegro has achieved some level of preparation. 
However,  the  track  record  on  effective  investigation,  prosecution  and  final  convictions  in 
corruption  cases,  in  particular  regarding  high-level  corruption,  remains  limited.  In  the  fight 
against organised crime, the country has some level of preparation. Further efforts are needed, 
in particular to investigate wider criminal networks and to counter money laundering. 

Further progress in the accession negotiations overall will also depend on progress on the rule 
of  law:  the  latter  will  also  have  to  be  demonstrated,  and  assessed,  on  the  basis  of  credible 
track records in the fight against corruption and organised crime. 

The  legal  framework  for  the  protection  of  human  rights  is  broadly  in  line  with  European 
standards, but problems remain with implementation. Montenegro has achieved some level of 
preparation  in  the  area  of  freedom  of  expression.  However,  concerns  remain:  There  were 
instances  of  attacks  against  media  practitioners  and  property  during  the  reporting  period, 
albeit  fewer  than  in  previous  years.  Some  cases  of  violence  against  the  media  remain  to  be 
resolved,  including  the  most  serious  case,  that  of  the  murder  of  an  editor-in-chief  in  2004. 
Lack  of  solid  professional  and  ethical  standards,  accompanied  by  lack  of  efficient  self-
regulation, does not advance media freedom. 

Montenegro continued to play a constructive role in regional cooperation and made important 
steps  in  finding  mutually  acceptable  solutions  to  bilateral  issues  with  neighbours,  including 
the signing of border agreements with Bosnia and Herzegovina and Kosovo∗  in August. 

As  regards  the  economic  criteria,  Montenegro  is  moderately  prepared  in  developing  a 
functioning market economy. Some  progress  was  made  in  pursuing fiscal consolidation and 
improving  the  business  environment.  The  economy  recovered  in  2013  from  the  double-dip 
recession  of  2009  and  2012.  After  a  mild  slowdown  in  2014,  economic  growth  is  gaining 
momentum  again,  boosted  by  investments.  While  the  construction  of  the  Bar-Boljare 
highway,  together  with  other  investments  in  energy,  transport  and  tourism,  will  support 
economic growth, the cost of the highway risks challenging fiscal sustainability. Montenegro 
should make efforts to reduce its public debt. Banks are confronted with a persistently high 
level  of  NPLs,  problems  of  debt  recovery  and  low  profitability  due  to  the  small  size  of  the 
market,  resulting  in  scarce  and  expensive  credit.  In  spite  of  a  small  improvement,  labour 
market  performance  remains  unsatisfactory  with  a  persistently  high  unemployment  rate, 
currently 18%. 

Montenegro  is  moderately  prepared  in  its  capacity  to  cope  with  competitive  pressure  and 
market  forces  within  the  Union.  However,  for  industrial  and  agricultural  products, 
Montenegro still suffers from low competitiveness, which should be improved. Major reforms 
are still needed to strengthen the country’s physical infrastructure and human capital, and to 
ensure a predictable and supportive regulatory environment. 

As regards its ability to take on the obligations of membership, Montenegro is moderately 
prepared  for  most  acquis  chapters  although  the  level  of  alignment  does  vary.  Concerning 
public  procurement  Montenegro  is  moderately  prepared.  More  work  is  needed  to  prevent 

∗ This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ 
Opinion on the Kosovo declaration of independence. 

5 

 
                                                            
 
corruption occurring during the procurement cycle. On financial control, Montenegro is also 
moderately prepared but significant efforts are needed to implement public internal financial 
control  (PIFC)  at  all  levels  of  public  administration  and  in  state-owned  enterprises.  On 
statistics, Montenegro has achieved some level of preparation: significant efforts are needed, 
especially  to  ensure  the  alignment  of  macro-economic  and  business  statistics  with  EU 
standards. 

Montenegro is at an early stage of preparation on, inter alia, environment and climate change. 
Aligning with the acquis and strengthening the administrative capacity remains a substantial 
challenge for Montenegro.  

2. 

POLITICAL CRITERIA 

2.1.   Democracy 

Elections 

Montenegro’s new electoral legislation, adopted in 2014, needs to be fully implemented and 
all  future  elections  need  to  take  place  in  accordance  with  the  new  laws.  The  State  Election 
Commission’s budget has been increased, but this institution needs to be further strengthened. 
The  judicial  follow-up  on  the  alleged  misuse  of  public  funds  for  party  political  purposes 
remains to be completed and political responsibility ensured.  

In October 2014, parliament appointed the members of the State Election Commission (SEC). 
In 2015, the SEC’s budget was significantly increased but this institution needs to be further 
strengthened. Recruitment has been completed.  

The electoral legislation adopted in 2014 has not been fully implemented, including new rules 
on  the  electronic  identification  of  voters  and  updating  of  the  single  voters’  list.  The  ad  hoc 
parliamentary  committee  monitoring 
legislation  for  building 
confidence in the election process needs to be established. 

implementation  of 

the 

In December, parliament adopted a new law on the financing of political parties and election 
campaigns,  after  the  Constitutional  Court  had  previously  annulled  some  of  the  old  law's 
provisions.  The  new  law  means  that  Montenegro  has  made  progress  on  meeting  its 
outstanding recommendations made by GRECO (Group of States against Corruption) and the 
OSCE Office for Democratic Institutions and Human Rights.  

Some  progress  has  been  made  on  the  judicial  follow-up  to  the  ‘audio  recordings  affair’  of 
2012, involving the alleged misuse of public funds for party political purposes. In February, 
the High Court in Bijelo Polje revised the September 2014 decision of the Pljevlja basic court, 
handing  down  stiffer  sentences  for  the  Director  of  the  Centre  for  Social  Work  and  an 
employee of that institution. Ten people previously acquitted for lack of evidence underwent a 
retrial,  which  resulted  in  suspended  six-month  prison  sentences.  Most  criminal  reports 
submitted to the prosecution over to the audio recordings affair have been dismissed. To date, 
there has been no political follow-up. 

In  May,  five  people  were  convicted  by  the  Podgorica  basic  court  for  buying  ID  cards  on 
behalf  of  the    ruling  Democratic  Party  of  Socialists  of  Montenegro  (DPS)  prior  to  the  May 
2014  Podgorica  local  elections.  One  of  the  defendants  was  sentenced  to  five  months’ 
imprisonment and the others received suspended sentences. Six people were acquitted of all 
charges. The investigation failed to shed light on who ordered the buying of ID cards. 

In  October  2014,  the  Constitutional  Court  ruled  that  certain  provisions  of  the  law  on  the 
election  of  local  councillors  and  MPs  were  unconstitutional.  The  provisions  in  question 

6 

 
 
stipulated that parliamentary parties, unlike extra-parliamentary ones, did not have to collect 
signatures in support of their electoral lists.  

Parliament 

Montenegro’s  parliament  has  a  newly-adopted  Code  of  Ethics  intended  to  strengthen  the 
overall  anti-corruption  framework  and  public  trust  in  parliament.  Work  in  these  two  areas 
must continue. Parliament continues to function in a transparent manner, but there is still no 
procedure for acting on citizens’ petitions. Oversight and legislative capacity need to improve. 
All political parties should show responsibility and re-engage in a constructive dialogue, with 
parliament as the key forum for political debate. 

In  December,  parliament  adopted  its  Code  of  Ethics.  The  Code  draws  on  general  ethical 
principles,  establishes  rules  of  conduct  in  carrying  out  parliamentary  duties  and  promotes 
transparency. The right to file complaints is currently limited to MPs and parliament entities 
but should be extended to include citizens, the media and other external stakeholders. There is 
also room for improvement in a number of other areas, including on the MPs’ obligation to 
declare private interests, the statute of limitations and the range of penalties applied.   

In  September  2015,  opposition  parties  embarked  on  a  boycott  of  parliament.  They  also 
organised a series of protests outside parliament, calling for the resignation of the government 
and  new  elections.  These  protests  eventually  led  to  confrontation  between  the  police  and 
protesters,  resulting  in  injuries  and  damage  to  property.  It  is  expected  that  all  incidents  of 
violence  and  allegations  of  excessive  use  of  force  during  these  events  will  be  duly 
investigated. At the same time all political parties should re-engage in a constructive political 
dialogue in the parliament. 

Parliament’s capacity to follow up on conclusions and recommendations adopted in oversight 
hearings remains limited. 

Parliament continued to display a high level of transparency. During the reporting period, it 
continued  to  reply  to  all  access  to  information  requests.  Procedures  for  acting  on  citizens’ 
petitions are not yet in place. Administrative and expert capacity need to improve further 
Parliament should, as a matter of priority, ensure that their premises are accessible to persons 
with disabilities. 

Governance 

Coordination of institutions involved in the EU accession process was strengthened, but there 
is room for further improvement. Transparency and stakeholder inclusiveness must be further 
strengthened.  Public  finances  at  local  level  should  be  consolidated  and  the  budgetary 
positions,  transparency,  efficiency  and  accountability  of  units  of  local  self-government 
strengthened. 

In  addition  to  EU  accession,  Montenegro's  key  foreign  policy  priority  during  the  reporting 
period was securing an invitation to join NATO. Both priorities are linked by the focus on the 
rule of law: progress in this area is a key condition for both processes.  

Coordination among institutions involved in the accession process has improved. As regards 
transparency,  the  Open  Government  Partnership  operational  team  was  dissolved  due  to 
irregularities  in  its  appointment,  and  re-established.  The  e-petitions  platform  continues  to 
exist,  but  is  underused.  The  capacity  and  independence  of  regulatory  authorities  should  be 
strengthened,  while  stakeholder  inclusion  and  consultation  should  be  further  enhanced. 
Despite  some  improvements  related  to  the  Ombudsman's  resourcing,  the  capacity  to 
effectively handle complaints remains limited. 

7 

 
In  December,  parliament  adopted  amendments  to  the  law  on  the  financing  of  local  self-
government, giving the recently-established municipalities of Petnjica and Gusinje access to 
additional  funds.  A  considerable  number  of  units  of  local  self-government  have  been 
struggling with high municipal debts and are not financially self-sufficient. In February, the 
government approved the restructuring of tax arrears for 14 municipalities. 

In January, the government adopted the 2015-2018 strategy for the professional development 
of local civil servants and state employees and its 2015-2016 action plan. To date, 19 out of 
23 units of local self-government have adopted action plans to combat corruption. 

Civil society 

Some progress was made in improving cooperation between the government and civil society 
organisations, especially concerning the latters' participation in the accession process, where 
civil  society  continued  to  play  an  active  role.  However,  more  transparency  is  needed  in 
government  procedures  for  cooperation  with  and  consultation  of  civil  society  organisations 
(CSOs).  It  is  a  matter  of  concern  that  some  civil  society  activists  have  been  targeted  on  a 
personal  basis  by  local  media.  Conditions  conducive  to  voluntary  work,  civic  activism  and 
social entrepreneurship need to be created. 

An empowered civil society is a crucial component of any democratic system and should be 
recognised and treated as such by state institutions. This also means providing opportunities 
for  meaningful  consultations,  and  legal  space  and  material  means  for  its  development.  In 
Montenegro,  despite  some  positive  examples,  there  is  still  room  for  improvement  on  this. 
Civil society representatives have on various occasions voiced their dissatisfaction with their 
level of involvement in policy-making. 

Relations between CSOs and the government have occasionally been overly adversarial and 
characterised by distrust, especially on the political situation, the rule of law and fundamental 
rights. Instances of government bodies undertaking unlawful surveillance of CSOs and using 
administrative  intimidation  and  legal  threats  have  been  reported  and  proven  with  court 
verdicts.  It  is  a  matter  of  concern  that  some  civil  society  activists  have  been  repeatedly 
targeted on a personal basis by local media through smear campaigns. 

Greater  transparency  is  needed  in  government  procedures  for  cooperation  with  and 
consultation of CSOs, especially in legislative drafting. The new Council for the development 
of  non-governmental  organisations  has  been  operational  since  2014.  Its  main  tasks  include 
monitoring the strategy for developing CSOs and the relevant sections of the action plan on 
Chapter  23.  So  far,  the  record  of  implementation  of  the  strategy  has  been  uneven; 
amendments to the law on NGOs remain pending.  

Montenegro  needs  to  establish  a  sustainable  system  of  public  funding  for  CSOs  and  an 
appropriate  institutional  framework.  It  also  needs  an  institutional  culture  that  facilitates 
grassroots  activities  by  civil  society,  through  free  concessions  of  public  spaces  and  other 
forms  of  support.  The  current  system  of  public  funding  has  so  far  proven  inefficient,  a  fact 
acknowledged by the State Audit Institution. Moreover, the law on gaming, currently the only 
source  of  public  financing  for  CSOs,  is  not  being  implemented  properly  and  the  amount 
allocated to CSOs' projects is decreasing. 

Conditions  need  to  be  created  that  are  conducive  to  voluntary  work  and  social 
entrepreneurship. This involves not only legislation but also bringing about an overall change 
of society’s approach to volunteerism and civic activism. 

8 

 
 
2.2. 

Public administration reform 

Montenegro  is  moderately  prepared  with  the  reform  of  its  public  administration.  It  made 
some progress over the past year, mainly on service delivery to citizens and businesses and 
public  financial  management.  However,  while  Montenegro  made  some  progress  under  its 
2011-2016 public administration reform (PAR) strategy, it did not achieve all its objectives. 
Delays with rationalisation of the public sector are also an issue of concern. 

In the coming year, Montenegro should in particular:  

→  adopt  a  new  2016-2020  PAR  strategy  and  a  multiannual  public  financial  management 
reform programme; 

→ ensure full implementation of the law on civil servants and state employees, and adhere to 
the  principles  of  merit,  de-politicisation  and  transparency  in  recruitment,  appraisals  and 
dismissals at all levels, including for senior positions; 

→ prepare for the implementation of the new law on general administrative procedures, and 
carry out a parallel review and alignment (as necessary) of all other relevant legislation; and  

→ ensure that adopted measures to rationalise public administration are implemented, while 
ensuring the necessary capacity and skills for European integration. 

Public service and human resources management 

Montenegro’s  legal  framework  on  public  service  is  in  place.  The  principles  of  merit-based 
recruitment, promotion and dismissal are regulated by the law on civil servants and state 
employees, and are broadly in line with international standards, However, the track record in 
ensuring merit-based recruitments is uneven at all levels, including for senior positions. 

Montenegro needs to further strengthen the capacity of its Human Resources Management 
Authority  (HRMA)  so  that  it  can  monitor  and  coordinate  human  resources  units  in  an 
effective manner. The central personnel records need to be further updated, following the joint 
efforts  of  the  Ministry  of  Finance  and  the  HRMA  already  calling  on  institutions  to  do  so. 
Disciplinary  procedures  are  regulated  in  the  law  on  civil  servants  and  state  employees,  to 
avoid arbitrary decisions.  

The current public sector remuneration system lacks transparency, and the principle of equal 
pay  for  equal  work  is  not  fully  respected.  Although  the  law  on  wages  of  civil  servants  and 
state  employees  lays  down  some  rules  on  the  basic  and  variable  portion  of  salaries,  a  large 
proportion  is  discretionary  and  can  be  allocated  by  senior  management.  The  payment  of 
bonuses  also  lacks  transparency.  A  law  on  public  sector  salaries,  designed  to  increase 
transparency and fiscal accountability, is currently in preparation. 

The HRMA is responsible for designing and delivering training programmes according to an 
annual training plan. However the legal right of public servants for continuous professional 
development is not fully respected. Rather, the amount of trainings has been decreasing over 
the  past  three  years.  Performance  appraisals  are  carried  out  only  in  a  limited  number  of 
institutions, often in a rather formalistic way.  

Integrity in public service has increased since the adoption of the law on civil servants and 
state  employees  in  2013.  A  new  anti-corruption  agency  is  due  to  be  in  place  on 
1 January 2016.  It  will  monitor  conflicts  of  interest  and  asset  declarations  and  provide 
protection for whistle-blowers. 

9 

 
 
 
Policy development and coordination 

Montenegro has the legal framework and institutional structures in place to provide the basis 
for a good policy-making system, including for European integration. There is clear division 
of  responsibilities  among  those  ministries  with  coordination  responsibilities,  especially  the 
General  Secretariat  of  the  government,  the  Ministry  of  Foreign  Affairs  and  European 
Integration  and  the  Ministry  of  Finance,  and  other  ministries.  However,  the  medium-term 
planning  system  is  not  fully  developed.  Specifically,  the  government  has  weak  capacity  to 
scrutinise draft policies and judge if they meet previous commitments. Sectoral strategies are 
developed  incoherently  and  often  lack  costing  or  a  link  to  the  medium-term  expenditure 
framework, therefore putting at risk their future implementation. 

Inclusive and evidence-based policy and legislative development is only partially ensured. 
Beside  the  lack  of  any  specific  legal  requirements  for  it,  ministries  have  a  relatively  low 
number of civil servants working on policy analysis and development. Ministries rather focus 
on the implementation of policies. This also detracts from institutions’ capacity to carry out 
legal drafting, including for the EU acquis. Both inter-ministerial and public consultations are 
regulated,  but  there  are  major  weaknesses  in  implementation.  Public  consultations  are  not 
systematically  organised.  When  they  do  take  place,  they  do  not  necessarily  include  all  the 
relevant stakeholders and often come too late in the process. Legislative and policy proposals 
are supposed to include  regulatory impact assessments. There is evidence that this is taking 
place, but some of analyses do not provide sufficient detail or only focus on fiscal impacts. 

The  broad  publication  of  government  monitoring  reports  allows  public  scrutiny  of 
government  work.  The  government  reports  are  however  more  focused  on  providing 
information on outputs than on results and outcomes achieved with government policies. 

Accountability of the administration 

The overall organisation of Montenegro’s state administration does not ensure effective lines 
of  accountability.  The  accountability  of  agencies  towards  parent  institutions  over  financial 
and operational reporting varies considerably, which makes efficient monitoring problematic. 
Also lines of accountability within institutions are weak, and responsibilities are typically not 
delegated to middle management. Moreover, managerial accountability is not systematically 
implemented (see Chapter 32 – Financial control).  

Rationalisation  of  the  state  administration  has  been  one  of  the  key  priorities  of  the  current 
public  administration  reform  strategy,  but  the  number  of  state  employees  actually  rose  in 
2014, mostly (but not solely) at local level. However, since any new recruitment in local self-
government is to be subject to approval by the Ministry of Finance, there may be a leaner and 
fiscally  tighter  public  sector  in  Montenegro  in  the  future,  which  in  parallel  ensures  the 
necessary capacity and skills for European Integration. 

Montenegro  has  put  in  place  the  appropriate  internal  and  external  oversight  mechanisms  to 
ensure  the  citizens'  right  to  good  administration.  The  total  number  of  the  Ombudsman’s 
recommendations is low although the implementation rate of these recommendations is high. 
The  right  to  access  public  information  is  regulated  in  the  law  on  free  access  to  public 
information, but in practice the state administration is not yet very responsive or proactive on 
this  point.  The  Agency  for  Personal  Data  Protection  and  Access  to  Information  is  in  place 
since  2013,  but  does  not  have  sufficient  capacity  to  deal  with  the  increasing  number  of 
complaints  it  is  receiving.  Administrative  silence  is  a  major  issue,  causing  nearly  50 %  of 
complaints from the public.  

The  right  to  administrative  justice  is  regulated  in  the  law  on  administrative  procedures. 
However,  there  are  weaknesses  in  implementation,  especially  due  to  administrative  silence. 

10 

 
Furthermore,  Montenegro  has  a  high  number  of  special  procedures,  and  therefore  a  lack  of 
transparency  in  administrative  appeals  and  judicial  reviews.  Administrative  litigation 
procedures are short, but since cases are often returned to the state administration for further 
consideration, many of these end up back in court. Montenegro does not have a specific law 
on public liability to ensure the right to seek compensation. Instead, this subject is covered 
by several pieces of legislation that are not easily understandable to the public. 

Public financial management 

Montenegro has carried out some reforms of its public finances. Significant additional work is 
needed for example in putting in place multiannual financial planning; in gradually moving to 
policy-based  budgeting;  in  improving  financial  forecasting,  management  and  control  of 
commitments; in managing assets; and in preventing tax evasion. Montenegro also needs to 
improve  legal  compliance.  A  comprehensive  public  financial  management  reform 
programme is being finalised to address the identified weaknesses. It should put in place a 
relevant  and  credible  framework  and  provide  an  action  plan  that  will  realistically  sequence 
and link reforms in different areas. 

Budget  transparency  needs  to  be  further  improved.  The  annual  budget  is  available  to  the 
public, but monthly reports on revenues, expenditure and borrowing provide only aggregate 
information. There is no transparency over how different institutions have spent their budget 
and  no  explanations  are  provided  on  variations  during  the  year.  Parliament's  capacity  for 
budget  oversight  needs  to  be  strengthened  and  it  needs  sufficient  time  for  processing 
budgetary information 

Service delivery to citizens and businesses 

Montenegro committed itself to achieving a user-oriented administration in its 2011-2016 
public  administration  reform  strategy  and  in  its  e-government  strategy.  Public  satisfaction 
with  government  services  is,  however,  not  yet  regularly  measured.  Equal  access  to  public 
services,  including  to  e-services,  is  largely  ensured.  A  central  government  portal  provides 
access  to  almost  80  e-services  from  25  public  institutions,  but  many  provide  only  basic 
services, such as information and templates, not full electronic procedures. A 2014 law on e-
government sets specific deadlines for developing e-services and interoperability. In summer 
2015 the government adopted a decree on its operation and content management. 

The new law on general administrative procedures was adopted in December and will enter 
into  force  in  July  2016.  Whereas  it  is  a  major  step  forward  in  simplification  of 
administrative  procedures,  considerable  work  is  still  needed  both  on  training  of  civil 
servants on its application and on ensuring consistency with special procedures. Nearly 150 
special procedures will need to be either abolished or brought into line with the new law. 

Strategic framework of public administration reform 

A public administration reform (PAR) strategy is in place for 2011-2016. The current action 
plan expires at the end of 2015. In June, Montenegro adopted an analysis of the impact of the 
strategy.  Weaknesses  identified  include  objectives  that  were  not  linked  with  performance 
targets  and  an  action  plan  that  only  focused  on  output-level  indicators,  not  outcomes  or 
impacts. Such weaknesses need be addressed under Montenegro forthcoming 2016-2020 PAR 
strategy, planned to be adopted before the end of 2015. Political support is ensured as PAR 
is identified as a priority in most government planning documents up to and including prime 
ministerial  level.  The  political  and  administrative  monitoring  and  reporting  framework  is  in 
place,  with  the  Ministry  of  Interior  in  charge  of  coordination.  The  new  strategy's  financial 
sustainability  needs  to  be  ensured  in  the  2016  budget  and  the  medium-term  expenditure 
framework.   

11 

 
2.3.   Rule of law 

Functioning of the judiciary 

Montenegro’s  judicial  system  is  moderately  prepared.  During  the  reporting  period 
Montenegro  made  some  progress  in  this  field.  Good  progress  has  been  made  on 
strengthening  the  legislative  framework  to  increase  the  independence,  accountability  and 
professionalism of the judiciary, but rules are not fully applied in practice. Courts are overall 
managing  to  cope  with  the  influx  of  cases,  but  measures  to  reduce  the  number  of  cases 
pending and the total length of proceedings need to continue.  

In the coming year, Montenegro should pay particular attention to: 

→ strengthening the independence and professionalism of the judiciary by fully implementing 
the new recruitment, professional appraisal and promotion systems; 

→  strengthening  the  accountability  of  the  judiciary  by  developing  a  track  record  of 
implementation  of  codes  of  ethics  and  of  the  new  disciplinary  systems  for  judges  and 
prosecutors; 

→ strengthening the capacity of the Judicial and Prosecutorial Councils, including in strategic 
planning for budget and human resources. 

Strategic documents 

Montenegro’s  action  plan  for  Chapter  23  outlines  comprehensive  reforms  in  the  area  of  the 
judiciary. It is monitored by the Chapter 23 inter-institutional working group, which includes 
representatives of civil society.  

In addition, a judicial reform strategy for the period 2014-2018  and accompanying  action 
plan are in place. The strategy reflects and complements the main reform priorities identified 
and  addressed  by  the  action  plan  for  Chapter  23.  A  mechanism  for  monitoring  the 
implementation of the strategy is in place. 

Management bodies 

The  Judicial  Council  and  the  Prosecutorial  Council  are  the  key  bodies  in  charge  of 
managing  the  judicial  system,  including  the  appointment  and  promotion  of  judges  and 
prosecutors  and  handling  disciplinary  measures  against  them.  Their  composition  and 
appointment  procedures  are  broadly  in  line  with  European  standards.  However,  some 
concerns remain about political influence on the work of these bodies. 

The Judicial Council has a consolidated administrative structure. However, its secretariat does 
not  have  sufficient  office  space  and  is  finding  it  difficult  to  recruit  additional  qualified 
administrative  staff.  Since  July  the  secretariat  for  the  Prosecutorial  Council  has  its  own 
secretariat  but  recruitment  of  staff  remains  to  be  completed.  The  budget  allocated  to  the 
Judicial Council does not sufficiently cover its IT spending needs. 

While  access  to  Judicial  Council  decisions  has  significantly  improved  and  the  Council’s 
meetings are generally open to the public, the operation of the Prosecutorial Council still lacks 
transparency. Both Councils lack strategic planning on budget and human resources. 

Independence and impartiality 

The  main  principles  guaranteeing  judicial  independence,  including  the  principle  of  the 
immovability  of  judges,  are  set  out  in  Montenegro’s  Constitution  and  reflected  in  its 
legislation. The constitutional amendments introduced in 2013 strengthened the independence 
of the judiciary by reducing political influence on the appointment of high-level judicial and 
prosecutorial officials.  

12 

 
Judges  and  prosecutors  have  tenure  until  retirement.  The  power  to  dismiss  judges  and 
prosecutors  lies  with  the  Judicial  and  Prosecutorial  Councils  respectively.  Judges  and 
prosecutors  enjoy  functional  immunity,  with  the  exception  of  crimes  committed  in  the 
performance of official duties. However, the internal independence of individual judges may 
be undermined by the Supreme Court’s possibility to adopt legal positions of principle and by 
the  supervisory  powers  of  higher  courts  vis-à-vis  lower  courts.  Under  the  Criminal  Code, 
undue  interference  in  the  work  of  judicial  officials  is  punishable  by  imprisonment.  So  far 
there has been no case where these provisions have been applied.  

The  principle  of  random  allocation  of  cases  is  guaranteed  by  the  law  on  courts  and 
implemented automatically through PRIS, the judicial information system, although for very 
small  courts  there  are  certain  limitations.  The  procedure  of  assigning  cases  to  judges 
overnight  rather  than  as  soon  as  they  are  submitted  does  not  entirely  exclude  manipulation. 
Failure to seek judicial disqualification in cases where it is mandatory constitutes grounds for 
disciplinary  action.  Rules  for  withdrawal  of  allocated  cases  are  stipulated  in  the  law  on 
courts. 

Accountability 

Codes  of  ethics  for  judges  and  prosecutors  are  aligned  with  the  relevant  European  and 
international standards and linked to mechanisms for complaints from members of the public. 
Compliance  with  the  codes  is  monitored  by  specialised  bodies  within  the  Judicial  and 
Prosecutorial Councils.    

In  February  2015,  new  systems  of  disciplinary  accountability  were  introduced  for  judges 
and  prosecutors.  Specialised  bodies  within  the  Judicial  and  Prosecutorial  Councils  are 
responsible  for  disciplinary  proceedings.  However,  the  numbers  of  reported  and  established 
violations  of  the  Codes  of  Ethics  and  of  disciplinary  and  dismissal  proceedings  are  limited. 
Most complaints submitted by members of the public refer to the substance of decisions. 

Like all public officials, judges and prosecutors have an obligation to declare their assets on 
an annual basis and to report on possible conflicts of interest.   

Professionalism and competence 

The power to recruit, appoint, transfer, promote and dismiss judges and prosecutors lies 
with the Judicial Council and the Prosecutorial Council respectively.  

New  legislation  adopted  in  February  2015  introduces  a  single,  countrywide  recruitment 
system  for  judges  and  prosecutors,  and  a  new  system  of  promotion  based  on  periodic 
professional  assessment.  The  new  systems  are  designed  to  be  transparent,  merit-based  and 
seek to apply objective criteria. Full implementation of the new systems is pending.  

Quality of justice 

The Judicial Training Centre provides initial and continuous training to judges, prosecutors 
and legal advisers. For 2015, it has been allocated its own budget line but is still dependent on 
donor support for certain specialised training courses. Montenegro has observer status in the 
European Judicial Training Network (EJTN). 

PRIS,  the  judicial  information  system,  is  used  by  all  courts  for  tracking  cases,  for  some 
aspects  of  case  management  and  for  communication  with  parties.  PRIS  also  collects 
comprehensive statistical data, which feed into annual reports on the performance of courts. 
However, the system has security gaps and is not running reliably outside Podgorica, partly 
due to slow network connections. It is also not backed by a clear institutional framework and 
remains  under-developed  with  regard  to  the  prosecution  service.  Final  court  decisions  are 

13 

 
publicly accessible online. The law on courts provides for mechanisms to ensure consistency 
of  jurisprudence.  However,  they  risk  undermining  the  internal  independence  of  individual 
judges.  

The judiciary’s current budget of EUR 27.1 million (EUR 40 per capita) amounts to 0.78 % 
of GDP but is insufficient. The number of judges and prosecutors in Montenegro is relatively 
high in relation to the size of the population. Spending on salaries limits the scope for other 
expenses such as necessary investment or free legal aid. 

Alternative  dispute  resolution  is  available  through  court  settlement,  arbitration  and 
mediation. Overall, its impact remains low.  

Efficiency 

In 2014 the clearance rate, i.e. the ratio of solved cases to new cases filed, was almost 100 % 
(2013:  98.5 %).  However,  overall,  in  2014  courts  solved  16.4 %  fewer  cases  than  in  the 
previous year, and the total number of pending cases at the end of the year (37 111) remained 
more or less constant. The backlog of cases older than three years pending before all courts 
has further decreased and amounted to 3192 at the end of 2014 (4089 at the end of 2013). 

In 2014, the disposition time, i.e. the average time from filing the case to a decision, was 242 
days  for  first  instance  proceedings  in  civil  cases  and  261  days  for  commercial  cases.  The 
overall length of proceedings from initiation to final judgment remains a cause for concern. 

Fight against corruption 

Montenegro  has  achieved  some  level  of  preparation  in  the  fight  against  corruption. 
Corruption  remains  prevalent  in  many  areas  and  continues  to  be  a  serious  problem.  Some 
progress  was  made  in  the  past  year  thanks  to  the  strengthening  of  the  legislative  and 
institutional  framework  but  work  on  this  needs  to  be  completed.  All  institutions  should 
demonstrate a more proactive attitude in fulfilling their mandate.  Montenegro’s track record 
on effective investigation, prosecution and final convictions in corruption cases, in particular 
regarding high-level corruption, remains limited.  

In  addressing  the  shortcomings  outlined  below,  in  the  coming  year  Montenegro  should  pay 
particular attention to: 

→ establishing a fully operational anti-corruption agency by 1 January 2016; 

→  establishing  track  records  in  combating  corruption,  in  particular  in  high-level  cases  and 
increasing the capacity to carry out financial investigations; 

→ improving track records in  the  prevention of corruption, including effective penalties for 
irregularities. 

Track record 

Results on investigation, prosecution and convictions in corruption cases are limited to low 
and  medium-level  corruption.  A  high  rate  of  investigations  into  reported  corruption-related 
offences  never  results  in  indictments.  So  far  there  have  been  no  final  convictions  for  high-
level corruption. In two cases former mayors have been convicted at first instance but trials 
are  ongoing.  Several  investigations  are  ongoing,  but  a  number  of  high-profile  cases  have 
never  been  subject  to  serious  investigation.  The  political  authorities  should  ensure  that  law 
enforcement bodies are fully empowered to act effectively and impartially when investigating 
corruption allegations. In cases involving low and medium-level corruption, courts frequently 
apply sentences below the minimum penalties laid down in the Criminal Code. 

14 

 
Financial  investigations  are  not  yet  systematically  used  in  cases  of  corruption.  In  no 
corruption case has the confiscation of assets been ordered. As regards political influence on 
law enforcement and judicial officials, some statements by members of the executive and the 
legislative  branch  may  be  interpreted  as  interference  in  the  independent  functioning  of  the 
judicial system.   

Also in the areas of control of conflict of interest, asset declarations as well as financing of 
political  parties  and  electoral  campaigns  Montenegro  is  yet  to  achieve  significant  results.  
Penalties have not been effectively applied and as a result are not serving as a deterrent. The 
practice  of  misdemeanour  bodies  to  issue  very  low  sanctions,  in  most  cases  below  the 
statutory minimum, counteracts effective enforcement of prevention of corruption rules. 

The  Commission  for  the  prevention  of  conflicts  of  interest  has  continuously  increased  the 
number  of  asset  declarations  it  cross-checks  against  data  held  by  other  institutions.  The 
number  of  irregularities  identified  has  increased,  but  until  very  recently  there  was  no 
appropriate  follow-up.  While  the  Commission  has  processed  a  number  of  cases  of 
incompatibility of functions, its decisions on conflicts of interest so far are limited to requests 
filed by the public officials concerned to receive an opinion.  The Commission does publish 
data from the asset declarations of public officials. 

Alleged irregularities in the area of political party and electoral campaign financing (abuse 
of  state  funds  for  political  party  purposes)  have  not  been  appropriately  followed  up  by  the 
State Electoral Commission.  

As regards free access to information, in 2014 public institutions who received such requests 
rejected  roughly  25 %  of  them.  However,  the  appeals  body,  the  Agency  for  Personal  Data 
Protection and Free Access to Information upheld most complaints. Court decisions on access 
to information are not effectively enforced.  

On the basis of amendments to the Criminal Code in July 2013 making dismissal of whistle-
blowers  a  criminal  offence,  criminal  charges  have  been  brought  against  17  persons.  In  two 
cases preliminary investigations are ongoing; in all other cases charges were dismissed. 

Institutional framework 

On the prevention of corruption, in December 2014 parliament adopted the legislative basis 
for  establishing  an  independent  anti-corruption  agency  with  administrative  investigation 
powers, to be operational as of 1 January 2016. The existing supervising institutions are not 
on  the  whole  taking  a  proactive  approach  and  their  administrative  capacity  has  not  been 
strengthened  as  required.  Codes  of  ethics  are  in  place  for  legislative,  judicial  and  executive 
authorities and integrity plans have been adopted in 77 (out of 102) public bodies.  

On  law  enforcement,  the  institutional  and  operational  capacity  of  prosecutors,  judges  and 
police  to  fight  corruption  is  insufficient.  The  prosecution  service  has  the  lead  in  criminal 
investigations.  However,  in  practice,  cooperation  between  the  police  and  the  prosecution  in 
pre-trial  investigations  remains  to  be  improved.  The  capacity  to  carry  out  financial 
investigations needs to be improved. 

The special prosecution division within the Supreme State Prosecutor’s Office lacked direct 
access to relevant databases and specialised expertise. A new Special Prosecutor’s Office for 
the  fight  against  corruption,  organised  crime,  war  crimes,  terrorism  and  money  laundering 
became operational in July but the recruitment of special prosecutors and specialised experts 
has not been completed.  

The fight against corruption is being hampered by frequent changes to the relevant legislation 
and  the  annulment  of  verdicts  on  appeal,  mostly  on  technicalities.  The  vast  majority  of 

15 

 
corruption  allegations  submitted  to  the  state prosecution  come  from  members  of  the  public, 
NGOs and private companies. Only very few cases are submitted by the police and hardly any 
complaints result from administrative control and auditing bodies. 

Legal framework 

Passive  and  active  corruption  are  punishable  offences  under  the  Criminal  Code,  which  lays 
down sentences for them ranging from three months to 15 years. Montenegro is a party to the 
main  international  instruments  against  corruption,  including  the  UN  Convention  against 
corruption and the relevant Council of Europe conventions. Illicit enrichment has not been 
made a criminal offence. 

The  legislative  framework  was  significantly  strengthened  through  the  adoption  of  a 
comprehensive package of laws in December 2014, which also included the legal basis for the 
future anti-corruption agency.  

Strategic framework 

The  action  plan  for  Chapter  23  outlines  comprehensive  reforms  on  the  prevention  and 
combat  of  corruption.  Its  implementation  is  monitored  through  the  Chapter  23  inter-
institutional  working  group,  which  also  includes  representatives  of  civil  society.  Sectoral 
action plans are in place for some areas particularly vulnerable to corruption but in practice 
their impact has been limited.   

Fight against organised crime 

Montenegro  has  achieved  some  level  of  preparation  in  the  fight  against  organised  crime. 
Some progress was made in the past year, notably on strengthening the legal and institutional 
framework  and  operational  capacity  for  the  prevention  of  money  laundering  and  terrorist 
financing.  Regional  and  international  cooperation  has  been  smooth,  and  a  number  of  joint 
operations were conducted. However, further work is needed in this area. Montenegro’s track 
record  on  organised  crime  needs  to  be  consolidated.  In  particular,  the  number  of  final 
convictions  for  organised  crime  and  the  number  of  seizures  and  confiscations  of  criminal 
assets are low. The number of suspicious transactions detected also remains low. 

In the coming year, Montenegro should pay particular attention to:  

→  improving  its  track  record  in  the  fight  against  organised  crime,  including  dismantling 
criminal networks and ensuring quality confiscation of criminal assets; 

→  stepping  up  intelligence-led  investigation  on  anti-money  laundering  and  financial  cases, 
and on cases of trafficking in human beings; 

→  ensuring  stronger,  proactive  inter-agency  cooperation  among  the  recently-established  
institutions  (the  Special  Prosecutor’s  Office  and  the  new  specialised  police  units),  the 
Administration  for  Prevention  of  Money  Laundering  and  Terrorist  Financing,  the  Central 
Bank, the tax authorities and the customs administration.    

Track record 

Despite  some  new  cases  in  the  area  of  drugs,  arms  trafficking,  cybercrime  and  migrant 
smuggling,  Montenegro’s  track  record  has  shown  little  progress  on  complex  crimes  such  as 
trafficking  in  human  beings  and  money  laundering.  In  various  cases,  there  has  been  little 
effort to investigate wider criminal networks. The number of final convictions for organised 
crime remained low with no major changes to the trend in the last few years. 

16 

 
Following  the  2014  seizure  of  250 kg  of  cocaine  from  a  cargo  ship  in  the  port  of  Bar,  the 
investigation into the case has not identified the network that organised this drug trafficking 
operation.  Apart  from  this  large  amount,  there  were  no  other  drug  seizures  in  Bar,  despite 
sizeable container traffic, including from southern America. So far there have been no cases 
of criminal assets seized for drug trafficking, despite Montenegro being a transit country.  

Trafficking  in  human  beings  remains  a  concern.  Despite  progress  on  the  legal  and 
institutional  aspects,  Montenegro  has  achieved  limited  results,  both  in  terms  of  victims 
identified  and  cases  prosecuted.  Despite  Montenegro  remaining  a  transit  country  towards 
Western Europe and remaining vulnerable to both domestic and regional trafficking, only few 
criminal cases have been launched and four victims identified.  

The  system  in  place  to  combat  money  laundering  remains  weak  and  lacks  strong 
coordination mechanisms between the various players in the chain. Two new indictments on 
money  laundering  were  brought  in  2014;  one  trial  is  still  ongoing,  while  the  second  case 
resulted  in  an  acquittal.  While  Montenegro’s  anti-money  laundering  agency  is  fulfilling  its 
mandate, including through a new policy on penalties, other institutions, including the Central 
Bank, need to step up systematic checks on other reporting entities. This problem is reflected 
in the low number of suspicious transactions reported in the country in comparison with the 
amount  of  cash  transactions.  Financial  investigations  and  the  seizure  and  confiscation  of 
assets are also used in a limited number of cases only, due to lack of know-how. 

For a number of years, large quantities of cigarettes have been declared transiting through the 
Port of Bar destined to third countries. Recently, an increase of the quantity of cigarettes has 
been  observed,  including  to  certain  destinations  located  in  third  countries  considered  as 
suspect. 

Institutional and operational capacity 

Since  2013  Montenegro  has  in  place  a  system  of  prosecutorial-led  investigations.  Practical 
problems in coordination and exchange throughout the law enforcement and judicial chain are 
not yet entirely resolved. This is one of the major shortcomings affecting results.  

The rules governing the organisation of the police are derived from the law on internal affairs. 
The changes made in early 2015, following the legislative amendments described below, aim 
at better cooperation between the public prosecution service and the police by establishing a 
‘double-hatted’  special  unit.  The  head  of  the  special  unit,  once  appointed,  will  report  to  the 
Chief of Police and to the Special Prosecutor. The unit is not yet operational.  

In addition, four specialised police units have been created, focusing on trafficking in human 
beings, cybercrime, financial investigations and the fight against terrorism. These changes are 
expected to improve Montenegro’s track record. As part of the reorganisation of the police, 
the  resources  dedicated  to  the  fight  against  organised  crime  have  substantially  increased. 
However,  the  operational  capacity  of  the  new  units  needs  to  be  improved,  both  through 
capacity-building  activities  and  by  providing  new  technical  equipment.  Inter-agency 
cooperation needs to be improved. An operational agreement with EUROPOL is in place. 

The  Montenegrin  authorities  need  to  look  for  and  identify  victims  of  trafficking  in  human 
beings  in  a  proactive  manner  (e.g.  using  their  inspection  services),  increase  outreach  to 
relevant  bodies  such  as  asylum  centres,  and  tackle  crimes  related  to  trafficking  in  human 
beings. The new police unit dealing with trafficking in human beings needs to be adequately 
trained. The shelter for victims of trafficking in human beings requires internal reorganisation 
and better planning ahead, taking into account the low number of victims hosted. 

17 

 
 
Legal framework 

In  recent  years,  Montenegro’s  legal  system  went  through  waves  of  reform  to  improve  its 
performance  in  curbing  organised  crime,  while  at  the  same  time  aligning  the  national 
framework with EU and international standards. The Criminal Code was amended in 2013 to 
incorporate  new  provisions  related  to  trafficking  in  human  beings,  cybercrime,  anti-money 
laundering and the financing of terrorism.  A new law on anti-money laundering, adopted in 
2014, aimed at incorporating the EU’s Fourth Directive and the standards of the Council of 
Europe’s  Committee  of  Experts  on  the  Evaluation  of  Anti-Money  Laundering  Measures 
(MONEYVAL).  A  law  establishing  the  Special  Prosecutor’s  Office  (with  a  mandate  on 
organised crime, corruption and war crimes) was adopted in February 2015; a new law on the 
seizure and confiscation of assets was adopted in September 2015. 

The  creation  of  a  Special  Prosecutor’s  Office  centralised  powers  on  organised  crime  and 
paved the way for the creation of specialised bodies, including in the police. Amendments to 
the law on internal affairs were adopted in 2014 to reorganise the police in line with the need 
to  address  modern  forms  of  organised  crime.  The  amendments  aim  at  eliminating  possible 
political influence in police work and ensuring that procedural safeguards are in place. For the 
implementation  of  these  legal  provisions,  see  the  section  on  Institutional  and  operational 
capacity above. 

The  overall  criminal  justice  reform  and  the  police  reorganisation  should  increase  the 
Montenegrin authorities’ capacity to fight serious and organised crime and improve its focus 
on specific areas of the phenomenon. This must now be followed by appropriate training for 
staff and a solid track record on implementation, including better cooperation between judicial 
and law enforcement authorities. Future amendments to the law on internal affairs should, in 
particular, focus on the single entry point and on transparent and merit-based recruitment to 
increase the professionalism of the police.  

Strategic framework 

Montenegro  drew  up  a  national  serious  and  organised  crime  threat  assessment  (SOCTA)  in 
2014,  based  on  intelligence-led  policing.  It  is  currently  implemented  and  a  mid-term 
assessment  was  developed  in  June  2015.  However,  this  key  strategic  framework  has  not 
translated into the dismantling of any of the organised crime groups identified by SOCTA.  

In  May  Montenegro  adopted  a  2015-2018  action  plan  on  fighting  money  laundering  and 
terrorism financing. In January, the government adopted a 2015 action plan to implement its 
strategy for the fight against trafficking in human beings.  

Montenegro has remained active at international and regional level; the Joint Centre for Police 
Cooperation in Trebinje (bringing together Montenegro, Serbia and Bosnia and Herzegovina) 
is operational and a Montenegrin liaison officer has been posted there. Montenegro is working 
to  establish  interconnectivity  with  the  national  IT  system  of  the  police.  The  operational 
agreement  with  Europol  was  signed  in  September  2014  and  a  police  liaison  officer  was 
appointed in April. The agreement needs to be fully implemented. 

Fight against terrorism 

Montenegro  has  been  affected  by  the  phenomenon  of  foreign  terrorist  fighters  and 
radicalisation.  The country has amended its Criminal Code, criminalising the phenomenon of 
foreign terrorist fighters in line with the relevant UN Security Council Resolution. An inter-
ministerial  group  has  been  established  to  monitor  the  situation  and  implement  actions  to 
prevent possible terrorist threats. An action plan on fighting money laundering and terrorism 
financing  has  been  adopted  and  cooperation  with  international  partners  has  intensified.  The 

18 

 
phenomenon of foreign terrorist fighters needs a dedicated approach by the intelligence and 
law enforcement community and a coherent judicial policy towards offenders. 

2.4.   Human rights and protection of minorities 

Overall situation 

Montenegro  is  gradually  shifting  its  focus  from  incorporating  EU  standards  into  its  legal 
framework  to  improving  its  institutional  framework  and  support  activities  that  make  the 
protection  and  enforcement  of  human  rights  possible.  The  amendments  to  the  Law  on  the 
Ombudsman enabled the latter to recruit more qualified staff. The law on gender equality, and 
that on fighting discrimination against persons with disabilities, were amended to align more 
closely with European standards. Full alignment with the acquis regarding sanctions has not 
been  achieved.  The  Roma  minority  remains  the  most  vulnerable  and  discriminated 
community in various areas of life.  

Shortcomings particularly affect the following areas: 

•   Human  rights  institutions  remain  weak.  The  Ombudsman  and  the  Ministry  of  Human 
Rights  and  Minorities  need  to  be  reinforced,  following  the  reform  of  the  anti-
discrimination  framework.  Staff  knowledge  on  international  and  European  human  rights 
law  and  standards,  and  their  ability  to  supervise  the  spending  of  funds,  remains 
insufficient.  Poor  transparency  and  control  of  the  funds  for  minorities  must  be  urgently 
addressed. 

•   Lack  of  a  uniform  approach  and  low  levels  of  penalties  in  the  area  of  human  rights 

violations create legal uncertainty.  

•   Impunity  is  still  an  issue  in  connection  with  abuses  in  prisons  and  pre-trial  facilities. 
Judges  and  law  enforcement  officials'  knowledge  of  European  standards  and  case  law 
needs to be increased. 

In line with the new reporting methodology, a detailed analysis of freedom of expression as a 
pilot area follows below. For a detailed analysis of developments on other human rights and 
the  protection  of  minorities,  see  Chapter  23  —  Judiciary  and  fundamental  rights.  For 
developments in the areas of trade union rights, anti-discrimination and equal opportunities, 
see also Chapter 19 — Social policy and employment. 

Freedom of expression 

Montenegro has achieved some level of preparation in the area of freedom of expression. No 
progress was made in the past year. 

Defamation  has  been  decriminalised  and  guidelines  issued  to  the  prosecution  concerning 
penalties. However, Montenegro still needs to achieve an overall alignment with the case law 
of the European Court of Human Rights. Recently, several vehicles belonging to journalists 
were  damaged.  A  number  of  physical  attacks  and  threats  of  attacks  have  taken  place  in  the 
past,  including  some  high-profile  incidents.  In  addressing  the  shortcomings  outlined  below, 
Montenegro should pay particular attention to: 

→ solving older cases of violence against media, including the 2004 murder case, identifying 
not  only  the  material  perpetrators  but  also  those  behind  the  attacks  and  implementing 
recommendations issued by the ad hoc media commission set up to monitor attacks;  

→ ensuring the independence of the public service broadcaster RTCG; 

→ providing guidance to the judiciary on aligning decisions with European Court of Human 

19 

 
Rights case law on freedom of expression. 

Intimidation of journalists 

In Montenegro there is no systematic trend of attacks against journalists resulting in threats to 
life or serious injuries. However, threats and attacks have occurred in the past, including high-
profile incidents targeting investigative journalists. The most serious case was the murder of 
an editor-in-chief in 2004; to-date there is no information on the motive or the people behind 
the crime. 

An  ad  hoc,  and  rather  low-profile,  commission  was  set  up  by  the  government  in  2013  to 
monitor investigations into cases of violence against journalists. It is composed of media, civil 
society organisations and state representatives and has had its mandate extended until the end 
of  2015.  In  2014,  it  issued  recommendations  on  prioritising  cases  and  accelerating  the 
resolution of prominent cases. These recommendations have not been fully followed up by the 
government, most notably on reinstating a reward for witnesses in older cases and identifying 
flaws in the investigations of the attacks. The effectiveness of police protection granted to a 
journalist and to the property of one media outlet, following the request of another journalist 
to discontinue the service, needs to be carefully assessed with a view to improving it. 
Legislative environment3 

Defamation  was  decriminalised  in  2012  and  contributed  to  the  decrease  in  the  number  of 
lawsuits  against  the  media.  To  help  judges  in  setting  standards  for  penalties,  the  Supreme 
Court  has  issued  guidelines  that  reference  European  Court  of  Human  Rights  case  law. 
Challenges remain in their implementation.  

Amendments to the law on electronic media aimed at further alignment with the acquis have 
yet to be adopted.  
Implementation of legislation/institutions4 

An  ongoing  smear  campaign,  mostly  by  one  tabloid  newspaper,  targeting  prominent  civil 
society  activists  and  some  politicians,  shows  that  the  authorities  are  not  properly 
implementing the media law and that self-regulation, re-established in 2012, is not working. 
Its effectiveness is hampered by the fact that it is split in different forms, reflecting divisions 
within the media community. The lack of a uniform approach to penalties in this area suggests 
that  European  Court  of  Human  Rights  case  law  is  not  sufficiently  known,  despite  the 
guidelines issued by the Supreme Court in 2012.  
Public service broadcaster5 

Amendments  to  the  law  on  public  broadcasting  services,  providing  more  financial 
independence  and  sustainability  to  the  public  broadcaster  RTCG  (Radio  i  televizija  Crne 
Gore), are yet to be adopted. Under the proposed model, RTCG would receive a fixed amount 
of  0.3 %  of  GDP  annually,  which  is  about  EUR  2  million  more  than  its  current  budget. 
Montenegro needs to prioritise the editorial independence of RTCG, since a well-functioning 
and truly independent public service media represents a key aspect of media pluralism. 

Economic factors 

Rules governing the transparency of media ownership, including media concentration, are set 
out  in  the  law  on  electronic  media.  There  are  concerns  about  transparency  and  non-

3 See also chapter 10 
4 See also chapter 10 
5 See also chapter 10 

20 

 
                                                            
discrimination in state advertising. Some major private media outlets are at risk of failure due 
to  high  tax  debts.  The  precarious  economic  situation  of  journalists  puts  them  at  risk  of 
editorial  interference  and  possible  self-censorship.  The  fact  that  many  media  outlets  are  not 
financially sustainable has a negative impact on the quality of reporting and professionalism. 

Professional organisations/professional conditions 

Journalists  are  jointly  represented  in  Montenegro’s  media  trade  union.  However,  the  media 
community  remains  highly  divided  overall.  Membership  of  the  Media  Self-Regulatory 
Council is not representative of the entire media community. Dialogue on improving ethical 
standards in reporting, facilitated by the OSCE, should continue. According to the media trade 
union, journalists are poorly paid and their jobs are not secure. In the past three years, at least 
500 journalists lost their jobs, while three TV stations and one newspaper closed due to poor 
financial performance. 

2.5.   Regional issues and international obligations 

There  were  no  developments  in  Montenegro’s  cooperation  with  the  International  Criminal 
Tribunal  for  the  former  Yugoslavia.  For  the  handling  of  domestic  war  crimes  cases,  see 
Chapter 23 — Judiciary and fundamental rights. 

Montenegro  still  maintains  a  2007  bilateral  immunity  agreement  with  the  United  States, 
granting  exemptions  for  US  citizens  from  the  jurisdiction  of  the  International  Criminal 
Court. In doing so, it is not complying with the EU common positions on the integrity of the 
Rome  Statute  or  with  the  related  EU  guiding  principles  on  bilateral  immunity  agreements. 
Montenegro needs to align with the EU position as part of its accession negotiations. 

Montenegro  has  continued  to  cooperate  closely  with  Bosnia  and  Herzegovina,  Croatia  and 
Serbia under the Sarajevo Declaration Process, which aims at sustainable solutions for some 
74 000 people who became refugees and displaced persons as a result of the armed conflicts 
in  ex-Yugoslavia  during  the  1990s.  At  the  same  time,  all  countries  need  to  further  step  up 
efforts to deliver on the implementation of the agreed housing solutions. In Montenegro, the 
first  delivery  of  the  344  housing  solutions  approved  so  far  is  expected  for  mid-2016.    The 
authorities  are  putting  in  place  complementary  sustainability  measures  for  the  housing 
solutions planned.   

The unresolved fate of missing persons resulting from the conflicts of the 1990s remains a 
humanitarian concern in the Western Balkans. As of February 2015, a total of 10 880 people 
were  still  missing  according  to  the  International  Committee  of  the  Red  Cross.  Ascertaining 
the  fate  of  missing  persons  remains  vital  for  reconciliation  and  stability  in  the  region.  The 
number  of  cases  in  Montenegro,  61,  is  low  but  all  efforts  should  be  made  to  ensure 
identification as soon as possible 

Regional  cooperation  and  good  neighbourly  relations  form  an  essential  part  of 
Montenegro’s  process  of  moving  towards  the  EU.  Montenegro  has  continued  to  actively 
participate in regional initiatives, including the South-East European Cooperation Process, the 
Regional Cooperation Council, the Central European Free Trade Agreement and the Energy 
Community Treaty. Montenegro continues to actively support the Coalition for Reconciliation 
Commission (RECOM) and the Igman Initiative on regional reconciliation. 

Fresh  impetus  has  been  given  to  regional  cooperation  through  the  'Berlin  process'  and  the 
Western Balkan six initiative, intensifying cooperation among the Western Balkan countries 
and with the EU, notably regarding our connectivity agenda.  In April, the Western Balkan 
six  countries  reached  an  agreement  on  the  core  transport  network  and  in  June  2015  on 
extending three Trans-European Transport Networks core corridors to the  Western Balkans. 

21 

 
They also identified the priority projects along sections of these corridors to be implemented 
by 2020. To ensure sustainability and also achieve short term results, the countries agreed to 
implement before the next summit in Paris a number of 'soft' measures such as aligning and 
simplifying border crossing procedures, road safety and maintenance schemes. 

Montenegro  continues  to  maintain  good  bilateral  relations  with  other  enlargement 
countries  and  neighbouring  EU  Member  States.    Border  demarcation  agreements  with 
Bosnia and Herzegovina and with Kosovo were signed in the margins of the Vienna Summit 
in August. The delimitation of borders with Croatia and Serbia remains pending. A bilateral 
convention  on  regional  cooperation  under  Article  15  of  the  Stabilisation  and  Association 
Agreement  was  concluded  with  Albania  in  May  and  negotiations  have  been  launched  for  a 
similar agreement with Bosnia and Herzegovina. 

Relations with Albania continue to be good. An economic cooperation agreement was signed 
in  February.  Albania  continues  to  support  Montenegro’s  NATO  accession  process.  The 
economic  cooperation  agreement  was  ratified  in  April.  In  January,  Montenegro  lodged  a 
diplomatic  demarche  with  Albania  on  the  display  of  the  ‘Greater  Albania’  flag  at  the 
residence of the Albanian Prime Minister. The incident was, however, followed by two high-
level visits, which took place in the next few months.  

With  Bosnia-Herzegovina an agreement on consular  protection and visa issues entered into 
force in May and the border agreement signed in August (see above)..  

In September 2014, Montenegro and the former Yugoslav Republic of Macedonia signed an 
agreement  on  the  mutual  recognition  of  driving  licences.  In  February,  the  two  countries 
signed  a  protocol  housing  their  diplomatic  and  consular  offices  at  the  same  site  in  Paris, 
France. The joint committee on EU affairs met in March in Skopje.  

Relations  with  Serbia  remained  good.  The  Speaker  of  the  Serbian  parliament  visited 
Podgorica  in  October  2014.  The  Prime  Ministers  met  at  the  ‘16+1’  SEE-China  summit  in 
Belgrade  in  December.  The  Serbian  Minister  of  Foreign  Affairs  visited  Montenegro  in 
February  in  his  capacity  as  OSCE  Chairperson-in-Office.  A  protocol  on  cooperation  on 
European  integration  was  signed  in  July.  There  were  no  developments  on  issues  related  to 
citizenship rights in the two countries. 

Relations  between  Montenegro  and  Kosovo  remained  good.  There  were  no  developments 
concerning  the  constitutional  recognition  of  the  Montenegrin  minority  in  Kosovo.  In  July, 
Montenegro  ratified  the  agreement  on  police  cooperation.  A  joint  commission  on  border 
demarcation  concluded  its  work  in  June  2015  and  Ministers  signed  the  border  agreement 
during the August Western Balkans Summit (Vienna), now pending parliamentary approval 
by both 

Cooperation  between  Montenegro  and  Turkey  continued,  including  through  the  Joint 
Commission  for  Economic  Cooperation.  In  October  2014,  the  two  countries  signed  an 
agreement on cooperation in military training. In December, Montenegro and Turkey signed 
an  agreement  on  cooperation  on  health  and  medical  sciences.  The  agreements  on  mutual 
assistance on customs issues and on social security were ratified.   

Joint work on finding a solution for the border demarcation between Montenegro and Croatia 
is  ongoing.  In  2014,  the  two  countries  signed  agreements  on  study  programmes  on  military 
engineering and leadership, and on the training of Montenegro cadets in Croatia. 

In  January,  Montenegro  adopted  a  decision  to  open  a  consulate  in  Trieste,  Italy.  A 
cooperation agreement in the area of health and  medical  sciences  was  signed in  October. A 
memorandum on cooperation in the fight against corruption was signed in July.  

22 

 
3. 

ECONOMIC CRITERIA 

Key economic figures 

Gross domestic product per capita (% of EU28 in PPS) 

GDP growth (%) 

2013 

40 

3.3 

2014 

39 

1.4* 

Unemployment rate (female; male) (%) 

19.5 (18.8; 20.1)   18 (18.2; 17.8) 

Economic activity rate for persons aged 20–64: proportion 
of  the  population  aged  20–64  that  is  economically  active 
(female; male) (%) 

65.1 (58.3; 71.9)  67.6 (60.7; 74.5) 

Current account balance (% of GDP) 

Foreign direct investment (FDI) (% of GDP) 

Source: Eurostat, *National Statistics Agency 

-14.6* 

9.7* 

-15.4* 

10.3* 

In  line  with  the  conclusions  of  the  European  Council  in  Copenhagen  in  June  1993,  EU 
accession  requires  the  existence  of  a  functioning  market  economy  and  the  capacity  to  cope 
with competitive pressure and market forces within the Union. 

The  monitoring  of  these  economic  criteria  should  be  seen  in  the  context  of  the  increased 
importance  of  economic  governance  in  the  enlargement  process.  In  order  to  enhance  their 
economic  governance,  in  2015  the  enlargement  countries  were  invited  to  prepare  Economic 
Reform  Programmes  (ERPs),  which  set  out  a  medium-term  macro-fiscal  policy  framework, 
together  with  key  structural  reforms  aimed  at  supporting  the  framework  and  boosting 
competitiveness.  The  ERPs  were  the  basis  for  country-specific  recommendations  jointly 
adopted  by  the  EU  and  the  Western  Balkans  and  Turkey  in  the  Economic  and  Financial 
Dialogue meeting on 12 May 2015. 

3.1.  The existence of a functioning market economy  

Montenegro is moderately prepared in developing a functioning market economy. Some 
progress  was  made  in  addressing  some  economic  challenges,  in  particular  on  fiscal 
consolidation  and  the  business  environment.  The  economy  recovered  in  2013  from  the 
double-dip recession of 2009 and 2012. After a mild slowdown in 2014, economic growth is 
gaining momentum again, boosted by investments. 

The  construction  of  the  Smokovac-Mateševo  priority  section  of  the  Bar-Boljare  highway  as 
well as ongoing investments in energy, transport and tourism will support economic growth. 
However,  challenges  to  macroeconomic  stability  remain.  The  cost  of  the  highway  risks 
challenging fiscal sustainability. Banks are confronted with problems of debt resolution and 
low  profitability  resulting  in  scarce  and  expensive  credit.  Further  efforts  are  necessary  to 
reduce the structurally high unemployment. 

In  line  with  the  2015  ERP  recommendations  and  in  order  to  support  long-term  growth, 
Montenegro should pay particular attention to: 

→  sustaining  its  commitment  to  fiscal  discipline  and  revising  its  public  debt  management 
strategy to reduce the public debt and to improve the sustainability of public finances; 

→ addressing the high burden of non-performing loans (NPL) and improving the efficiency of 
contract enforcement; 

23 

 
→ amending labour legislation to introduce further market flexibility and better target active 
labour market policies as well as further improving the business environment. 

Economic policy essentials 

The  government  remained  committed  to  pursuing  market-based  reforms,  attracting 
FDI,  and  developing  the  private  sector.  In  January  2015,  Montenegro  submitted  its  first 
Economic  Reform  Programme  (ERP),  covering  the  period  2015-2017.  The  ERP  partially 
complied with the targeted policy guidance 
adopted by the Joint Ministerial dialogue of 
6 May 2014. 

recommendation 

the 

A number of major reforms still need to be 
implemented, 
ERP 
including 
recommendations  set  out  below.  These 
include sustaining the commitment to fiscal 
the  voluntary 
discipline, 
bank 
programme, 
restructuring 
improving  the  business  environment,  and 
actively  pursuing  the  reform  of  education 
to align it with labour market conditions. 

implementing 

loan 

to 

1: 

"Sustain 

the 
ERP 
commitment 
fiscal  discipline,  establish  a 
credible track record on the basis of the new rules-
based  fiscal  framework  and  revise  the  public  debt 
management strategy to bring the public debt into a 
the  ERP 
downwards 
in 
medium-term 
context, 
framework. 
municipalities  are  also  called  to  contribute  by 
strengthening  their  own  budgetary  position.  In 
order 
the 
necessary administrative capacity to implement the 
European System of Accounts (ESA 2010)." 

line  with 
this 

transparency,  develop 

trajectory 

improve 

In 

to 

Macroeconomic stability 

strongly 

recovered 

The  fast  recovery  after  each  recession  episode  is  indicative  of  the  Montenegrin 
economy's  resilience  to  shocks.  After  suffering  two  recessions  in  2009  and  2012,  the 
economy 
in  2013,  but 
moderated  its  pace  in  2014.  The  economy  has 
started to pick up speed again in 2015 boosted by a 
surge  in  public  works  and  private  investments, 
particularly  in  the  transport,  energy  and  tourism 
and 
sectors.  However, 
domestic investments have remained subdued, also 
due 
tight  credit  conditions,  high 
unemployment  and  lower  wages.  The  recessions 
marginally reduced the average per-capita income 
to 39% of the EU28 average in 2014, compared to 
40% in 2013. 

to  banks' 

consumer 

spending 

There has been no signficant improvement in Montenegro's trade deficit in the last four 
years.  After  a  substantial  decline  in  2009,  and  a 
somewhat  stronger  export  performance  in  2010 
and 2011, the trade deficit has since remained flat 
(at  40 %  of  GDP).    The  current  account  deficit 
widened in 2014 to 15.4 % of GDP and to 16.1 % 
of  GDP  in  the  four  quarters  to  June  2015  on  the 
back  of  a  higher  trade  deficit  and  lower  transfers 
from  abroad.  Net  financial  inflows  consisted 
mainly of foreign direct investments (FDI), which 
remain above 10 % of GDP. 

The labour market situation improved in 2014, 
but  high  unemployment  is  still  a  concern.  The 
number  of  workers  increased  by  7.1 %  compared 

24 

 
 
with the previous year, and registrations with the employment agency also grew (by 4.7 %). 
This was in part due to efforts to reduce undeclared work. However, employment and activity 
rates  have  remained  low,  at  55.6 %  and  67.6 %  respectively,  and  are  markedly  lower  for 
women. 

recommendation  4: 

After  having  been  stagnant  at  above  19  % 
for  five  consecutive  years,  the  average 
unemployment  rate  fell  to  18.0 %  in  2014 
and  to  17.7 %  in  the  second  quarter  of 
2015.  However,  regional  differences  are 
huge.  The  average  unemployment  rate  in 
the  coastal  region  was  6.7 %,  in  sharp 
contrast  with  the  figure  of  13.4 %  in  the 
central region and 39 % in the north. Youth unemployment (15-24 years old) remained high at 
35.8 %. Two-thirds of the unemployed were without a job for more than two years. 

ERP 
labour 
legislation  to  introduce  further  market  flexibility. 
Reinforce sanctions to discourage undeclared work. 
Better  target  active  policies  for  workers  at  risk  of 
losing  their  employments  and  enhance  labour 
market  participation 
in  view  of  an  ageing 
population." 

"Amend 

Inflation  has  been  largely  driven  by  global  commodity  prices.  In  2014,  lower  import 
prices  for  energy  and  food  coupled  with  falling  wages  contributed  to  a  fall  in  prices.  As  a 
result,  the  average  consumer  price  inflation  contracted  by  0.5 %  in  2014,  compared  with  a 
moderate  increase  of  1.8 %  a  year  before.  Overall,  prices  grew  by  1.1 %  on  average  in  the 
first seven months of 2015, driven by food prices and despite a further decline in oil prices. 

Improvements  were 
the 

The  economic  crisis  put  a  significant  burden  on  public  finances  through  declining 
revenues  and  further  increases  in  mandatory  expenditures.  Over  the  last  few  years  the 
country has recorded large budget deficits of around 5 % of GDP. As a major concern, total 
public  debt  has  practically  doubled  since  2008  to  reach  60.3 %  of  GDP  in  June  2015.  A 
process  of  fiscal  consolidation,  supported 
by  tax  increases  and  expenditure  restraint, 
brought the budget deficit to 1.3 % of GDP 
largely 
in  2014. 
concentrated 
side, 
expanding to 46 % of GDP, up from 43 % 
a year before, following increases in excise 
duties,  vehicle  registration  fees,  insurance 
taxes and real estate tax rates, as well as the 
introduction  of 
to  facilitate 
repayment  of  tax  arrears  and  tightening 
sanctions against tax debtors. On the expenditure side, freezes on pensions and public sector 
wages were enacted. Total spending stands at 47.3 % of GDP compared with 47.7 % a year 
before.  

ERP  recommendation  2:  "Consider  additional 
reforms for attaining long-term sustainability of the 
introduction  of  further 
budget,  such  as 
restriction 
the 
consideration of options for individual participation 
into  the  old-age  pension  system  on  a  mandatory 
basis,  as  well  as  the  implementation  of  a  common 
policy  for  public  sector  wages  in  the  context  of 
rationalisation  and  modernisation  of  the  public 
sector." 

incentives 

the 
early 

retirement 

revenue 

and 

on 

for 

The 2015 budget provides for a substantial increase 
in  capital  spending  to  9.2 %  of  GDP,  most  of  it 
intended for the construction of the highway. With 
this increase, the budget deficit is planned to rise to 
5.3 %  of  GDP.  The  Law  on  Budget  and  Fiscal 
Responsibility  introduced  upper  limits  for  the 
budget  deficit  of  3  %  of  GDP  and  public  debt  of 
60 % of GDP, to be effective as of 2015. However, 
investment projects of national importance (such as 
the  highway)  are  excluded  from 
the  deficit 
calculation.  In  the  first  half  of  2015,  the  headline 
deficit reached 6 % of GDP, due to substantial capital spending resulting from the start of the 

25 

 
 
highway construction, calling for continued fiscal discipline in particular on current spending. 
In  September  2015,  the  government  raised  the  limit  for  state  guarantees  to  allow 
municipalities to clear arrears to the tax administration and suppliers. 

Montenegro's  institutional  public  finance  framework  requires  additional  reforms.  The 
new fiscal policy aims to ensure the sustainability of public finances, while introducing a tax 
shift and incentives in favour of investment. However, its efficiency needs to be tested. The 
budget is also designed to boost capital spending to finance the construction of the highway. 
While  supporting  economic  growth,  this  project  will  also  entail  significant  fiscal  risks. 
Montenegro  will  need  to  make  a  sustained  commitment  to  fiscal  discipline  to  rebuild  fiscal 
buffers, including expenditure-side reforms and a sound public debt management strategy. 

Interplay of market forces 

The privatisation process is quite advanced and just a few firms remain in the privatisation 
programme for 2015. The final instalment for the sale of KAP's aluminium smelter was made 
in August 2015 (see also chapter 8 – Competition policy). The same investor also procured 
the bankrupt Nikšić bauxite mine. However, high production costs threaten the revival of the 
aluminium  industry.  There  is  also  litigation  ongoing  with  one  of  the  former  owners. 
Discrepancies  in  the  ruling  coalition  over  the  concession  of  long-term  leases  for  tourism 
resorts failed to secure a sufficient majority in Parliament. In June 2015, the commercial court 
launched a bankruptcy procedure for the Adriatic shipyard Bijela in order to facilitate the sale 
and restructuring of the company. In 2015, the management of  the bankrupt saltworks Bajo 
Sekulic was temporarily given to the public enterprise National Parks of Montenegro. 

Market entry and exit 

The recovery of the economy is also reflected in the growing number of new companies. 
In 2014 there were 3,179 new companies established, 91 % of which as limited liability firms. 
The cost of setting up new businesses was reduced through the introduction of lower fees for 
public  utility  connections  on  building  land,  and  tax  exemptions  for  companies  in  strategic 
sectors  (i.e.  tourism,  energy  and  food  production).  However,  there  is  still  room  for  further 
improvement for starting a business, in particular by streamlining administrative procedures. 
Scarce and expensive bank loans, in particular for small and medium enterprises (SMEs), also 
hinder enterprise creation and operation. To support investments, Montenegro should further 
simplify  the  regulatory  environment,  facilitate  the  issuing  of  construction  permits  and 
improve its land registration system, in accordance with ERP recommendation 7. 

Legal system 

Licensing,  contract  enforcement,  access  to  credit  and  cumbersome  tax  administration 
procedures  are  the  main  obstacles  for 
the  business  community.  Progress  has 
been  made  on  reducing  the  number  of 
documents  needed  for  customs  procedures 
through  the  establishment  of  a  centralised 
registry  and  by  exempting 
electronic 
printed 
providing 
companies 
documents. 
e-
of 
context 
Government,  300  government  sites  have  so  far  been  connected  to  a  single  communications 
network and begun to provide services to corporate users. However, full interoperability has 
not been achieved. Electronic registration of companies, and its extension to all regional tax 
administration  offices,  remains  to  be  completed.  The  number  of  enforcement  cases  in  the 
courts has been significantly reduced since the introduction of a bailiff system in April 2014. 

ERP  recommendation  7:  "Further  improve  the 
the 
business  environment  by  ensuring 
timely 
"regulatory 
so-called 
implementation  of 
guillotine"  (simplification)  project,  enhancing  the 
functioning of one-stop shops at municipal level for 
the  issuing  of  construction  permits  and  the  quality 
of the land registry."  

from 
In 

the 

the 

26 

 
Amendments to the Law on Enforcement and Securing of Claims replaced three-judge panels 
with  decisions  by  individual  judge,  speeding  up  court  enforcement  proceedings  and 
foreclosure  of  collateral.  The  number  and  the  value  of  commercial  disputes  successfully 
resolved tripled in 2014, reaching a total of 869 cases. 

Financial sector development 

The  recovery  of  the  banking  system  remained  unfinished  given  the  need  for  further 
balance  sheet  adjustments.  The  Greek  crisis  did  not  have  any  significant  effect  on 
Montenegro's  financial  sector  as  none  of  the  14  banks  operate  with  majority  Greek  capital. 
Banks'  deposits  have  recovered  to  pre-crisis  levels,  but  the  recovery  of  credit  is  slower  and 
more uneven. In June 2015, the stock of loans remained 15 % below its 2009 level. Although 
financial results remained positive and capital was reinforced, banks confront problems with 
debt  resolution  and  low  profitability  related  to  high  overhead  costs  and  scale  inefficiencies 
that add to high risk premiums. As a result, the decline in the interest rate on loans has been 
marginal, averaging 8.93 % in July 2015 compared to 9.55 % a year before. In July 2015, the 
Central Bank of Montenegro (CBCG) approved a decision on maximum interest rates on new 
loans in order to facilitate their reimbursement and thus reduce credit risk. However, given the 
weak profitability of banks, this measure could instead result in further restriction of lending. 

loans 

In  July  2015,  the  non-performing  loans  (NPL)  ratio  remained  high  at  16.4 %  of  total  loans. 
Credit  risk  remained  concentrated,  with  three  banks  totalling  63 %  of  the  NPL  stock.  This 
challenge is addressed in the Law on Voluntary Financial Restructuring of Debts to Financial 
Institutions,  known  as  the  'Podgorica  Approach'.  Adopted  in  April  2015,  it  provides  a 
framework for voluntary out-of-court proceedings for restructuring the debts of economically 
viable  companies.  In  August  2015,  the  parliament  adopted  the  law  for  conversion  of  Swiss 
franc 
into  euro.  The  measure 
concerns indexed loans totalling some € 30 
million of one bank, which has challenged 
the  measure  at  the  constitutional  court.  To 
improve 
some 
subsidiaries  sold  part  of  their  troubled 
loans  to  parent  banks  but  also  to  factoring 
companies set up by the latter, bringing up 
the  need  for  a  regulatory  framework  for 
effective  supervision  of  these  companies 
too, as also underlined by ERP recommendation 3. 

ERP recommendation 3: "Implement the planned 
voluntary  financial  restructuring  programme  (the 
so-called "Podgorica approach") to address the high 
burden  of  non-performing  loans  on  bank  balance 
sheets from a flow perspective. In order to address 
the  NPL  stock  issue,  improve  deadlines  and 
efficiency  of  contract  enforcement.  Introduce 
effective  supervision  of  factoring  companies  to 
improve the transparency of the financial system." 

their  balance 

sheets, 

The  size  of  the  non-banking  sector  remained  modest.  In  2014,  the  turnover  of 
Montenegro's Stock Exchange reached 3.2 % of GDP, the highest level in the last five years, 
thanks to trading –for the first time– in corporate bonds, and in government coupon bonds on 
the secondary market. Yet, the number of financial instruments remained limited. In 2014, the 
value of insurance and leasing contracts totalled 2.0 % and 3.4 % of GDP respectively. 

The  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the 

3.2 
Union  

Montenegro  is  moderately  prepared  in  its  capacity  to  cope  with  competitive  pressure 
and market forces within the Union. Some progress was made, particularly on launching 
several infrastructure and tourism investment projects and some further improvement  of  the 
business environment.  

Montenegro's economy suffers from low competitiveness, especially as regards industrial and 
agricultural products. Montenegro should improve its export capacities by gradually bringing 

27 

 
market  standards  for  its  products  and  industries  in  line  with  EU  standards.  Competitiveness 
will also improve as a result of investments in energy, transport and tourism. Major reforms 
still  need  to  be  implemented  to  strengthen  the  country's  physical  infrastructure  and  human 
capital,  to  further  improve  the  business  environment,  and  to  ensure  a  predictable  and 
supportive regulatory environment.  

In line with the ERP recommendations and in order to support long-term growth, Montenegro 
should pay particular attention to: 

→  actively  continuing  education  reform  in  order  to  increase  the  quality  of  education,  by 
teaching basic and transversal skills and focusing on learning outcomes; 

→  aligning  with  EU  food  safety,  sanitary  and  phytosanitary  standards  in  order  to  receive 
accreditation for exporting agricultural and food products to the EU; 

→ strengthening its transport development strategy. 

Human and physical capital 

The  persisting  challenge  of  skills  mismatches  requires  more  effective  active  labour 
market  policy  measures  and  a  higher  quality  education  system  that  is  responsive  to 
labour market needs. Funds for active labour market programmes have remained limited and 
mainly  focused  on  young  graduates  and  seasonal  workers.  There  is  low  labour  mobility 
between regions, including during the peak 
tourist  season.  Efforts  to  promote  lifelong 
learning  and  ensure  a  higher  quality  of 
education  at  all  levels  are  ongoing,  but 
have  yet 
to  yield  clear  results.  (See 
chapters  19  –  Social  Policy  and 
Employment,  and  26  –  Education  and 
Culture). 

ERP  recommendation  5:  "Actively  continue 
education  reform  with  a  view  to  better  aligning 
education and skills with labour market needs, and 
strengthening  cooperation  between  education  and 
business."  

Montenegro made further progress on some major infrastructure projects. In 2014, the 
value  of  investments  in  fixed  assets  rose  by  5  %  to  some  15  %  of  GDP,  of  which  56  %  in 
construction and 37 % in equipment. In 2015, works started on the highway and the building 
of  three  large  seaside  tourism  resorts  continued.  The  power  system  network  is  gradually 
improving and several investments are in progress, including the interconnection cable with 
Italy,  two  wind-farms,  and  several  small  hydropower  plants.  However,  the  decision  for 
construction  of  a  second  block  in  the 
thermal  plant  Pljevlja  was  delayed,  and  the 
construction  of  large  hydropower  plants 
stalled.  While 
investment 
increased  in  recent  years,  Montenegro  is 
advised  to  bring  its  transport  development 
strategy in line with the regional agenda on 
connectivity,  as  per  ERP  recommendation 
6. As regards the requirement to establish a 
planning  and  funding  mechanism,  Montenegro  set  up  a  National  Investment  Committee  for 
the development of a single sector pipeline for priority infrastructure projects. 

ERP  recommendation  6: 
the 
transport development strategy ensuring alignment 
with  the  regional  agenda  on  connectivity,  with  a 
particular  focus  on  the  core  investment  priorities 
(core  network),  and  establish  a  credible  planning 
and  funding  mechanism  in  the  form  of  a  single 
sector pipeline."  

infrastructure 

"Strengthen 

Montenegro's  innovation  and  research  capacity  remained  limited.  Funds  for  research  and 
development (R&D) programmes have increased by more than 30 % in 2014, although gross 
expenditure  on  R&D  remained  very  modest  (around  0.38 %  of  GDP).  In  July  2015 
construction  work  started  on  the  science  and  technology  park  in  Nikšić  with  the  aim  of 

28 

 
connecting  science  and  business  sectors.  The  centre  will  comprise  laboratories  of 
biochemistry and industrial design. 

Sectoral and enterprise structure 

The structure of the economy has changed little over the past five years. Services remain 
the  main  engine  of  the  Montenegrin  economy,  producing  more  than  70 %  of  gross  value 
added, while industry accounts for 11 % (with 6 % coming from utilities), agriculture 8 % and 
construction 4 %. The manufacturing sector is being transformed after several years of being 
dominated  by  metals  production.  Other  industries  -like  pharmaceuticals-  are  gaining  in 
importance, but the production of competitive high value-added products is very limited.  

Industry  and  construction  performance  recovered  in  2015,  while  the  more  resilient 
tourist industry expanded further. After registering negative output in five out of the seven 
years since the outbreak of the economic crisis, industrial production expanded by 12.9 % y-
o-y  in  the  first  seven  months  of  2015.  However,  production  was  dominated  by  low  value-
added industrial products. In the first half of 2015, the value of construction works increased 
by  9.7 %  y-o-y,  compared  to  2.0 %  growth  in  the  whole  2014.  In  the  first  seven  months  of 
2015,  tourism  surged  21.3 %  y-o-y,  fuelling  a  number  of  sectors  of  the  economy  like 
transport, accommodation, telecommunications, retail trade and restaurants. 

The  vast  majority  of  companies  (around  23,000)  are  small,  with  some  200  classified  as 
medium-sized and 100 as large. Access to finance remains a particular challenge for SMEs. 
Public  sector  support  for  SMEs  has  been  limited  and  mainly  relies  on  Investment  and 
Development  Fund  (IDF)  loan  support,  which  in  2014  totalled  €71  million  and  additional 
€ 31 million in the first half of 2015. The Employment Agency also provided loans totalling 
€ 260,000  in  2014  and  € 15,000  in  the  first  half  of  2015,  to  finance  new  job  creation.  It  is 
important  that  Montenegro  follows  up  on  the  ERP  reform  measures  intended  to  strengthen 
SMEs.  Further  controls  on  excise  goods  (in  particular  tobacco)  and  labour  inspections  are 
necessary to reduce the large informal economy. 

State influence on competitiveness 

Subsidies  have  been  significantly  reduced  following  the  liquidation  of  the  former 
aluminium conglomerate. The government provided some EUR 460 million in state aid to 
companies in the 2007-2014 period. The support was more pronounced in the years following 
the recessions, when substantial state guarantees were activated. The government maintained 
a  favourable  investment  policy  including  a  flat  tax  regime  with  low  tax  rates,  and  the 
possibility to transfer profits, dividends and interest earnings without restrictions. In 2015, in 
an  effort  to  further  encourage  the  key  sectors  of  the  Montenegrin  economy,  tax  exemptions 
were  introduced  for  the  building  of  new  facilities  in  tourism,  energy  and  food.  However, 
Montenegro  should  avoid  specific  measures  aimed  at  only  some  businesses  as  these  could 
potentially distort the market and create problems over state aid (see chapter 8 – Competition, 
chapter 16 - Taxation). The 2015 general government budget provided for a modest allocation 
of state aid (0.6 % of GDP for subsidies plus 0.3 % of GDP for state guarantees). 

Economic integration with the EU 

The  Central  European  Free  Trade  Agreement  (CEFTA)  countries  and  the  EU  remain 
Montenegro’s main trading partners. In 2014, merchandise exports to the EU represented 
36 % of Montenegro’s total sales abroad compared with 46 % to CEFTA. Yet, the EU was the 
major source of goods imports, accounting for 46 % of total imports as compared with 38 % 
from CEFTA. In services and foreign investment, Russia remained Montenegro’s single most 
important partner, accounting for 30 % of tourism stays and 25 % of FDI inflows (mostly real 
estate).  However,  investments  from  Russia  declined  in  2014  by  10 %  compared  with  the 

29 

 
previous  year.  In  2014,  the  EU  accounted  for  20 %  of  tourism  and  39 %  of  foreign 
investment, the latter rising by 6 % y-o-y. 

the 

low 

reflecting 

Trade  openness  in  Montenegro  is  high 
strong 
(101.2 %), 
dependency on goods imports and services 
exports.  However,  exported  goods  consist 
predominantly  of 
added  value 
products,  and  only  a  few  companies  trade 
internationally.  To  address  this  issue,  the 
government 
launched  a  direct  support 
scheme  for  SMEs'  harmonisation  with 
international  standards  of  business.  In  line 
with ERP recommendation 8, Montenegro needs to make more progress on its alignment with 
EU product and quality standards so that it can access relevant EU markets. 

ERP  recommendation  8:  "Make  further  progress 
with a comprehensive and strategic approach in the 
field  of  EU 
food  safety  and  sanitary  and 
phytosanitary standards to receive accreditation for 
exporting agricultural and food products to the EU. 
Efforts  in  this  direction  should  commence  with 
those  products  where  preparations  are  advanced 
and  where  Montenegro  sees  the  biggest  export 
potential."  

4.  

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

4.1.   Chapter 1: Free movement of goods 

The free movement of goods ensures that many products can be traded freely across the EU 
based on common rules and procedures. Where products are governed by national rules the 
principle of the free movement of goods prevents these creating unjustified barriers to trade. 

Montenegro  is  moderately  prepared  for  the  free  movement  of  goods.  Good  progress  was 
made, particularly on its strategic and legislative framework. 

In the coming year, Montenegro should in particular: 

→  strengthen  the  capacity  and  increase  the  resources  allocated  to  the  relevant  horizontal 
bodies. 

→ implement its plan for legislative alignment on the free movement of goods.                         

As  regards  general  principles,  in  October  2014  Montenegro  adopted  its  strategy  to 
implement the acquis under the free movement of goods chapter and a five-year action plan,  
and submitted an updated draft action plan for compliance with Articles 34-36 of the Treaty 
on  the  Functioning  of  the  European  Union  (TFEU)  to  the  Commission  in  summer.  The 
capacity, coordination role and competence of the Department for Quality Infrastructure have 
been strengthened, though as yet no legal basis is in place setting out its role in the system of 
government. Resources remain insufficient, which endangers the implementation of the new 
strategy on free movement of goods. 

On  horizontal  measures,  some  progress  was  achieved:  on  standardisation,  the  2010-2018 
strategy  and  2015  action  plan  were  adopted  in  November  2014.  The  Institute  for 
Standardisation of Montenegro (ISME) adopted 1 133 Montenegrin standards. In December, 
ISME  and  the  European  Telecommunication  Standards  Institute  signed  a  memorandum  of 
understanding  recognising  ISME  as  a  national  standards  organisation  and  meeting  a 
precondition for transposition of standards in telecommunications. However, ISME’s capacity 
and  resources  remain  at  critical  level,  which  risks  undermining  its  ability  to  keep  up  the 
necessary pace of change on standardisation. 

The number of accredited conformity assessment bodies  increased  to 24. Two more are in 
the process of being accredited, but their overall number remains low. 

30 

 
 
On accreditation, in November Montenegro adopted its 2015-2018 strategy for accreditation 
and  2015  action  plan.  In  July  amendments  to  the  law  on  accreditation  were  adopted  by  the 
government  to  strengthen  the  cross-border  accreditation  policy,  However,  the  Accreditation 
Body  of  Montenegro  (ATCG)'s  limited  financial  resources  put  the  implementation  of  the 
strategy at risk, impede it in raising of public awareness of the benefits of accreditation and 
prevent it from participating in the activities of the European Cooperation for Accreditation. 

On  metrology,  the  Croatian  Accreditation  Agency  and  ATCG  have  accredited  three  further 
calibration  laboratories:  one  on  time  and  frequency,  one  on  pressure  and  one  on  electrical 
quantity, bringing the total number to six. 

On  market  surveillance,  the  law  on  general  product  safety  was  adopted  in  October  2014. 
Amendments  to  the  law  on  inspections  were  adopted  in  February,  while  in  April  the 
government adopted a decree determining which product groups would be subject to market 
supervision, and another establishing the coordination body for market surveillance. 

On product safety, in 2014 2 873 inspections were performed in the reporting period, which 
identified 131 dangerous products types (12 045 items, 5 939 of which permanently taken of 
the  market).  Five  further  inspection  services  were  integrated  into  the  Administration  for 
Inspection Affairs in February. However, the Administration’s budget remains insufficient. 

On  ‘Old  Approach’  product  legislation,  18  rulebooks  were  adopted,  including  on 
pharmaceutics,  textile,  footwear,  and  crystal  glass.  In  January,  the  government  adopted  its 
2015-2018 national strategy for managing chemicals and its related action  plan. Some steps 
have  been  taken  to  ensure  partial  alignment  with  the  provisions  of  REACH,  however 
administrative capacity necessary to implement REACH also needs strengthening. 

For  the  ‘New  and  Global  Approach’  product  legislation,  11  rulebooks  were  adopted, 
including on toy safety and on electromagnetic compatibility, though some were not yet fully 
aligned to the acquis. 

On procedural measures, the law on weapons was adopted in February. 

4.2.  Chapter 2: Freedom of movement for workers 

Citizens of one Member State have the right to work in  another Member State  and must  be 
given the same working and social conditions as other workers. 

Preparations  in  this  area  are  still  at  an  early  stage.  No  progress  was  made  on  freedom  of 
movement for workers.   

On  access  to  the  labour  market,  the  new  law  on  foreigners  was  adopted  in  December.  It 
imposes additional limitations on the employment of foreigners in Montenegro and needs to 
be  brought  in  line  with  the  acquis.  Its  enforcement  was  put  on  hold  due  to  administrative 
constraints. 

On  the  coordination  of  social  security  systems,  negotiations  with  Bosnia-Herzegovina, 
Bulgaria and Romania on a bilateral agreement on social security are ongoing.  

4.3.  Chapter 3: Right of establishment and freedom to provide services 

EU natural and legal persons have the right to establish themselves in any Member State and 
to provide cross-border services. For certain regulated professions, there are rules on mutual 
recognition of qualifications. Postal services are gradually being opened up to competition. 

Montenegro is moderately prepared in these fields. Some progress was made on the right of 
establishment  and  freedom  to  provide  services.  In  the  coming  year,  Montenegro  should,  in 
particular: 

31 

 
→  continue  preparations  to  align  its  legislation  on  the  mutual  recognition  of  professional 
qualifications with the acquis and to align with the Services Directive. 

On the right of establishment, electronic company registration is not yet fully available and 
has  yet  to  be  extended  to  all  regional  tax  administration  offices.  Following  the  decision  to 
reduce municipal fees for construction permits, local one-stop shops for issuing construction 
permits need to be established. 

On  the  freedom  to  provide  cross-border  services,  preparations  for  alignment  with  the 
Services  Directive  continued,  most  notably  by  completing  the  process  of  screening  national 
legislation.  The  final  internal  screening  report  has  been  prepared  and  the  action  plan  for 
transposition of the Services Directive was adopted in June.  

There were no further legislative activities in the area of postal services. The postal service 
(Posta  Crne  Gore)  remained  in  the  2015  privatisation  plan,  which  proposes  a  public-
partnership model for it. 

On mutual recognition of professional qualifications, Montenegro started implementing its 
national  plan  to  develop  qualifications  for  regulated  professions  and  its  2013-2018  action 
plan. 

4.4.  Chapter 4: Free movement of capital 

In  the  EU,  capital  and  investments  must  be  able  to  move  without  restriction  and  there  are 
common rules for cross-border payments. Banks and other economic operators apply certain 
rules to support the fight against money laundering and terrorist financing. 

Montenegro  is  moderately  prepared  in  this  area.  Some  progress  was  made  on  payment 
systems.   

There were no developments on capital movements and payments. 

To further harmonise national legislation on payment systems with the acquis, in November 
the  Central  Bank  adopted  a  number  of  rules  implementing  the  new  law  on  payment 
operations. The rules entered into force together with the law in January. 

On the fight against money laundering, activities implemented under the previous strategy 
included  the  training  of  state  employees  in  2014;  the  focus  now  needs  to  shift  to  reporting 
entities. The IT system of the financial intelligence unit was upgraded. Although reforms are 
progressing, Montenegro still needs to put in place a solid prevention system for anti-money 
laundering. A new law, adopted in 2014, seeks to incorporate the EU Fourth Directive and the 
standards of the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money 
Laundering Measures (MONEYVAL). 

4.5.   Chapter 5: Public procurement   

EU  rules  ensure  public  sector  procurement  of  goods  and  services  in  any  Member  State  is 
open to all EU companies on the basis of non-discrimination. 

Montenegro  is  moderately  prepared  on  public  procurement,  which  is  an  area  particularly 
vulnerable to corruption. Good progress was achieved with the adoption of amendments to 
the  public  procurement  law  at  the  end  of  2014.  However,  more  work  is  needed  to  prevent 
corruption occurring during the procurement cycle. Alignment with the acquis on concessions 
is  at  an  early  stage.  More  work  is  needed  to  strengthen  implementation  and  enforcement 
capacity at all levels.  

In the coming year Montenegro should in particular: 

32 

 
→ start to implement a new strategy to develop its public procurement system to ensure that it 
works effectively, efficiently, and transparently; 

→ further strengthen the implementation and enforcement capacity of its public procurement 
system at all levels, including on e-procurement, the monitoring of contracts and supervision 
and reporting on procurement procedures; 

→  implement  a  legal  alignment  plan  to  ensure  full  harmonisation  with  the  2014  EU 
procurement directives, especially on concessions. 

Institutional set-up and legal alignment 

The  institutional  and  legal  framework  on  public  procurement  is  broadly  aligned  with  the 
acquis,  apart  from  on  concessions,  where  alignment  with  the  EU  Directive  has  yet  to  be 
achieved.  

Good  progress  was  achieved  at  the  end  of  2014  with  the  adoption  of  amendments  to  the 
public procurement law. The amendments brought the law closer to EU rules on defence and 
security procurement and improved the efficiency of procurement processes. Montenegro now 
needs  to  address  remaining  gaps  and  ensure  full  alignment  with  the  2014  EU  directives  on 
public procurement, including in particular the Directive on Concessions.  

In  June  2015,  Montenegro  became  a  full  member  of  the  WTO  Agreement  on  Government 
Procurement. Montenegro will need to ensure that bilateral agreements concluded with non-
EU  countries  do  not  unduly  restrict  competition  and  fully  comply  with  the  EU  acquis  and 
related TFEU provisions on public procurement. 

Montenegro’s  2011-2016  strategy  to  develop  the  public  procurement  system  is  being 
implemented. A regular reporting mechanism has been set up and is functioning well. A new 
strategy  is  expected  to  focus  on  reaching  full  alignment  with  the acquis  and  to  set  out  how 
Montenegro will ensure that it has strong implementation capacity at all levels. 

Montenegro’s  Public  Procurement  Administration  (PPA)  is  responsible  for  implementing 
the  law  on  public  procurement  and  monitoring  and  implementing  the  2011-2016  public 
procurement development strategy. The PPA is an independent state body. 

Implementation and enforcement capacity 

Montenegro’s public procurement market as a percentage of gross domestic product (GDP) 
stood  at  9.6 %  in  2014.  This  represents  a  slight  increase  compared  with  2013,  both  in  the 
value  and  in  the  number  of  contracts.  The  use  of  less  transparent  procurement  procedures 
stood at 9 % in 2014, a level similar to previous years. 

Better monitoring of contract awards and contract implementation is needed. While the 2014 
amendments  to the procurement law gave the public inspection service more powers in this 
area,  it  still  does  not  have  sufficient  capacity  to  deal  with  this  issue.  Meanwhile,  better 
internal auditing within contracting authorities remains crucial for improving monitoring and 
verifying contract implementation (see also Chapter 32 — Financial control). 

Contracting authorities' capacities to manage public procurement processes improved. The 
planning,  preparation  and  implementation  of  public  procurement  are  generally  in  line  with 
transparency and efficiency principles. However, public procurement suffers from an overly 
formalistic  approach  and  the  prevalence  of  price  as  the  only  award  criterion.  Montenegro 
needs to invest in better data management to trace the complete procurement cycle and make 
the system more user-friendly. 

33 

 
The  PPA’s  capacity  to  promote  and  enforce  public  procurement  rules  and  monitor  the 
procurement  market  improved.  However,  the  PPA  needs  to  invest  more  in  assessing  the 
performance of the procurement processes, the risk of irregularities and the factors that reduce 
the  competitiveness  and  efficiency  of  public  procurement.  The  PPA’s  resources  remain 
insufficient to address this task effectively. The 2014 amendments to the public procurement 
law  tightened  the  liability  of  contracting  authorities  and  stipulate  the  level  of  fines  for 
infringements committed. 

A  public  procurement  certification  and  training  programme  is  operational.  So  far, 
approximately  48%  of  the  procurement  officers  employed  are  certified.  The  training 
programmes  need  to  focus  more  on  procurement  planning  and  contract  management.  The 
number of contracting authorities was reduced from 698 to 621 in 2014; given the size of the 
country, this reduction should continue. Montenegro has not set up a centralised procurement 
body  and  joint  procurement  is  carried  out  on  an  ad  hoc  basis  only.  A  shift  to  full  e-
procurement is needed and framework contracts need to be used more systematically. 

A  regulatory  and  institutional  framework  is  in  place  on  integrity  and  conflict  of  interest 
mechanisms in public procurement. The framework also includes a number of improvements 
adopted at the end of 2014, which now need to be applied effectively. Montenegro also needs 
to  set  up  a  risk  assessment  methodology  to  better  identify  potential  integrity  problems.  The 
number  of  integrity-related  reports  remains  low,  while  surveys  of  public  opinion  show  that 
public procurement continues to be perceived as a significant source of corruption. 

Efficient remedies system 

The  right  to  legal  remedy  is  stipulated  in  the  Constitution  and  the  law  on  public 
procurement.  The  legislation  on  review  procedures  is  broadly  in  line  with  the  relevant  EU 
acquis and general EU Treaty principles. The remedies system includes administrative review 
by  the  State  Commission  for  the  Control  of  Public  Procurement  (PPC),  which  is  an 
independent  administrative  body,  reporting  annually  to  parliament.  The  Concessions 
Commission  is  responsible  for  remedies  for  awarding  concessions,  but  this  area  is  not  yet 
aligned with the acquis. The decisions of the PPC and the Concessions Commission are final, 
but can be challenged before the Administrative Court of Montenegro. 

In  2014,  the  PPC  upheld  53 %  of  appeals  submitted  and  cancelled  388  procurement 
procedures,  a  level  similar  to  the  previous  year.  The  number  of  PPC  decisions  rose  for  the 
third  consecutive  year.  In  2014,  it  rose  by  5 %  compared  with  2013,  indicating  increasing 
implementation capacity. There was also a 5 % fall in the number of Administrative Court 
rulings  annulling  decisions  of  the  PPC.  However,  the  43 %  rejection  rate  for  2014  remains 
significant; this partially derived from discrepancies between rules on public procurement and 
administrative  procedure,  which  are  undermining  the  effectiveness  of  the  remedies  system. 
Montenegro also needs to improve the transparency of PPC rulings by upgrading its register 
of  decisions  and  introducing  user-friendly  online  search  functions.  The  PPC  secretariat  is 
understaffed at present, particularly considering the steady increase in the number of appeals. 

34 

 
 
 
 
 
4.6.  Chapter 6: Company law 

The  EU  has  common  rules  on  the  formation,  registration,  and  disclosure  requirements  of  a 
company,  with  complementary  rules  for  accounting  and  financial  reporting,  and  statutory 
audit. 

Montenegro  is  moderately  prepared  on  company  law.  Some  progress  was  made  on 
legislative alignment. 

National legislation on company law is largely in line with the acquis. Work on legislative 
alignment continues, in particular on transparency, and takeover bids. Alignment in the area 
of  cross-border  mergers  must  also  be  assured.  Montenegro  is  developing  online  electronic 
company registration to facilitate its business environment, but it is not yet fully operational.  

Progress was made on corporate accounting and auditing through the signature in May of 
the contract under the World Bank project for the setting up and operation of a public audit 
oversight body and a related system of quality assurance. Results are expected by mid-2016. 
Montenegro is advancing with draft legislation to comply with the most recent EU legislation 
on accounting and auditing. This work remains to be completed. 

4.7.  Chapter 7: Intellectual property law 

The  EU  has  harmonised  rules  for  the  legal  protection  of  copyright  and  related  rights.  This 
covers, 
trademarks,  designs, 
biotechnological inventions and pharmaceuticals.  

instance,  computer  programs,  broadcasting  and 

for 

Montenegro  is  well  advanced  on  intellectual  property  law.  Some  progress  was  made  in 
intellectual  property.  Legislation  on  intellectual  property  rights  (IPR)  is  largely  in  line  with 
the acquis. However, insufficient IT and human resources at the IPO have to be addressed.  

In the coming year, Montenegro should in particular: 

→  further  strengthen  coordination  of  all  intellectual  property  rights-related  bodies  through 
formal cooperation and effective enforcement mechanisms; 

→  improve  its  track  record  on  investigations,  prosecutions  and  judicial  treatment  of 
violations. 

There  were  no  new  developments  on  copyright  and  neighbouring  rights.  Copyright 
legislation  is  currently  being  reviewed  with  the  law  on  the  protection  of  topographies  for 
semiconductor products. 

On industrial property rights, the new law on patents was adopted in July. The trademark 
classification online database became operational in October 2014. 

The IT infrastructure of the Intellectual Property Office (IPO) remains weak. 

On  enforcement,  a  coordination  body  for  all  IPR-active  institutions  has  not  yet  been 
established.  Training  for  all  IPR-related  institutions  intensified  during  the  reporting  period. 
The  enforcement  track  record  of  Montenegro’s  customs  administration  and  market 
inspectorate is good. However, criminal prosecution remains unsatisfactory. 

The  new  law  on  courts  abolished  the  Commercial  Court  in  Bijelo  Polje,  leaving  the 
Commercial  Court  in  Podgorica  the  only  one  of  its  kind  in  Montenegro.  Jurisdiction  in  all 
IPR-related disputes has been transferred to this court as the court of first instance. 

A number of activities were undertaken to raise awareness on IPR matters among the general 
public. 

35 

 
4.8.  Chapter 8: Competition policy 

EU rules protect free competition. They include anti-trust rules against restrictive agreements 
between companies and abuse of dominant position. EU rules also prevent governments from 
granting state aid which distorts competition.  

Montenegro is moderately prepared on competition policy. Some progress was made in this 
field.  Nonetheless,  state  aid  remains  an  issue  of  concern,  particularly  the  notification  and 
compatibility of new legislation and aid to large investment projects and the KAP aluminium 
plant. Administrative capacity needs to improve, both on antitrust and state aid. In the coming 
year, Montenegro should in particular: 

→ complete the alignment of the state aid control law with the acquis on state aid procedural 
rules; 

→ ensure the operational independence of its state aid authority. 

On  antitrust  and  mergers,  three  bylaws  regulating  block  exemptions  were  adopted  by  the 
government  in  December.  All  secondary  legislation  pertaining  to  the  law  on  protection  of 
competition  has  now  been  adopted.  However,  the  first  three  years  of  implementation  of  the 
law have shown some shortcomings in procedures and penalties 

Despite the 28 % increase in the 2015 budget of the Agency for the Protection of Competition 
(APC),  its  administrative  capacity  remains  insufficient.  The  APC’s  enforcement  record  has 
improved, particularly on antitrust policy, but must be further strengthened. The APC closed 
four  antitrust  cases.  Two  of  the  four  decisions  were  challenged  before  the  Administrative 
Court, which upheld the decisions. The APC decision to conduct its first dawn raid was also 
challenged before the Administrative Court, but the court confirmed its legality. The work of 
the APC is also becoming more transparent. 

The  decisions  of  the  Administrative  Court  are  improving.  However,  the  fact  that  fines  can 
only be imposed through misdemeanour courts remains an issue of concern. 

On state aid, Montenegro brought its legislation closer to EU law, although, the law on state 
aid control still needs to be brought in line with the acquis and with Montenegro’s state aid 
obligations  under  the  Stabilisation  and  Association  Agreement  (SAA)  on  procedural  rules. 
Montenegro  has  also  improved  the  quality  of  state  aid  reporting  and  day-to-day  operations. 
An  action  plan  with  a  clear  timetable  for  the  alignment  of  the  remaining  aid  schemes 
incompatible with the SAA has been sent to the European Commission. 

The  independence  of  the  SACC  (State  Aid  Control  Commission)  and  the  State  Aid Control 
Unit (SACU) is an issue of concern. The legal provisions on the establishment of the SACC, 
which  allow  representatives  of  the  main  grantors  of  state  aid  to  be  selected  as  SACC 
members, create potential for conflicts of interest. Although the administrative capacity of the 
SACU is gradually improving, it is still operating with limited staff. The current enforcement 
record  does  not  demonstrate  that  the  SACC's  has  the  necessary  credibility,  powers  and 
resources  for  the  full  application  of  state  aid  rules.  The  SACC  is  rarely  notified  on  legal 
initiatives with potential state aid impact, even in landmark cases such as the construction of 
the Bar-Boljare highway, or on exemptions from tax and custom duties. To remedy this, the 
government  amended  in  June  its  rules  of  procedure,  obliging  all  authorities  to  consult  the 
SACC  on  their  draft  legislation  prior  to  submission  to  the  government.  In  2014,  the  SACC 
launched  only  one  case  on  its  own  initiative  --  on  the  law  on  postal  services.  The  State  aid 
authority  still  needs  to  ensure  effective  enforcement  of  State  aid  rules,  notably  through  an 
increased  number  of  ex  post  investigations  on  unlawful  aid.  Montenegro  still  needs  to 

36 

 
 
demonstrate that the resolution of the KAP bankruptcy proceedings complies with State aid 
rules.  

Some progress has been made on liberalisation. The current legislation governing services of 
general economic interest has been screened to set up a state aid inventory. 

4.9.  Chapter 9: Financial services 

EU rules aim at ensuring fair competition between and the stability of financial institutions, 
namely  banking,  insurance,  supplementary  pensions,  investment  services  and  securities 
markets. They include rules on authorisation, operation and supervision of these institutions. 

Montenegro  is  moderately  prepared  in  the  area  of  financial  services.  Some  progress  was 
made in this field. 

On  banks  and  financial  conglomerates,  in  October  2014  the  Central  Bank  passed  a  set  of 
implementing decisions relating to the law on consumer credit. In November, amendments to 
the decision on minimal standards for management of credit risk in banks were adopted. The 
Central  Bank  amended  its  decision  on  the  method  of  calculation  and  disclosure  of  effective 
interest rates on loans and deposits in order to bring it into line with the EU acquis. 

On  insurance  and  occupational  pensions,  the  law  on  bankruptcy  and  liquidation  of 
insurance undertakings needs to be adopted. 

On financial market infrastructure, the system of settlement cycles on the second business 
day  was  introduced  in  January.  Rules  on  registration  of  issuers  of  securities  with  the 
Securities and Exchange Commission were adopted. 

On  securities  markets  and  investment  services,  the  Securities  and  Exchange  Commission 
adopted secondary legislation implementing the law on investment funds and improving the 
way of doing business in the capital market. 

4.10.  Chapter 10: Information society and media 

The EU supports the good functioning of the internal market for electronic communications, 
electronic  commerce  and  audio-visual  services.  The  rules  protect  consumers  and  support 
universal availability of modern services. 

Montenegro  is  moderately  prepared  in  the  area  of  information  society  and  media.  Some 
progress  was  made  in  the  last  year.  The  independence  of  the  Agency  for  Electronic 
Communications and Postal Services (EKIP) and the Agency for Electronic Media continues 
to be undermined, albeit to a lesser extent than previously.  

In the coming year, Montenegro should in particular: 

→ ensure the independence of the public broadcaster through appropriate financial resources. 

On electronic  communications  and  information  and  communications  technologies,  the 
digital  switchover  was  completed  in  2015.  The  Ministry  of  Telecommunications  and 
Information Society and EKIP adopted 18 new regulations. As for ex ante market regulation, 
EKIP launched the second round of market analysis and started implementing a methodology 
on accounting separation and cost accounting. Under the current legal provisions, which are to 
expire  in  January  2016,  EKIP  is  still  required  to  transfer  any  budget  surplus  to  the  state 
budget.  Parliament  continues  to  have  the  authority  to  dismiss  the  entire  EKIP  Council  if  it 
does not approve EKIP’s financial report. A decision on the appeal re-launched by EKIP was 
dismissed by the Constitutional Court in April.   

37 

 
The agreement of September 2014, signed by Montenegro, the former Yugoslav Republic of 
Macedonia,  Bosnia  and  Herzegovina,  and  Serbia  on  reducing  the  prices  of  mobile  roaming 
services, came into force in July 2015. 

On information  society  services,  the  ‘wireless  Montenegro’  project  is  currently  providing 
free  public  wireless  internet  access  to  around  300  000  users  in  specific  locations  and  its 
services are being further expanded. 

On audio-visual policy, the Agency for Electronic Media still transfers all budget surpluses 
to  the  state  budget  (until  January  2016)  and  submits  its  financial  and  technical  reports  to 
parliament for approval. This continues to limit the Agency’s independence.  

The Agency for Electronic Media launched two calls for tender to allocate radio frequencies 
for  digital  terrestrial  broadcasting.  Amendments  to  the  law  on  public  broadcasting  services 
aimed  at  increasing  the  independence  and  financial  sustainability  of  the  public  broadcaster 
RTCG have not yet been adopted. RTCG lacks the appropriate financial resources to meet its 
public broadcasting and digitalisation obligations. 

4.11.  Chapter 11: Agriculture and rural development 

The  Common  Agricultural  Policy  supports  farmers  and  rural  development.  This  requires 
strong management and control systems. There are also common EU rules for quality policy 
and organic farming.  

Montenegro has some level of preparation in the area of agriculture and rural development. 
However,  there  has  been  good  progress.  The  Instrument  for  Pre-accession  Assistance  for 
Rural  Development  (IPARD  II)  programme  was  adopted  by  the  Commission  in  July.  The 
government adopted in June its national strategy for agriculture and rural development and an 
action plan for alignment with the acquis.  

In the coming year, Montenegro should in particular: 

→ implement the action plan for acquis alignment on agriculture and rural development; 

→ ensure that the operating structures are ready for IPARD II entrustment of budget 
implementation tasks. 

On  horizontal  issues,  in  June  the  government  adopted  its  2015-2020  agriculture  and  rural 
development  strategy  and  an  action  plan  for  transposing,  implementing  and  enforcing  the 
acquis. This is crucial for monitoring acquis alignment, both on legislative development and 
on implementation across the agriculture and rural development sectors.  

Direct support measures will need to be brought in line with the acquis. Montenegro is in the 
process of establishing a farm register and a land parcel identification system. These form part 
of  the  overall  integrated  and  administrative  control  system  (IACS)  needed  to  manage  and 
control  funding  under  the  common  agricultural  policy.  For  the  system  to  work  properly, 
Montenegro  will  have  to  build  capacity  and  ensure  that  the  different  bodies  involved  have 
clear and well-coordinated responsibilities. 

On  common  market  organisation,  the  law  on  wine,  aligning  legislation  to  the  acquis,  has 
still to be adopted by  parliament.  The  law on olive  growing and olive oil, adopted in 2014, 
will require further fine-tuning to bring it fully in line with the acquis. 

On  rural  development,  the  European  Commission  adopted  in  July  the  2015-2020 
programming document for IPARD II. Preparations for the management and control of rural 
development funds under the programme have also continued. There has been some progress 

38 

 
in  increasing  the  capacity  of  the  operating  structure  (the  Paying  Agency  and  the  Managing 
Authority of the Ministry of Agriculture and Rural Development) to manage IPARD II funds. 

On  quality  policy,  although  Montenegrin  legislation  is  to  a  large  extent  aligned  with  the 
acquis, attention should be paid to its implementation. A control body authorised for the tasks 
of  verification  and  control  of  compliance  with  quality  schemes  needs  to  be  established.  On 
organic farming, a rulebook on detailed rules for plant and livestock production was adopted. 

4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy 

EU  hygiene  rules  for  foodstuff  production  ensure  a  high  level  of  food  safety.  Animal  health 
and welfare and the safety of food of animal origin are safeguarded together with quality of 
seed, plant protection material, harmful organisms and animal nutrition. 

Montenegro has some level of preparation in this chapter. Some progress has been made on 
food safety, veterinary and phytosanitary policy, including through the adoption of a strategy 
for alignment with the acquis and a number of framework laws. 

In the coming year, Montenegro should in particular: 

→ improve its administrative capacity, in particular for inspection services and laboratories; 

→ continue upgrading food establishments. 

On  general  food  safety,  in  September  the  government  adopted  the  strategy  for  transposing 
and implementing the acquis. Montenegro is making progress on aligning its framework laws 
with the acquis. The revised law on food safety has been adopted in September 2015.  

On  veterinary  policy,  amendments  to  the  laws  on  the  identification  and  registration  of 
animals, the veterinary law, the law on protection of animal welfare and the law on livestock 
breeding have been adopted. Implementing legislation was also adopted.  

The 2014 programme for mandatory animal health protection measures was implemented and 
the  2015  programme  was  adopted  and  published  in  March.  Extension  of  the  animal 
identification and registration system to pigs and establishment of the monitoring system for 
live bivalve molluscs are on track. The multiannual programme for the eradication of rabies 
continued  with  the  implementation  of  the  seventh  and  eighth  vaccination  campaigns  in 
October 2014 and April 2015. Capacity building for veterinary services continued. 

With  regard  to  the  placing  on  the  market  of  food,  feed  and  animal  by-products, 
assessments (based on the acquis) of food establishments and establishments handling animal 
by-products are progressing well.  

On  food  safety  rules,  the  2014  programme  of  phytosanitary  measures  was  implemented, 
particularly for pesticide residues, nitrate and cadmium in plant foods and control testing of 
seed  production,  plant  genetic  resources  and  genetically-modified  organisms.  The  2015 
programme of phytosanitary measures has been drawn up. The implementation of the action 
plan for the eradication and control of red palm weevil has started. 

There were no developments on specific rules for feed. 

On  phytosanitary  policy,  amendments  to  the  law  on  agricultural  plant  seeds,  planting 
material and plant health protection have been adopted, as well as a number of rulebooks on 
phytosanitary  measures.  The  law  on  forestry  reproductive  material  has  been  adopted  in 
September 2015.   

39 

 
4.13.  Chapter 13: Fisheries 

The  Common  Fisheries  Policy  protects  living  resources  of  the  sea  and  limits  the 
environmental  impact  of  fisheries.  This  includes  setting  catch  quotas,  managing  fleet 
capacity, rules for aquaculture as well as support for fisheries and coastal communities. 

Preparations  remain  at  an  early  stage.  There  was  good  progress  on  fisheries.  In  June 
Montenegro adopted its 2015-2020 strategy and action plan for fisheries.  

In the coming year, Montenegro should in particular: 

→ implement the action plan (for transposing, implementing and enforcing the EU acquis). 

The 2015-2020 strategy and action plan for fisheries were adopted in June. Amendments to 
the law on marine fishery and mariculture have been adopted. 

On  resource  management,  a  survey  of  the  demersal  and  pelagic  resources  of  the 
Montenegrin  coast  was  performed  by  the  Institute  for  Marine  Biology  and  the  report 
submitted  to  the  Ministry  of  Agriculture  in  December.  A  socioeconomic  study  of 
Montenegro’s  fisheries  sector  was  presented  to  the  General  Fisheries  Commission  for  the 
Mediterranean.  The  monitoring  of  invasive  species  continued,  resulting  in  the  discovery  of 
one new fish species. 

There were no developments on fleet management. 

On  inspection  and  control,  fisheries  inspection  capacity  remains  very  limited.  Substantial 
efforts  are  needed  to  ensure  the  systematic  processing  of  data  from  logbooks,  adequate 
registration  of  catches  and  landings,  the  use  of  sales  notes  and  systematic  cross-checking 
between catch composition and logbook records. 

There  were  no  developments  on  structural  actions,  market  policy,  state  aid  or 
international agreements on fisheries. 

4.14.  Chapter 14: Transport policy 

The EU has common rules for technical and safety standards, security, social standards, state 
aid  and  market  liberalisation  in  road  transport,  railways,  inland  waterways,  combined 
transport, aviation and maritime transport.   

Montenegro is moderately prepared on transport policy. There has been some progress in 
this  area.  However,  more  work  is  needed  to  implement  the  rail  and  maritime  safety  acquis 
effectively  and  to  strengthen  the  financial  and  technical  capacity  of  the  national  accident 
investigation body for air, maritime and rail transport. 

On road transport, in March Montenegro adopted an action plan to implement its 2015 road 
safety  strategy  and  programme  for  the  reconstruction  and  maintenance  of  state  roads,  for 
which EUR 45.20 million were allocated for 2015. Montenegro has to continue aligning with 
the  social  and  safety  acquis  in  this  area  and  develop  enforcement  capacity,  in  particular  for 
roadworthiness  tests  and  roadside  checks  of  commercial  vehicles.  Montenegro  adopted 
rulebooks  on  transport  of  hazardous  substances.  No  progress  was  made  on  intelligent 
transport systems. 

On  rail  transport,  new  rulebooks  were  adopted  on  the  certification  and  licensing  of  train 
drivers,  on  safety  certificates  management  systems,  railway  infrastructure  managers  and 
carriers,  and  on  assessing  the  interoperability  of  components  and  vehicles.  More  work  is 
needed  to  implement  and  enforce  newly-adopted  legislation  on  railway  safety  and 
interoperability. In accordance with the network statement of Montenegro’s rail infrastructure 

40 

 
manager  for  2015,  track  access  charges  in  Montenegro  for  all  types  of  trains  are  EUR  3 
(including VAT) per train km. 

On air transport, Montenegro further aligned with the acquis over the rights of disabled and 
reduced mobility persons and the rules on compensation and assistance to passengers in case 
of delays or cancelation. Montenegro adopted several rulebooks further aligning with acquis 
on traffic and airport management. The ‘One-stop-security’ project, managed by the European 
Civil Aviation Agency, was successfully completed in December.  

On  maritime  transport,  in  December  parliament  ratified  the  1974  Athens  Convention 
relating to the carriage of passengers and their luggage by sea and the 2006 Geneva Maritime 
Labour Convention. In July, parliament ratified the Paris Memorandum of Understanding on 
Port State Control. 

No progress was made on inland waterways or intermodal transport. 

4.15.  Chapter 15: Energy 

EU energy policy covers competition and state aids, equal access to resources, the internal 
energy market, energy efficiency, nuclear energy and nuclear safety and radiation protection. 

Montenegro is moderately prepared in the area of energy. Some progress was made in this 
area, including on preparations for aligning legislation with the third Energy Package, and on 
renewable energy and energy efficiency. In the coming year, Montenegro should in particular: 

→ adopt its new energy law to complete alignment with the third Energy Package and move 
to the implementation stage. 

Progress  was made in  the  area of security of supply. In April, the government adopted the 
action  plan  on  mandatory  oil  stocks  in  line  with  the  acquis.  However,  the  current  levels  of 
stocks are close to zero. 

As  regards  the  internal  energy  market,  Montenegro  has  not  yet  adopted  its  new  law  on 
energy, which is intended to align national legislation with the third Energy Package.  Power 
distribution  activities  have  not  been  separated  from  the  supply  function  within  the 
Montenegrin Electric Power Company (EPCG). There has been no progress on developing a 
gas market in Montenegro. The electricity market was formally fully opened for households 
on  1 January 2015,  but  no  new  providers  have  entered  the  market.  In  July,  Montenegro 
ratified the Energy Charter Treaty.  

On  renewable  energy,  in  December  the  government  adopted  the  10-year  renewable  energy 
action  plan  to  meet  its  national  target  of  33 %  of  gross  final  energy  consumption  being 
provided by energy from renewable sources by 2020. Construction work continued on small 
hydropower plants on eight rivers. Works on one wind power plant were launched in May and 
a  construction  permit  was  obtained  for  a  second.  Investments  in  renewable  energy 
infrastructure  need  to  fully  respect  the  relevant  environmental  legislation.  On  energy 
efficiency  parliament  adopted  the  law  on  the  efficient  use  of  energy  in  December.  This 
intends  to  incorporate  the  main  provisions  of  the  EU  acquis  in  this  area.  Initial  steps  were 
taken to regulate sustainable energy use, in particular in the transport sector.  

On  nuclear  energy,  nuclear  safety  and  radiation  protection,  in  October  2014  the 
government  adopted  and  submitted  to  the  International  Atomic  Energy  Agency  its  second 
national report on the implementation of obligations under the Joint Convention on the Safety 
of Spent Fuel Management and on the Safety of Radioactive Waste Management. The law on 
the ratification of the Convention on Nuclear Safety entered into force in July. 

41 

 
4.16.  Chapter 16: Taxation 

EU  rules  on  taxation  cover  value-added  tax  and  excise  duties  as  well  as  aspects  of  taxing 
income from savings of individuals and of corporate taxes. They also deal with cooperation 
between tax administrations, including information exchange to prevent tax evasion.  

Montenegro is moderately prepared in the area of taxation. Some progress was made in this 
field. In the coming year, Montenegro should in particular: 

→  continue  its  efforts  on  reinforcing  its  administrative  capacity  and,  in  particular,  the  IT 
support for the Tax administration. 

On  indirect  taxation,  in  January  2015  Montenegro  transferred  the  competence  on  excises 
from the tax administration to the customs administration. Value added tax (VAT) rates were 
amended  to  further  align  with  the  VAT  Directive.  Inter  alia,  the  new  rules  also  ensure  full 
alignment with the acquis on the exemption from VAT and excise duty for goods imported by 
persons travelling from third countries. A rulebook concerning the refund of excise duty on 
mineral oil was adopted, relevant to acquis requirements. Having repealed its excise duties on 
coffee  on  1 January 2015,  which  had  a  discriminatory  component,  in  February  Montenegro 
introduced  a  new  tax  on  raw  and  roasted  coffee.  On  direct  taxation,  the  tax  rate  on  gross 
personal income over EUR 720 per month was reduced.  

The law on tax administration was amended in February, to improve the collection of taxes 
and  other  duties,  particularly  where  a  taxpayer  fails  to  settle  their  tax  obligations.  The 
amendments also introduced the fiduciary transfer of property ownership as a new means of 
ensuring tax collection, and several tax laws were amended, including on property tax and on 
the  use  of  tobacco  products.  The  amendments  were  also  designed  to  define  tax  inspection 
measures and the amount of fines for tax violations in more detail.  

The  2015-2017  Economic  Reform  Programme  (ERP)  includes  measures  increasing  excise 
duties, and a tax on games of chance. Montenegro introduced tax incentives to boost certain 
sectors,  such  as  high-level  tourism  and  construction,  including  exemptions  from  tax  and 
customs duties for construction works on the Bar-Boljare highway (also foreseen in the ERP). 
Measures  aimed  only  at  some  businesses,  which  are  difficult  to  administer  and  could 
potentially distort the market, should be avoided.  

On  operational  capacity  and  computerisation,  a  comprehensive  analysis  and 
documentation  of  IT  interoperability  systems  (automatic  exchange  of  information  among 
revenue  administrations  and  other  institutions)  was  carried  out,  and  the  testing  phase  of  the 
interoperability  architecture  has  started.  The  2014-2019  Business  Strategy  for  the  tax 
administration  was  adopted  in  November.  The  IT  Department  of  the  tax  administration 
introduced  a  new  tax  accounting  subsystem,  designed  to  eliminate  deficiencies  of  the  Tax 
Administration's information system, in line with audit recommendations. The agreement for 
Montenegro to participate in the Fiscalis 2020 programme was concluded. 

4.17.  Chapter 17: Economic and monetary policy 

EU rules require the independence of central banks and prohibit them directly financing the 
public  sector.  Member  States  coordinate  their  economic  policies  and  are  subject  to  fiscal, 
economic and financial surveillance.  

Montenegro  is  moderately  prepared  in  the  area  of  economic  and  monetary  policy.  Some 
progress was made on alignment with the acquis. In addition, the public sector’s privileged 
access to financial institutions has been partially adjusted.  

In the coming year, Montenegro should in particular: 

42 

 
→ adopt and start implementing an action plan for alignment with the acquis. 

On  monetary  policy,  Montenegro’s  present  use  of  the  euro,  which  was  decided  by  the 
Montenegrin  authorities  under  exceptional  circumstances,  is  fully  distinct  from  membership 
of the euro area. Montenegro does not have standard monetary policy tools at its disposal, as 
it uses the euro as legal tender. This leaves fiscal policy as the main macro-economic policy 
instrument.  

In  December,  the  Central  Bank  adopted  amendments  to  the  decision  on  bank  reserve 
requirements, decreasing the upper limit for bank reserves to be held in treasury bills issued 
by the government. However, full alignment with the acquis is yet to be achieved. 

On  economic  policy,  in  January  the  government  adopted  its  first  Economic  Reform 
Programme (ERP), covering the period 2015-2017. There is room for further improvement of 
the authorities' capacity for economic policy formulation and coordination.  

In 2014, Montenegro introduced numerical fiscal rules, which represent partial alignment with 
the  directive  on  requirements  for  budgetary  frameworks.  The  first-time  application  of  these 
numerical fiscal rules for the 2015 budget is going to stress test the quality of public finances 
and  budgetary  planning.  The  adopted  2015  budget  has  an  excessive  deficit  above  the  3 % 
limit,  partially  due  to  the  costs  of  the  Bar-Boljare  highway  project.  A  strategy  for  the 
implementation  of  the  2010  methodology  of  the  European  System  of  Accounts  standards 
(ESA  2010)  in  public  finance  statistics,  also  a  requirement  of  the  directive,  was  adopted  in 
April.  

In  2014,  Montenegro  submitted  fiscal  notifications  for  the  first  time;  these  now  need  to  be 
gradually aligned with the EU requirements. 

4.18.  Chapter 18: Statistics 

EU  rules  require  that  Member  States  are  able  to  produce  statistics  based  on  professional 
independence,  impartiality,  reliability,  transparency,  and  confidentiality.  Common  rules  are 
provided for the methodology, production and dissemination of statistical information.  

Montenegro has achieved some level of preparation in the area of statistics. Some progress 
was  made  in  the  past  year,  notably  on  harmonising  its  statistical  methodology  with  EU 
standards and by adopting, in April 2015, a strategy for implementing the European System of 
Accounts (ESA) 2010 methodology in its public finance statistics. 

However,  significant  efforts  are  needed,  especially  to  ensure  the  alignment  of  macro-
economic and business statistics with EU standards.  

In  addressing  the  shortcomings  outlined  below,  in  the  coming  year  Montenegro  should  in 
particular: 

→  considerably  strengthen  the  human  and  financial  resources  of  the  Statistical  Office  of 
Montenegro (Monstat); 

→ further align its statistics with ESA 2010, including government finance statistics. 

On statistical infrastructure, the legal framework is in line with the European statistics Code 
of Practice. The Statistical Office of Montenegro (Monstat) is the main producer and overall 
coordinator of statistics. Its professional independence is enshrined in law and its management 
was  strengthened  by  the  appointment  of  a  deputy  director  in  April.  However,  its 
administrative capacity is still limited due to insufficient resources: only 105 of 200 available 
posts have been filled and its financial resources were reduced during the reporting period and 
the premises of the office are not adequate. 

43 

 
Monstat  has  signed  12  memoranda  of  understanding  with  administrative  data  providers, 
including  4  in  the  reporting  period.  Cooperation  between  producers  of  official  statistics 
continued  to  improve.  The  main  classifications  (NACE  Rev.  2,  ISCO-08  and  NUTS)  are  in 
compliance  with  the  EU  acquis,  while  three  additional  ones  (CPA,  GEONOM  and  ISCED 
2011) were implemented during the reporting period.  

Data  transmission  to  Eurostat  continued,  and  additional  areas  were  included,  but  further 
improvement is still needed. The use of administrative sources should be increased. Monstat 
uses  three  statistical  registers:  the  business  register,  the  territorial  units  register,  and  the 
statistical farm register, which are partly aligned with the EU acquis.  

Continued  efforts  will  be  needed  to  align  Macro-economic  statistics  with  the  ESA  2010. 
Monstat  currently  compiles  annual  and  quarterly  gross  domestic  product  (GDP)  data  in 
current  and  constant  prices,  and  in  April  2015  it  published  for  the  first  time  quarterly  GDP 
based  on  the  expenditure-approach  in  current  and  constant  prices.  Monstat  does  not  yet 
compile  quarterly  sector  accounts.  Considerable  efforts  are  needed  to  develop  government 
finance  statistics,  financial  accounts  and  supply  and  use  tables.  The  Central  Bank  compiles 
statistics on the balance of payments but these are not yet aligned with the EU acquis. Foreign 
direct investment statistics are partially in line with the EU acquis. The harmonised index of 
consumer prices (HICP) as well as purchasing power parities (PPP) are mostly aligned. The 
excessive  deficit  procedure  (EDP)  tables  were  submitted  for  the  first  time  in  October  2014, 
but are only partially aligned with ESA 2010. In April, the government adopted a strategy for 
implementing ESA 2010 methodology in public finance statistics. 

On  structural  business  statistics  and  short-term  business  statistics,  further  quality 
improvements,  the  introduction  of  kind-of-activity  units  and  an  increased  coverage  of 
variables  are  necessary.  The  Business  Register  represents  a  good  basis  for  statistical 
production  and  sampling,  but  needs  more  frequent  updates  and  better  coverage  of  small 
businesses.  PRODCOM  (list  of  products  of  the  European  Community)  is  aligned  to  a  large 
extent,  but  more  efforts  are  needed  to  ensure  the  full  harmonisation  of  foreign  affiliates' 
statistics (FATS) with the EU acquis. Tourism statistics are also partially compliant: statistics 
on air transport, maritime transport and traffic by ports are not aligned with the EU acquis. 
Research and development data are in line with the EU acquis. 

In social statistics, a pilot survey of income and living conditions was launched and data was 
sent  to  Eurostat  in  November  2014.  Initial  steps  were  taken  to  implement  the  European 
system  of  integrated  social  protection  statistics  (ESSPROS).  Labour  market  statistics  are 
broadly  aligned  with  the  EU  acquis,  but  the  labour  cost  index  and  the  structure  of  earnings 
data still need to be produced. Crime statistics also need to be aligned.   

Agricultural statistics are partially aligned with the EU acquis. A pilot survey on vineyards 
was launched in November 2014. Supply balance sheets, economic accounts for agriculture, 
the  agricultural  price  index  and  the  agriculture  labour  input  need  to  be  introduced.  Energy 
statistics are fully compliant for annual data and partially compliant for monthly data. Energy 
price statistics are fully compliant. In environment statistics, waste and water statistics are 
partially  compliant.  Statistics  on  environmental  protection  expenditure  and  material  flow 
balances are not yet produced. 

44 

 
 
 
4.19.  Chapter 19: Social policy and employment 

EU rules in the social field include minimum standards for labour law, equality, health and 
safety at work and anti-discrimination. They also promote social dialogue at European level.  

Montenegro  has  achieved  some  level  of  preparation  in  the  area  of  social  policy  and 
employment.  There  was  some  progress  in  this  area,  mainly  on  employment  and  social 
inclusion. More work is needed to ensure legislative alignment with the acquis. The critical 
labour market situation remains a key issue.  

In the coming year, Montenegro should in particular: 

→ increase the active labour market measures on the employability of young people, the long-
term unemployed and people from vulnerable groups. 

→ strengthen capacity at all levels to lead and implement employment and social reforms. 

→ strengthen cooperation with social partners and NGOs. 

On labour law, amendments to the Regulation on subsidies for employing certain categories 
of  unemployed  persons  were  adopted  in  December  to  sustain  further  employability.  The 
labour law is being revised to further align legislation with the acquis.  

On  health  and  safety  at  work,  five  rulebooks  were  adopted.  Health  and  safety  inspections 
identified  irregularities  on  employee  training,  the  malfunctioning  of  funds  for  work  and 
medical  examinations  for  employees.  The  law  on  health  and  safety  at  work  will  need  to  be 
fully aligned with EU acquis. 

On  social  dialogue,  a  memorandum  of  understanding  was  signed  in  April  between  the 
government,  social  partners  and  the  International  Labour  Organisation  (ILO)  on  the  2015-
2017  programme  on  decent  work.  A  new  law  on  strikes  entered  into  force.  Social  dialogue 
needs  to  be  improved,  in  particular  in  the  private  sector.  The  social  council  needs  to  be 
consulted  for  new  regulations  related  to  social  partner  competence.  The  government’s 
decision  to  limit  the  participation  of  civil  society  organisations  in  the  drafting  of  new 
legislation is a matter of concern. 

On  employment  policy,  the  2015  action  plan  was  adopted  in  December  to  implement  the 
2012-2015  national  strategy  for  employment  and  human  resource  development.  The 
employment  and  social  reform  programme  (ESRP)  was  adopted  in  July.  In  February,  the 
government  adopted  a  decision  on  measures  and  activities  to  support  implementation  of 
labour market reforms set out in the 2015-2017 ERP. Montenegro also signed the agreement 
for participation in the EU Programme for Employment and Social Innovation (EaSI) 2014-
2020.  The  2015  action  plan  for  combating  the  grey  economy  was  adopted  in  April.  Efforts 
continued to reduce undeclared work. Reliable data and statistics remain an issue, particularly 
for labour market analysis.  

As  regards  preparations  for  the  European  Social  Fund  (ESF),  Montenegro  is  currently 
implementing  its  first  operational  programme  for  human  resources  development  as  a 
precursor to the ESF. (See also Chapter 22 — Regional policy and coordination of structural 
instruments). 

On social inclusion, the 2015 and 2016 action plans implementing the 2013-2017 strategy to 
develop  a  social  and  child  protection  system  were  adopted  in  April.  An  Institute  for  Social 
and Child Protection was established. However, adoption of significant secondary legislation 
has been delayed, including guidelines for accreditation of professionals and programmes for 
social services. In February, the government adopted the 2015 action plan and the 2014 report 
on implementing the 2012-2016 strategy for Roma and Egyptians. 

45 

 
Around  half  of  Montenegro’s  municipalities  have  drawn  up  local  social  inclusion  plans. 
However,  administrative  and  fiscal  decentralisation  of  social  services  needs  to  be  improved 
and sufficient staff ensured. A national system to set and monitor compliance with standards 
for the quality and accessibility of health and social services should be in place. An increase 
in alternatives to institutionalisation, such as foster care, could be noticed. However, the plan 
to  transform  the  “Mladost”  institution  in  Bijela,  adopted  in  July, is  a  matter  of  concern. 
Community-based  services  providing  an  alternative  to  institutionalisation  need  to  be  further 
expanded for persons with disabilities and those with mental health problems, children older  
persons and the homeless. Public buildings' accessibility for persons with disabilities remains 
critical. The Fund for professional rehabilitation and employment of persons with disabilities 
should be sufficiently protected against misuse.  

On  social  protection,  the  process  for  introducing  the  social  card/social  welfare  information 
system continues. Secondary legislation regulating the financing and costing of social services 
needs  to  be  developed  urgently  and  a  new  department  set  up.  The  law  on  pensions  and 
disability insurance was further amended; inter alia, introducing more favourable conditions 
for pension rights in certain cases. The pension system should be made more sustainable and 
adequate,  including  through  further  measures  restricting  early  retirement,  and  options  for 
funded pension schemes based on mandatory savings.  

The  overall  legislative  framework  on  anti-discrimination  has  made  some  progress  in 
alignment with the acquis but requires further alignment, notably regarding sanctions which 
are not dissuasive enough as the fines are very low. The implementation of the legislation has 
been hindered by a number of factors, including lack of awareness. (See also Chapter 23 — 
Judiciary and fundamental rights).  

On  equal  opportunities,  support  for  single  parents  is  very  limited  in  terms  of  financial  aid 
and  services  available.  Women  remain  underrepresented  in  the  labour  market  and  gender-
based statistical indicators are still not available. The new law on social and child protection 
reduces state contributions for financial assistance for women on maternity leave. These could 
further contribute to discriminatory practices affecting the employment of young women and 
it could also discourage employment of women of reproductive age. The impact of this law on 
the position of women in the labour market should be properly assessed (See also Chapter 23 
— Judiciary and fundamental rights).  

4.20.  Chapter 20: Enterprise and industrial policy 

EU industrial policy enhances competitiveness, facilitates structural change and encourages 
an enterprise friendly environment that stimulates small and medium sized enterprises.  

Montenegro is moderately prepared on enterprise and industrial policy. Some progress was 
made  in  this  field.  However,  the  lack  of  administrative  capacity,  coupled  with  fragmented 
strategies,  continues  to  impede  the  effectiveness  of  enterprise  and  industrial  policy 
instruments. 

In the coming year, Montenegro should in particular: 

→ adopt and start implementing an industrial competitiveness policy; 

→  strengthen  non-financial  and  financial  public-sector  support  for  small  and  medium-sized 
enterprises (SMEs) and bolster authorities’ administrative capacity. 

On  enterprise  and  industrial  policy  principles,  Montenegro  has  started  to  develop  an 
industrial  competitiveness  policy  and  an  inter-ministerial  working  group  has  been  set  up  to 
ensure  sector  coordination.  The  first  results  of  the  ongoing  Small  Business  Act  assessment 
indicate that Montenegro progressed in entrepreneurial learning and institutional framework. 

46 

 
Administrative  procedures  for  issuing  permits  and  licences  remain  costly  and  time-
consuming. 

On  enterprise  and  industrial  policy  instruments,  the  Ministry  of  Economy  launched  a 
programme to  help  regional  and local companies to export their products and  become  more 
competitive  through  alignment  with  international  quality  standards.  The  ministry  also 
continued to implement a support programme for less-developed municipalities in the north. 
Montenegro also participates in the EU’s COSME competitiveness programme. The value of 
financial support provided by the Investment and Development Fund (IDF) almost doubled in 
2014. The IDF will also implement the EIB’s EUR  70  million  credit  line  to  support  SMEs, 
improve  the  overall  business  infrastructure  and  boost  energy  sector  and  environmental 
protection projects. Despite this increase, non-financial and financial public-sector support for 
SMEs and authorities’ administrative capacity needs to be further strengthened.  

On  sector  policies,  the  government  adopted  the  multiannual  framework  action  plan  for  the 
2014-2018 strategy for the development of the manufacturing industry. Until now there were 
no comprehensive strategies to support industry and manufacturing, which represent 15 % of the 
economy. 

4.21.  Chapter 21: Trans-European networks 

The EU promotes trans-European networks in the areas of transport, telecommunications and 
energy to strengthen the internal market and contribute to growth and employment. 

Montenegro is moderately prepared in the area of trans-European networks. Some progress 
was made in the past year. 

On  transport  networks,  Montenegro  continued  to  participate  in  the  South  East  Europe 
Transport Observatory (SEETO). The country played an active role in the Western Balkans 6 
connectivity  agenda  by  endorsing  the  agreement  on  the  regional  core  transport  network  in 
Brussels in April, and the further agreement (in Riga in June) on the core network corridors 
and on the list of projects to be implemented by 2020 (in Vienna in August). The alignment of 
the Mediterranean core corridor (former Route 1) in Montenegro was modified to include the 
section from Bar to the Albanian border. The government took further steps in constructing 
the  priority  Smokovac-Mateševo  section  of  the  Bar-Boljare  highway  project  (extension  of 
Orient  East-Med  core  corridor  in  the  Western  Balkans).  Works  were  launched  in  May. 
However,  the  environmental  impact  assessment  and  the  construction  permit  have  not  been 
issued yet. 

Montenegro  has  set  up  a  National  Investment  Committee  to  improve  the  preparation  and 
prioritisation of infrastructure investments. 

On  Trans-European  Energy  Networks,  the  construction  of  the  undersea  interconnection 
cable with Italy continues. Preparation works for the construction of the Lastva transformation 
the  Serbia-Montenegro-Bosnia  and 
substation  have  started.  A  feasibility  study  for 
Herzegovina  400  kV  interconnection  was  completed  in  February.  The  transmission  line  has 
been identified as a project of Energy Community common interest and will complement the 
undersea interconnection cable between Montenegro and Italy. 

47 

 
 
 
4.22.  Chapter 22: Regional policy and coordination of structural instruments 

The  EU  funds  regional  development  in  the  Member  States.  Implementation  is  the 
responsibility of the Member States that must have adequate administrative capacity to ensure 
the good handling and sound financial management of the projects.  

Montenegro is moderately prepared regarding regional policy and coordination of structural 
instruments.  Good  progress  was  made  on  putting  the  financial  management  and  control 
systems  into  operation.  However,  the  trend  in  planning  and  procurement  needs  to  be 
strengthened and project preparation and strategic planning capabilities need to improve. 

In the coming year, Montenegro should in particular: 

→ start implementing the action plan for meeting requirements for the use  of EU structural 
and investment funds. 

→ accelerate the procurement for EU co-financed projects. 

On  the  legislative  framework,  the  financing  agreements  between  Montenegro  and  the 
European Commission on the 2012-2013 Operational Programme for Regional Development 
(component  III)  and  the  2012-2013  Operational  Programme  for  Human  Resources 
Development  (component  IV)  entered  into  force  in  December.  Montenegro  ratified  the 
Framework  Agreement  with 
the  arrangements  for 
implementation of EU financial assistance under the Instrument for Pre-accession Assistance 
(IPA II). The agreement entered into force in June. Montenegro has adopted an action plan for 
meeting the requirements deriving from the future use of EU structural and investment funds.  

the  European  Commission  on 

No  further  developments  were  made  on  the  institutional  framework.  Administrative 
capacity  has  been  strengthened  by  five  new  appointments  to  the  operating  structure  for 
component  III.  In  addition,  a  new  head  of  the  operating  structure  for  regional  development 
has been appointed. However, further capacity strengthening remains necessary. 

On  programming,  Montenegro  prepared  a  Sectoral  Operational  Programme  for  Education, 
Employment  and  Social  Policies  2015-2017,  following-up  on  the  2012-2013  Human 
Resources  Development  programme.  On  monitoring  and  evaluation,  sectoral  monitoring 
committees for IPA components III and IV were organised in December 2014 and June 2015. 

On financial management, control and audit, in December the National Authorising Officer 
published  guidelines  for  issuing  statements  of  assurance  for  2014  operations  under 
components III and IV. Amendments to the manuals of procedure were adopted in November 
2014 in line with the audit findings and recommendations, with further amendments adopted 
in  January  2015.  The  accounting  software  was  certified  for  compliance  with  international 
standards  and  the  upgrade  of  Montenegro’s  management  information  system  is  progressing 
well.  In December 2014, the National  Fund completed the system-level verification process 
which had started in mid-2014. 

The  capacity  of  Montenegro’s  audit  authority  has  been  strengthened.  The  auditors  were 
intensively  trained  by  audit  authorities  from  EU  Member  States.  In  December,  the  audit 
authority  submitted  annual  audit  reports  for  both  operational  programmes.  A  new  audit 
methodology was adopted in April. 

In  December,  the  government  amended  the  decision  establishing  the  coordinating  body  for 
monitoring  and  managing  irregularities  to  protect  the  financial  interests  of  the  European 
Union (the anti-fraud coordination service (AFCOS) network). 

48 

 
4.23.  Chapter 23: Judiciary and fundamental rights 

The  EU's  founding  values  include  the  rule  of  law  and  respect  for  human  rights.  A  proper 
functioning  judicial  system  and  effective  fight  against  corruption  are  of  paramount 
importance, as is the respect for fundamental rights in law and in practice.  

Montenegro is moderately prepared to apply the acquis and European standards in this area 
and  has  made  overall  some  progress.  The  legislative  framework  on  the  judiciary  was 
strengthened  to  increase  its  independence  and  professionalism  but  has  not  yet  been  fully 
implemented. On the fight against corruption the legislative framework has further improved. 
Institutions now need to be established or strengthened. Corruption remains prevalent in many 
areas and continues to be a serious cause of concern. On fundamental rights, Montenegro is 
gradually shifting from incorporating EU standards into its legal framework to establishing an 
institutional framework with the potential to effectively protect and enforce human rights in 
practice. 

In the coming year, Montenegro should in particular:  

→  strengthen  the  independence,  accountability  and  overall  effectiveness  of  the  judicial 
system; 

→ establish a track record for  investigation, prosecution and final convictions in corruption 
cases, in particular for high-level corruption, and increase the capacity to carry out financial 
investigations; 

→ match progress in the alignment of legislation with an increased institutional capacity, in 
particular  for  the  fight  against  discrimination,  the  prison  system  and  the  protection  of 
minorities;  

→ ensure effective penalties for human rights violations. 

(See  also  the  specific  recommendations  on  the  judicial  system,  the  fight  against  corruption 
and the freedom of expression in sections 2.3 and 2.4.) 

In  February,  the  government  adopted  a  revised  action  plan  for  Chapter  23,  based  on  an 
analysis of the progress made and shortcomings identified. The aim of this adaptation was to 
fine-tune  the  implementation  of  reforms  planned  for  2015  and  beyond,  and  to  set  new, 
realistic deadlines for measures not implemented on schedule. 

Functioning of the judiciary 

Strategic documents 

In October 2014 the government established the Council for monitoring the implementation 
of  the  2014-2018  judicial  reform  strategy,  which  includes  representatives  of  the  main 
stakeholders of the judiciary. According to the first semi-annual report on the implementation 
of  the  action  plan  for  the  implementation  of  the  strategy,  10  %  of  measures  have  been 
partially implemented, and 9 % of measures have not been implemented.  

Management bodies 

The new Law on the Judicial Council and rights and duties of judges and the new Law on the 
State Prosecutor’s Office were adopted in February. The two laws increased the competences 
of  the  Judicial  and  Prosecutorial  Councils.  The  adaptation  of  internal  procedures  and  the 
establishment of the new bodies required under the new laws remains to be completed. 

The 2015 budget for the Judicial Council went up to EUR 715 383, compared with the 2014 
figure of EUR 675 601. The 2015 budget for the Prosecutorial Council was increased to EUR 
246 970 from EUR 131 824 in 2014 so that the Council could set up its own secretariat. The 

49 

 
Secretariat of the Judicial Council has been strengthened by two new employees. Additional 
recruitment could not be completed due to the lack of qualified candidates. A secretariat for 
the  Prosecutorial  Council  has  been  established.  It  is  operational  since  July  but  not  yet  fully 
staffed.   

While  overall  transparency  of  the  Judicial  Council  has  significantly  improved,  the 
Prosecutorial Council needs to take further steps to increase the transparency of its work.  

Independence and impartiality 

In February, parliament adopted the new law on courts, the new Law on the Judicial Council 
and the Rights and Duties of Judges, the new Law on the Constitutional Court and the new 
Law on the State Prosecutor’s Office. The provisions on functional immunity in the new Law 
on  the  Judicial  Council  and  the  Rights  and  Duties  of  Judges  have  been  aligned  with  the 
Constitution.  The  new  law  on  courts  transferred  the  responsibility  for  conducting 
misdemeanour  proceedings  from  specialised  bodies  appointed  by  the  government  to 
specialised  misdemeanour  courts.  The  appointment  of  misdemeanour  judges  needs  to  be 
completed and the new misdemeanour court system made operational. 

The  ongoing  procedure  of  reappointment  of  state  prosecutors  (formerly  deputy  state 
prosecutors)  needs  to  be  completed  in  line  with  European  standards.  The  number  of 
presidential  pardons  granted  further  dropped  in  2014.  Out  of  137  requests,  the  President 
granted  a  pardon  in  23  cases  (2013:  49  cases;  2012:  146  cases).  Montenegro  needs  to  take 
further steps to exclude any political influence on the work of judges and prosecutors. 

Accountability 

In 2014, the Commission for monitoring the implementation of the Code of Ethics for judges 
dealt with eight cases and in the first half of 2015 with 10 cases. It did not find any violations; 
in one case proceedings are ongoing. Regarding prosecutors, in 2014, there were no cases. In 
2015 there were two cases; in one of them a violation of the Code of Ethics for prosecutors 
was established.  

Disciplinary proceedings were initiated against three judges in 2014 and against three judges 
in  the  first  half  of  2015,  resulting  in  minor  sanctions.  Two  procedures  for  dismissal  were 
brought against judges. In both of them the judge concerned filed a request for termination of 
judicial  office.  In  2014,  no  disciplinary  and  dismissal  proceedings  were  initiated  against 
prosecutors.  In  the  first  half  of  2015  disciplinary  proceedings  were  initiated  against  one 
prosecutor; proceedings are ongoing.    

the  State  Prosecutor’s  Office, 

The new Law on the Judicial Council and the Rights and Duties of Judges, and the new Law 
improved  system  of  disciplinary 
introduced  an 
on 
accountability  for  judges  and  prosecutors.  Specialised  bodies  have  been  set  up  within  the 
Judicial and Prosecutorial Councils to handle disciplinary proceedings.  

Mechanisms to detect breaches of integrity rules and enforce disciplinary penalties are not yet 
effective. Given that there were very few reports by members of the public of violations of the 
Code of Ethics, Montenegro needs to continue raising public awareness of existing complaint 
mechanisms.  The  possibility  to  challenge  the  dismissal  of  complaints  on  violations  of  the 
Code  of  Ethics  before  the  Judicial  and  Prosecutorial  Councils  should  be  introduced.  The 
adoption of integrity plans and appointment of integrity managers has been completed in all 
courts and prosecution offices. 

50 

 
 
 
Professionalism and competence 

The new Law on the Judicial Council and the Rights and Duties of Judges and the new Law 
on  the  State  Prosecutor’s  Office  introduced  a  single,  countrywide  recruitment  system  for 
judges and prosecutors, a system enabling judges and prosecutors to transfer on a voluntary 
basis to different courts and prosecutors’ offices, and a new promotion system for judges and 
prosecutors based on periodic professional assessment.  

The  new  systems  are  designed  to  be  transparent,  merit-based  and  seek  to  apply  objective 
criteria. Adoption of secondary legislation and implementation of the new systems is pending. 
Uniform, objective, and transparent assessment of candidates is not yet guaranteed in practice. 
The  grounds  for  decisions  are  not  fully  documented.  In  several  cases  of  appointment  and 
promotion  of  judges  and  prosecutors,  the  Judicial  and  Prosecutorial  Councils  selected  a 
candidate other than the one who achieved the highest score. 

Quality of justice 

The  Judicial  Training  Centre  has  continued  to  provide  initial  and  continuous  training  to 
judges, prosecutors and judicial advisers. It also offered e-learning programmes. For 2015, the 
Judicial Training Centre was allocated its own budget of EUR 170 000. However, it still has 
to rely on donor support for certain specialised training courses. In September 2015 the law 
on  the  training  centre  for  judges  and  prosecutors  was  adopted.  The  law  provides  the  legal 
basis  for  transforming  the  Judicial  Training  Centre,  which  is  currently  attached  to  the 
Supreme Court, into an independent institution. 

Instructions  for  collecting  statistical  data  in  compliance  with  European  Commission  for  the 
Efficiency of Justice (CEPEJ) guidelines were adopted in January 2015 but are not yet fully 
implemented.  Some  concerns  remain  as  to  the  reliability  and  consistency  of  statistical  data. 
While  some  court  presidents  started  actively  using  statistical  information  for  management 
purposes, so far it is seldom used on the policy-making level. 

PRIS,  Montenegro’s  judicial  information  system,  is  not  backed  by  sufficient  human  and 
financial  resources.  Montenegro  relies  entirely  on  donations  to  maintain  and  upgrade  PRIS 
and the system is no longer viable from a technical point of view. Work has started on a new 
IT strategy.  

The 2015 judicial budget (including both courts and prosecutors’ offices) is EUR 27.1 million 
(0.78 % of GDP; EUR 40 per capita), up from the 2014 figure of EUR 26.6 million. In 2015, 
EUR 20.8 million were allocated to the courts (2014 figure: EUR 20.6 million) and EUR 6.3 
million to prosecutors’ offices (2014 figure: EUR 6 million). Given that the largest part of the 
budget  is  spent  on  salaries,  the  funds  allocated  are  insufficient,  in  particular  to  cover 
investment needs. 

The number of cases referred to and solved through mediation significantly increased in 2014 
(in 2014 869 cases were solved through mediation, compared to 262 in 2013) but the impact 
of alternative dispute resolution remains low and the use of mediation needs to be promoted 
further  both  among  judges  and  parties  to  the  dispute.  In  July  a  new  law  on  arbitration  was 
adopted.  

Efficiency 

Although in 2014 the clearance rate (i.e. the ratio of solved cases to new cases filed) improved 
slightly in comparison with 2013 and was almost at 100 % (2013: 98.5 %), this was mainly 
due to a decrease in the number of incoming cases (17.6 %). Overall, in 2014 courts solved 
fewer  cases  than  in  the  previous  year  (16.4 %).  Basic  courts  and  commercial  courts  in 
particular recorded a noticeable decrease in the number of cases solved.  

51 

 
The  total  number  of  cases  pending  at  the  end  of  the  year  remained  more  or  less  constant 
(37 111; 2013: 37 072). The total number of cases older than three years pending before all 
courts has further decreased and amounted to 3192 at the end of 2014 (end of 2013: 4 089). 
However, Montenegro needs to continue to work on increasing the efficiency of the judiciary, 
monitor backlogs and reduce the number of cases pending. 

In 2014, the Constitutional Court solved more than three times as many cases as during the 
previous  year  (1 691;  2013:  425).  At  the  same  time,  the  number  of  incoming  cases 
significantly  increased  (1 736  cases  in  2014  compared  with  860  in  2013).  The  efficiency  of 
the Constitutional Court needs to be further improved to both cope with the backlog and the 
influx of new cases and to solve cases within the 18 months provided for by law. 

In 2014, the disposition time (i.e. the average time from filing the case to a decision) for first 
instance proceedings was 242 days in civil cases and 261 for commercial cases (2013 figures: 
237  days  for  civil  cases  and  303  days  for  commercial  cases).  One  of  the  main  reasons  for 
lengthy  trials  was  the  practice  of  referring  cases  from  higher  to  lower  courts  without  going 
into  the  merits  of  the  case.  Amendments  to  the  Criminal  Procedure  Code  adopted  in  June 
2015 and amendments to the law on civil procedure adopted in July 2015 limit this option by 
stipulating that a case can be quashed by a higher court only once. 

Since the start of implementation of the bailiff system in April 2014, the number of incoming 
enforcement cases to be processed by the courts has been significantly reduced (2013: 72851; 
2014: 23452; first half of 2015: 3271). However, the number of cases solved by the courts has 
also  significantly  decreased  (2013:  65173;  2014:  35815;  first  half  of  2015:  15667).  The 
number  of  cases  pending  is  still  considerable  (140 784  cases  at  the  end  of  June  2015).  To-
date, 29 out of the planned 32 bailiffs have started working. Montenegro needs to put in place 
a centralised system to monitor data on the recovery rate, costs and duration of enforcement 
proceedings carried out by bailiffs. Enforcement of civil and administrative decisions remains 
weak. 

Progress has been made on rationalising the judicial network. In the first half of 2015, a case-
weighting  study  was  carried  out  on  a  pilot  basis  in  nine  courts  to  collect  data  on  the  time-
frames  for  processing  specific  types  of  cases.  The  results  of  the  study  will  provide  a  solid 
basis  for  allocating  human  resources  more  efficiently  and  setting  realistic  standards  for 
judges’ workloads that take into account case complexity. Montenegro also needs to develop 
a medium- and long-term human resources strategy. 

Domestic handling of war crimes cases 

In December, the Appellate Court confirmed the decision of the High Court in Bijelo Polje, 
acquitting all eight defendants accused of having committed war crimes in Kaludjerski Laz in 
1999. In March, the Supreme State Prosecutor’s Office filed an application with the Supreme 
Court for protection of legality concerning the final verdict in the ‘Deportation of Refugees’ 
case, pointing to errors in the application of the law in this case. The application for protection 
of legality was dismissed by a Supreme Court decision in June.  In May, the Supreme State 
Prosecutor's Office adopted a prosecution strategy that outlines measures to identify possible 
Montenegrin perpetrators of war crimes and open new cases. Its implementation has not yet 
started.  

Montenegro’s  prosecution  service  needs  to  demonstrate  a  more  proactive  approach  in 
following up on outstanding allegations of war crimes. The judicial decisions reached so far 
have  contained  legal  mistakes  and  shortcomings  in  the  application  of  international 
humanitarian  law.  Montenegro  needs  to  do  more  to  fight  impunity  over  war  crimes,  and 
effectively  investigate,  prosecute,  try  and  punish  war  crimes  in  line  with  international 

52 

 
standards. Charges of command responsibility, co-perpetration and aiding and abetting have 
so  far  not  been  brought.  Montenegro  also  needs  to  ensure  that  victims  of  war  crimes  have 
access to justice and compensation. 

Anti-corruption policy 

Track record 

Prevention measures 

Montenegro  has  made  some  progress  in  establishing  a  track  record  in  the  prevention  of 
corruption.  However,  penalties  provided  for  by  law  are  not  applied  effectively  and  are  far 
from having a deterrent effect. 

The  Commission  for  the  prevention  of  conflicts  of  interest  has  significantly  increased  the 
number  of  asset  declarations  cross-checked  with  data  held  by  other  institutions.  In  2014  it 
checked the asset declarations of 2 428 public officials (62 % of all asset declarations; in 2013 
1 489  were  checked).  Also,  the  number  of  public  officials  found  to  have  reported  incorrect 
data  significantly  increased  from  206  in  2013  to  629  in  2014.  For  the  submission  period 
2014/15, 97% of public officials submitted income and asset declarations. During the first half 
of 2015 the Commission verified a total of 1438 asset declarations; in 242 cases it established 
that  public  officials  did  not  provide  complete  and  correct  data.  The  new  powers  of  the 
Commission to enquire about inexplicable wealth so far have been applied in 79 cases (April 
– August 2015). In 46 cases public officials submitted evidence on the grounds of acquiring 
income and assets; in the remaining cases misdemeanour proceedings were launched. 

Until  2015,  the  Commission  terminated  proceedings  relating  to  established  irregularities  in 
asset  declarations  if  officials  provided  additional  information  and  corrected  the  data. 
However, it has now discontinued this ineffective practice, resulting in a significant increase 
in the number of misdemeanour proceedings initiated.  

The  Commission  has  processed  and  followed  up  on  an  increasing  number  of  cases  of 
incompatibility of functions (15 cases in the first half of 2015; 13 cases in 2014). Most but not 
all decisions of the Commission have been enforced through either resignation or dismissal of 
the concerned public official. Decisions on conflict of interest have been limited to requests 
by the public officials concerned to receive an opinion.    

In 2014, the Commission filed 337 misdemeanour charges against public officials (2013: 455) 
for violation of the law on prevention of conflict of interest; in the first half of 2015 already a 
total  of  542  misdemeanour  charges  were  filed.  Out  of  300  misdemeanour  proceedings 
completed  in  2014,  the  majority  resulted  in  a  warning  or  minor  fines  below  the  statutory 
minimum.      

The  Ministry  of  Interior’s  internal  control  unit  has  so  far  cross-checked  140  asset 
declarations of high-ranking police officers out of a total of 500. In two cases irregularities 
were  found  and  followed  up  through  disciplinary  and  criminal  proceedings  respectively. 
Amendments adopted in December to the new law on internal affairs have expanded checks 
on assets and income to cover the spouses and children of police officers. 

Only a very small number of irregularities were established in connection with the funding of 
political parties and electoral campaigns (2014: 10; 2015: 13). They all relate to the failure 
to  submit  annual  reports  on  incomes,  assets  and  expenditures.  The  judicial  follow-up  on 
alleged  irregularities  in  the  context  of  the  ‘audio  recordings  affair’  and  the  2014  local 
elections was not based on information provided by or decisions taken by the State Electoral 
Commission. 

53 

 
In  2014,  out  of  a  total  of  4 058  initial  requests  for  access  to  information  made  to  public 
bodies,  the  requested  information  was  not  provided  in  1 007  cases  (25 %).  The  agency  for 
personal data protection and free access to information received a total of 1 753 complaints in 
2014.  Of  these,  it  upheld  1 332.  The  majority  were  cases  of  administrative  silence.  In  a 
number of cases, the first instance authorities declared the requested documents confidential, 
thus  requiring  the  complainant  to  request  an  Administrative  Court  decision.  In  2014,  the 
Administrative Court upheld 26 complaints, while 14 were rejected. While in 2014 the agency 
did not initiate misdemeanour proceedings for non-compliance with the law on free access to 
information, in 2015 (January – August) a number of proceedings were launched.   

As  regards  the  protection  of  whistle-blowers,  criminal  charges  related  to  the  dismissal  of 
whistle-blowers  were  brought  against  11  people  in  2014  and  against  one  person  in  2015. 
Preliminary  investigations  are  ongoing  against  two  people;  in  all  other  cases  the  criminal 
charges were dismissed. 

No  violations  of  the  Code  of  Ethics  for  members  of  parliament  have  been  submitted  to  the 
parliamentary  committee  on  human  rights  and  freedoms.  The  fact  that  only  MPs  and 
parliamentary bodies have the right to submit complaints, and not the public, the media and 
other external stakeholders, may hinder implementation of the Code of Ethics. 

Law enforcement 

Investigations,  prosecutions  and  convictions  for  corruption-related  offences  mostly  concern 
low and medium-level corruption. In most cases, sentences are below the minimum provided 
for  by  law.  There  have  been  no  final  convictions  for  high-level  corruption.  During  the 
reporting  period,  several  new  investigations  in  cases  involving  high-level  officials  were 
launched. These cases involve, among others, several former mayors. New trials have started 
in two cases. In the third first instance trial in the 'Zavala' case the Podgorica High Court in 
June confirmed the previous sentences (3-5 years of imprisonment) for the three higher-level 
defendants, a former mayor of Budva, a former deputy mayor and a former DPS MP. In the 
'Kosljun'  case  in  September  another  former  mayor  of  Budva  has  been  convicted  by  the 
Podgorica High Court at first instance to six years of imprisonment; a former manager of the 
municipality and adviser to the Prime Minister was acquitted. Both judgements are not final. 

Financial  investigations  are  not  yet  systematically  used  in  cases  of  corruption.  In  no 
corruption  case  has  the  confiscation  of  assets  been  ordered.  Seizure  and  confiscation  of 
criminal assets should be systematically ordered to detect and cut financial flows of criminal 
networks. 

Institutional framework 

Prevention of corruption 

In  December,  parliament  adopted  the  legislative  basis  for  an  independent  anti-corruption 
agency  with  administrative  investigation  powers,  scheduled  to  be  operational  as  of 
1 January 2016. Its mandate covers the main areas of the prevention of corruption, including 
conflicts  of  interest,  asset  declarations,  incompatibility  of  functions,  integrity  plans  and 
protection of whistle-blowers. The agency will also be in charge of implementing the law on 
lobbying  and  have  powers  to  check  political  party  financing.  The  Directorate  for  Anti-
corruption Initiative (DACI), until now in charge of coordinating anti-corruption policy and 
awareness  raising,  and  the  Commission  for  the  prevention  of  conflict  of  interest,  will  be 
merged into the new agency. The new agency will also take over powers and staff from the 
State Electoral Commission (SEC). 

54 

 
The  members  of  the  new  agency’s  council  were  appointed  in  June,  and  the  director  of  the 
agency  was  appointed  in  October  2015.  It  is  a  matter  of  concern  that  in  areas  other  than 
control of conflict of interest, incompatibility of functions and asset declarations, the agency 
is  unlikely  to  be  fully  operational  by  January  2016  due  to  lack  of  staff  with  the  necessary 
expertise and training.  

The Commission  for prevention  of conflicts of  interest has shown a slightly more proactive 
approach  and,  in  a  small  number  of  cases,  launched  proceedings  on  its  own  initiative.  A 
proper risk assessment methodology is not yet in place. The Commission lacks an electronic 
case management system and a system for electronic submission of cases. In addition, it is not 
yet connected to the databases of all relevant institutions. 

In  October  2014,  parliament  appointed  the  State  Electoral  Commission  in  its  reformed 
composition. The 2015 budget for the SEC was increased by 100 % and now amounts to EUR 
240 240.  The  recruitment  procedures  for  seven  out  of  the  eight  additional  SEC  staff  were 
finalised in September 2015.   

DACI  continued  to  implement  awareness-raising  campaigns  and  provide  anti-corruption 
training and workshops on integrity plans for public officials.  

Inspection  capacity  in  the  area  of  public  procurement  needs  to  be  enhanced  and  full  e-
procurement introduced as an instrument for achieving more transparency. The development 
of a risk assessment methodology remains to be completed. Steps have been taken to improve 
internal  control  mechanisms  within  the  police,  customs  and  tax  administrations.  A  risk 
analysis  methodology  for  performing  inspection  control  was  adopted  by  the  government  in 
June;  however,  it  contains  shortcomings  that  need  to  be  addressed  as  soon  as  possible. 
Overall,  there  is  a  strong  and  urgent  need  to  improve  and  strengthen  internal  control  and 
inspection mechanisms within the public administration and to improve their interaction with 
law enforcement authorities. 

Law enforcement 

The institutional and operational capacity of prosecutors, judges and police to fight corruption 
remains insufficient and needs improving, including through specialised training. Cooperation 
between  the  police  and  the  prosecution  in  pre-trial  investigations  must  be  improved.  The 
capacity to carry out financial investigations in corruption cases needs to be enhanced. 

The  new  Special  Prosecutor’s  Office  for  the  fight  against  corruption,  organised  crime,  war 
crimes,  terrorism  and  money  laundering  became  operational  in  July.  Recruitment  of  two 
special  prosecutors  and  of  specialised  experts  is  pending.  The  special  police  directorate 
supporting the Special Prosecutor's Office is not yet operational.  

A  uniform  database  monitoring  proceedings  for  criminal  offences  involving  corruption  has 
been  established  as  part  of  PRIS,  the  judicial  information  system.  So  far,  it  covers  only  the 
stage from indictment to final judgment; the roles played by the police and prosecution are not 
yet covered. 

Legal framework 

In December 2014, parliament adopted a comprehensive package of laws on the prevention of 
corruption. The package includes: the law on the prevention of corruption (legal basis for the 
future anti-corruption agency); a new law on lobbying; a new law on political party financing 
and  electoral  campaigns;  amendments  to  the  law  on  the  prevention  of  conflicts  of  interest; 
amendments  to  the  law  on  public  procurement;  the  new  law  on  general  administrative 
procedure.  Parliament  also  adopted  a  Code  of  Ethics  for  its  members.  The  new  laws  and 
amendments significantly strengthened the legislative framework in this area. 

55 

 
The  amendments  to  the  law  on  prevention  of  conflicts  of  interest  gave  the  relevant 
Commission the power to investigate inexplicable wealth. They also increased the number of 
misdemeanour  penalties  and  the  level  of  fines.  However,  the  range  of  penalties  laid  down 
does not seem to be enough of a deterrent for all offences. Under the new amendments, the 
Commission has access to information held by banks and other financial institutions, but only 
with the consent of the public official concerned.  

As regards the accountability of directly-elected public officials, the law on the prevention of 
corruption constitutes a step back in comparison to the legislation currently in force in that it 
exempts directly-elected public officials from the four-year ban on public office that applies 
to public officials dismissed for breaches of the law on the prevention of corruption. 

The main novelties introduced by the new law on lobbying are the establishment of a public 
register  of  lobbyists  and  the  requirement  for  public  authorities  to  document  and  publish 
contacts with lobbyists. 

The  new  law  on  political  party  financing  and  electoral  campaigns  is  intended  to  meet 
outstanding  GRECO  (Group  of  States  against  Corruption)  recommendations.  The  new  law 
strengthens  rules  preventing  the  abuse  of  public  resources  for  political  party  and  election 
campaign purposes in line with the Constitution. The GRECO recommendations not yet fully 
met relate mainly to institutional capacity and enforcement.   

The  amendments  to  the  law  on  public  procurement  are  intended  to  tighten  up  the  rules  on 
preventing conflicts of interest and to reduce the risk of corruption. The inspection service is 
in charge of checking the implementation of awarded contracts. 

The law on the Special Prosecutor’s Office, adopted in February, provides the legal basis for a 
new Special Prosecutor’s Office to cover organised crime, corruption, war crimes, terrorism 
and money laundering. Its mandate is very broad and not limited to high-level and particularly 
complex  cases.  Police  investigators  work  under  the  instructions  of  special  prosecutors;  to 
strengthen their autonomy, they cannot be reassigned to another position without the consent 
of  the  chief  special  prosecutor.  However,  the  rules  governing  their  status  do  not  seem  to 
sufficiently limit the risk of conflicting instructions and undue interference. 

Amendments to the Criminal Procedure Code were adopted in June. They brought in a more 
stringent  mechanism  for  reviewing  decisions  by  prosecutors  to  dismiss  criminal  charges.  A 
new law on the seizure and confiscation of assets was adopted in September 2015. 

Montenegro  decided  not  to  follow  the  recommendation  made  in  Article  20  of  the  United 
Nations’ Convention against Corruption, i.e. to criminalise inexplicable wealth. 

Strategic framework 

Montenegro’s  2010-2014  national  strategy  for  the  fight  against  corruption  and  organised 
crime and its accompanying 2013-2014 action plan expired at the end of 2014. According to 
the final report on the level of implementation of the action plan, 59% of measures have been 
implemented, 30% partly implemented, while 11% of measures have not been implemented. 
In order to avoid duplication with the action plan for Chapter 23, for the time being no new 
strategy  and  action  plan  will  be  drafted.  The  implementation  of  measures  that  were  in  the 
strategy and related action plan but not implemented before the end of 2014 will be included 
in an annex to the action plan for Chapter 23 and monitored through the mechanism in place 
for Chapter 23.  

56 

 
 
 
Fundamental rights 

Montenegro  continued  to  comply  with  international  human  rights  instruments  by 
progressing in the dialogue with relevant institutions and via the monitoring mechanisms.  In 
October  and  December  2014,  UN  committees  published  concluding  observations  on 
Montenegro's implementation of the covenant on civil and political rights and on economic, 
social  and  cultural  rights.  The  reports  mainly  focused  on  shortcomings  in  the  fight  against 
discrimination.  

In January, the Council of Europe's Parliamentary Assembly decided to close the monitoring 
procedure  on  Montenegro  and  start  the  post-monitoring  dialogue  in  response  to  progress  in 
the five key areas identified in its 2012 resolution: independence of the judiciary, organised 
crime  and  corruption,  the  media,  the  rights  of  minorities  and  the  situation  of  refugees  and 
internally displaced persons. 

Cooperation  with  the  European  Court  of  Human  Rights  (ECtHR)  remained  good;  all  17 
cases  under  supervision  remained  under  the  standard  monitoring  mechanism.  Since 
September 2014, the Court has found that the country violated the European Convention on 
Human  Rights  (ECHR)  in  two  cases  relating  to  the  right  to  a  fair  trial  and  prohibition  of 
torture. A total of 109 new applications were allocated to a decision-making body, bringing 
the number of pending applications to 178. A new IT system in the Constitutional Court will 
enable easier and more consistent application of ECtHR case law to national rulings which so 
far has not been satisfactory.  

As  regards  the  promotion  and  enforcement  of  human  rights,  two  new  deputies  to  the 
Ombudsman  with  experience  in  human  rights  were  appointed,  one  for  the  fight  against 
discrimination  and  one  for  the  national  preventive  mechanism  (NPM).  Some  posts  in  the 
Ombudsman’s  department  still  remain  vacant,  specifically  those  dealing  with  human  rights 
and discrimination. The capacity of this institution to effectively handle complaints remains 
limited: its internal organisation has to improve to cope with its broad mandate. An internal 
review mechanism for complaints would help improve the quality of decisions. Overall, key 
institutions in charge of human rights policy, including the relevant Ministry, are understaffed 
and existing staff require further training, particularly on international human rights standards.  

As  regards  prevention  of  torture  and  ill-treatment,  the  national  mechanism  for  the 
prevention of torture (NPM) started functioning under the new Law on the Ombudsman.   

Inspections  by  the  Ombudsman  appear  to  be  improving  conditions  for  detainees,  notably 
regarding  health.  The  NPM  department  remains  understaffed  and  its  capacities  need  to  be 
strengthened by improving the quality of visits and priority setting. Concerns remain over the 
prevention  and  punishment  of  torture  and  ill-treatment,  both  in  police  facilities  and  prisons. 
The processing of such abuses and the number of officers punished remain low. For example, 
there  should  be  a  full  investigation  into  the  instances  of  aggression  which  took  place  in 
Podgorica  prison  in  January  between  prisoners  and  guards.  Several  prisoners  are  on  trial, 
while only one guard was sentenced, to the minimum penalty.  

Detention conditions, including in police stations, need to improve. The treatment of convicts 
and detainees still needs to be brought in line with international standards, as do the screening 
and  reporting  capacities  of  prison  medical  services  and  their  cooperation  with  judicial 
authorities. Detainees' overall awareness of their rights needs to be increased.  

On the prison system, amendments adopted in June to the law on prison sentences, pecuniary 
fines and security measures bring the system closer to European standards, balancing security 
and respect for human rights in the enforcement of prison sentences. With these amendments, 
the alternative sanctioning system is fully in place but work should continue to make it fully 

57 

 
operational.  The  probation  department  of  the  Ministry  of  Justice  was  expanded,  with  two 
additional posts filled in March. The prison health service remains understaffed and overall of 
poor quality. The limited availability of rehabilitation programmes continues to be an issue of 
concern in Montenegrin prisons. 

On  personal  data  protection,  a  report  on  the  agency  for  personal  data  protection  and  free 
access  to  information  was  issued  at  the  end  of  March.  To-date,  no  cases  on  data  protection 
have been brought before the courts, with the exception of the Constitutional Court’s opinion 
on  law  enforcement  access  to  the  data  of  electronic  communication  services  providers. 
Training  for  judges  and  prosecutors  on  data  protection  should  continue  in  line  with  the 
schedule in the action plan.  

Freedom of thought, conscience and religion continued to be guaranteed and upheld by law. 
Tensions between the Serbian and Montenegrin Orthodox Churches continue, particularly on 
property  issues.  A  new  law  on  the  legal  status  of  religious  communities,  compatible  with 
European  standards,  has  yet  to  be  adopted.  The  law  is  expected  to  better  regulate  the 
procedures  for  allocating  state  funds  to  religious  communities,  particularly  where  the 
supervision of expenditure and auditing are concerned, as so far they are not being carried out 
in a transparent manner. 

As  regards  freedom  of  expression,  there  were  no  attacks  against  journalists  during  the 
reporting  period.  However,  vehicles  belonging  to  four  journalists  from  three  different 
newspapers were damaged in the reporting period, including a car belonging to the family of 
the  editor-in-chief  murdered  in  2004.  Investigation  and  prosecution  of  cases  of  violence 
against the media continued. Three cases of violence were concluded in the recent period and 
hearings are ongoing for another three. Work needs to continue to solve older cases, including 
the 2004 murder of an editor-in-chief, and identify not only the material perpetrators but also 
those behind the attacks. However, there was limited progress on this. 

Montenegro’s  ad  hoc  commission  monitoring  violence  against  media  continued  its  work. 
Security  issue,  such  as  those  related  to  premises  and  the  granting  of  security  clearance  for 
commission  members  to  access  restricted  information,  were  resolved.  The  commission’s 
mandate was extended until the end of 2015. The police continued to take action to prevent 
violence  against  the  media  by  carrying  out  risk  analyses  and  protecting  journalists  and 
premises possibly at risk. The government has not implemented fully the recommendations of 
the media monitoring commission, particularly as regards the re-establishment of a reward for 
witnesses in older cases and identifying flaws in the investigations on the attacks. 

Draft amendments to Montenegro’s media law proposed by several members of parliament, 
enabling the courts to ban media outlets which violate constitutionally guaranteed rights, did 
not receive the necessary support in the parliamentary committees. The Council of Europe’s 
Venice Commission criticised the amendments and recalled that the Montenegrin legal system 
already had mechanisms to enforce court decisions. 

The lack of a uniform approach to penalties in this area suggests that ECtHR case law is not 
sufficiently known. The rationale behind the decision of the High Court in Bijelo Polje and of 
the Basic Court in Podgorica, ordering news outlets to pay EUR 5 000 in damages to a sibling 
of a high-ranking politician for emotional suffering and damage to reputation, is of concern. 
An  ongoing  smear  campaign  by  one  tabloid  newspaper,  mostly  targeting  prominent  civil 
society activists and some politicians, shows that the authorities are failing to implement the 
media  law  and  that  self-regulation,  re-established  in  2012,  is  not  working.  Lack  of 
professional  and  ethical  standards  continued  to  be  an  issue  of  concern.  There  is  no  single 
forum of discussion recognised by the whole of the media community. The OSCE-facilitated 
dialogue on improving ethical and professional standards in the media should continue. 

58 

 
Montenegro  switched  from  analogue  to  digital  broadcasting  in  June  without  any  major 
problems. Ensuring the editorial independence of the public broadcaster RTCG needs to be a 
priority. 

The previously state-owned newspaper company was privatised in December, following years 
of  being  in  breach  of  the  media  law.  There  are  concerns  about  the  transparency  and  non-
discrimination of the media in state advertising. Some major private media outlets are at risk 
of closure due to high tax debts. The precarious economic situation of journalists leaves the 
door  open  for  editorial  interference  and  possible  self-censorship.  The  fact  that  many  media 
outlets  are  not  financially  sustainable  detracts  from 
the  quality  of  reporting  and 
professionalism in the media. 

According to the latest reports of Montenegro’s media trade union, journalists are poorly paid 
and  their  jobs  are  not  secure.  In  the  past  three  years,  at  least  500  journalists  lost  their  jobs, 
while three TV stations and one newspaper closed due to poor financial performance. 

On freedom of assembly and association, amendments to the law on public gatherings were 
adopted  in  December.  They  provide  wide  discretionary  powers  to  the  police  to  temporarily 
ban  peaceful  gatherings  and  stipulate  that  assemblies  can  only  be  held  in  front  of  certain 
public  buildings.  The  ambiguous  definition  of  peaceful  gatherings  leaves  room  for 
interpretation and requires further amendments to the law, including defining state obligations 
accordingly. 

On property rights, the restitution of property as provided by law is being hampered by the 
lack  of  administrative  capacity  and  cumbersome  procedures.  The  courts  did  not  make  any 
progress  on  addressing  pending  cases  in  line  with  the  national  legislation  and  ECtHR  case 
law. Displaced persons permanently resident in Montenegro continued to face discrimination 
over access to land. 

The  overall  legislative  framework  on  non-discrimination  has  been  further  aligned  with  the 
acquis but requires additional strengthening, notably regarding sanctions. The capacity of the 
Ombudsman’s Office to effectively handle complaints remains limited and the follow-up on 
reported  cases  of  discrimination  has  not  improved.  Lesbian,  gay,  bisexual,  transgender  and 
intersex civil society organisations have continued to raise concerns over the Ombudsman’s 
lack  of  results,  in  particular  over  its  handling  of  petitions  and  complaints  concerning 
discrimination.  

As  regards equality  between  women  and  men,  amendments  to  the  law  on  gender  equality 
were adopted, bringing Montenegro closer to European standards. The law contains a clearer 
definition of direct and indirect discrimination, expands the definition of gender and includes 
improved  provisions  on  penalties.  The  law  also  shifts  the  referral  mechanism  on  gender 
equality  from  the  Human  Rights  Ministry  to  the  Ombudsman  who  will  consequently  need 
increased administrative capacity to carry out its enhanced role, including through hiring staff 
experienced in gender issues. The National Gender Equality Office has continued to build up 
a  network  of  local-level  gender  mechanisms  and  nine  municipalities  have  so  far  adopted 
action plans to tackle gender issues. A formalised model of cooperation should be established 
between the gender department, gender coordinators and relevant civil society organisations. 
The  number  of  women  councillors  in  local  assemblies  rose  to  32 %  through  recent  legal 
provisions; however, few women are mayors or presidents of municipal councils. 

Gender-based violence remains a concern. Amendments to the law on free legal aid adopted 
in  April  made  free  legal  aid  available  to  victims  of  domestic  violence.  However, 
implementation of the Convention on preventing and combating violence against women and 
domestic violence is proceeding slowly: the establishment of a unified country-level database 

59 

 
for recording cases of violence against women was postponed and in the meantime statistics 
remain unreliable. The same happened with the government’s pilot phase for the SOS helpline 
for  victims  of  family  violence.  The  rules  of  procedure  for  multidisciplinary  teams  for  the 
prevention  of  domestic  violence  were  adopted  in  December.  Such  teams  have  been 
established  in  all  11  social  welfare  centres.  Inter-institutional  cooperation  requires 
improvement,  especially  between  social  services  and  law  enforcement  authorities,  as  does 
cooperation  between  institutions  and  NGOs  in  the  field.  The  involvement  of  the  police  in 
tackling gender-based violence remains low; a better central coordination mechanism, linked 
with local police units, should be established. 

Some progress was made with regard to the rights of the child. The 2013-2017 action plan on 
children continued to be implemented. Regular meetings of the Council for the rights of the 
child were held, discussing planned legislative changes and institutional developments with a 
focus on social affairs, in the context of the overall social services reform.  

The  relevant  department  in  the  Ombudsman’s  Office  continued  its  awareness-raising 
activities and raised its visibility, leading to an increase in the number of cases handled. Some 
of  its  recommendations  cited  a  lack  of  sensibility  on  the  part  of  the  judiciary  when  dealing 
with  cases  involving  children;  a  survey  was  conducted  as  a  follow-up.  However,  the 
department  is  understaffed  and  depends  on  external  funds  for  specific  projects.  As  also 
highlighted  by  the  UN  committee  on  the  rights  of  the  child,  child  labour  is  a  concern  in 
Montenegro.  Such  children  are  exposed  to  exploitation  and  human  trafficking.  Capacity-
building activities have continued for judges and police dealing with children in conflict with 
the  law;  progress  is  needed  in  adapting  the  overall  justice  system  to  children's  rights, 
including through collection of reliable statistical indicators. 

As regards deinstitutionalisation, the operational plan for the children’s home in Bijela has yet 
to  be  adopted.  Individual  plans  of  care  for  the  beneficiaries  in  the  ‘Komanski  Most’  public 
institution were drawn up and regularly reviewed, while contacts with parents were improved. 
Individual plans were also prepared to protect children originally from Montenegro who are 
currently accommodated in institutions in Serbia. The law on social and child protection must 
also be implemented effectively. 

Some  progress  was  made  on  the  integration  of  persons  with  disabilities.  A  new  law 
prohibiting discrimination against persons with disabilities was adopted in July bringing the 
national  framework  closer  to  EU  standards  on  the  fight  against  discrimination  and  the  UN 
Convention  on  the  rights  of  persons  with  disabilities.  Provisions  of  the  law  on  higher 
education facilitating the inclusion of students with disabilities need to be fully implemented. 
The situation concerning accessibility for persons with reduced mobility remains critical: the 
law on spatial planning needs to be fully implemented to make it easier to enter priority public 
buildings.  Construction  works  to  make  parliament  accessible  to  persons  with  disabilities 
started in August. The allocation in the national budget remains a void commitment without 
effective implementation. Obstacles in physical access to courts are impeding access to justice 
for persons with disabilities. 

As  regards  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons,  in  May 
Montenegro successfully organised the third International Day against Homophobia (IDAHO) 
conference.  It  was  attended  by  ministerial  delegations  from  21  countries  and  high-level 
participants  from 
international  community  and  civil  society 
organisations. Montenegro was also one of the signatories of the Joint Statement of Ministers 
of the region. Montenegro was able to smoothly handle the pride parade in Podgorica in 2014; 
various institutional and political representatives participated and demonstrated their support. 

the  government, 

the 

60 

 
Unlike  the  previous  year,  no  incidents  were  observed;  this  was  also  due  to  the  rigorous 
security measures in place. 

The rights of transgender persons were improved by the adoption in November of a protocol 
for legal gender recognition. Cooperation between the Ombudsman and LGBTI organisations 
requires  improvement,  as  does  cooperation  between  relevant  institutions.  Concerns  remain 
over  the  level  of  homophobia,  as  attacks  on  LGBTI  community  members  and  activists 
continued. The lack of progress in related police investigations led to some tensions between 
police and the LGBTI community and few criminal convictions for attacks. Training for the 
judiciary and the police needs to continue. Regrettably, the police banned, for the third time, 
LGBTI  gatherings  in  Nikšić,  citing  security  reasons;  prior  to  that,  an  academic  debate  on 
LGBTI  issues  was  banned  in  the  local  university.  Systematic  anti-discrimination  campaigns 
need to be rolled out in schools and universities as a matter of urgency. 

Labour  and  trade  union  rights  need  to  be  strengthened.  Proper  procedures  for  appointing 
employees'  representatives  should  be  defined  in  the  national  legislation.  Employees' 
representatives  should  enjoy  adequate  protection  to  perform  their  duties.  Freedom  of 
association needs to be guaranteed to workers assembling to discuss work- related issues.  

Montenegro has started laying the legal foundations on procedural rights. A new law on the 
compensation  of  victims  of  violent  crimes,  adopted  in  June,  has  brought  the  national 
framework closer to EU standards, particularly on compensation. Amendments to the law on 
internal  affairs  and  to  the  Criminal  Procedure  Code,  adopted  in  December  2014  and  June 
2015 respectively, increased procedural safeguards in pre-detention. The law on free legal aid 
adopted in April includes new categories among the beneficiaries but certain categories, such 
as  victims  of  torture  and  harassment,  remain  excluded.  Legal  aid  is  not  yet  applicable  to 
administrative proceedings. 

Amendments to the law on minorities remain to be adopted. The amendments need to remove 
possible conflicts of interest in procedures for allocating and controlling funds for minorities. 
There  are  concerns  over  the  lack  of  transparency  and  overall  institutional  capacity  in 
allocating and auditing funds dedicated to minorities, despite the substantial annual allocation: 
in 2015, minority councils and the minority fund received a total of EUR 1.318 million. The 
capacity of the Ministry for Human and Minority Rights to supervise in substance the legality 
of the work of national minority councils needs to be significantly increased. 

According to the latest census, there are approximately 8 300 Roma and Egyptians living in 
Montenegro. The participation of Roma students in all levels of education improved. Access 
to  healthcare  services  has  remained  difficult  and  the  Roma  minority  remains  the  most 
vulnerable and discriminated community in various areas of life. Roma women are subject to 
double discrimination. Despite this, the community has very limited access to funds destined 
to minorities. Roma continue to be underrepresented in the political sphere and have difficult 
access to the labour market. Informal employment prevails and Roma children are particularly 
exposed to child labour. Active measures to include the community in the job market need to 
be pursued. 

Some  progress  was  made  in  resolving  the  issues  of  displaced  and  internally  displaced 
persons (IDPs). Following years of postponement, the end of 2014 was the final deadline for 
registration.  Under  Montenegro’s  new  law  on  foreigners,  the  category  of  displaced  persons 
has ceased to exist. A simplified procedure to apply for permanent or temporary residence in 
the  country  was  introduced  for  holders  of  an  identity  card  for  internally  displaced  persons, 
while  additional  documents  could  be  provided  at  a  later  stage.  A  total  of  12  854  internally 
displaced  persons  have  applied  since  2009  to  regularise  their  status  in  Montenegro,  while 
around  2  400  are  still  in  the  process  of  doing  so.  It  remains  important  to  follow  up  on  all 

61 

 
cases, to ensure that cases are finalised through support in collecting documents and to ensure 
that internally displaced persons have full access to citizens’ rights. 

Montenegro has not yet introduced a separate procedure for the determination of statelessness, 
despite the ratification of the relevant Convention in 2013, which negatively affects access to 
rights for potential beneficiaries. 

Amendments  to  the  law  on  non-contentious  proceedings  were  adopted  in  April,  facilitating 
subsequent birth registration. The amendments establish a procedure for determining the time 
and place of birth in order to regulate status. Construction of social housing is in progress in 
the  Konik  camp  and  in  some  other  settlements  of  the  country.  Social  integration  activities 
continued for the durable and sustainable integration of those residing in the Konik area. 

4.24.  Chapter 24: Justice, freedom and security 

The EU has common rules for border control, visas, external migration and asylum. Schengen 
cooperation entails the lifting of border controls inside the EU. There is also cooperation in 
the  fight  against  organised  crime  and  terrorism,  and  judicial,  police  and  customs 
cooperation.   

Montenegro  is  moderately  prepared  to  implement  the  acquis  correctly  in  this  area.  Some 
progress  was  made,  through  the  continued  implementation  of  the  action  plan  for  justice, 
freedom  and  security.  Criminal  justice  reform  and  police  reorganisation  have  gained 
momentum, but so far results are limited, in particular in the fight against money laundering, 
trafficking  in  human  beings  and  cigarette  smuggling.  Implementation  of  the  new  legal 
provisions should focus on strengthening cooperation between judicial and law enforcement 
authorities, and on the authorities' specialisation in the different forms of serious crime.  

Reception  centres  for  migration  and  asylum  are  now  operational.  So  far,  they  appear  to  be 
coping  with  the  inflow  of  migrants  passing  through  Montenegro.  The  centres  represent  a 
major step forward in the establishment of a sound migration and asylum management system 
in the country.  

In the coming year, Montenegro should in particular: 

→  establish  a  track  record  of  investigations,  prosecutions,  seizures  and  confiscations  in 
organised crime cases; 

→ further improve its capacity to deal with mixed migration flows, paying particular attention 
to vulnerable groups and minors; 

→ further invest in its border surveillance and control  capacity and  work towards resolving 
border management issues with neighbouring countries. 

(See also the specific recommendations on the fight against organised crime in section 2.3.) 

In February, the government adopted a revised action plan for Chapter 24 on the basis of an 
analysis of progress made and shortcomings identified. This revision mainly consisted of fine-
turning the implementation of reforms planned for 2015 and beyond and setting new, realistic 
deadlines for measures that were not implemented on schedule. 

Legal and irregular migration 

Amendments  to  the  law  on  foreigners  were  adopted  in  December.  They  pave  the  way  for 
future alignment with the Blue Card Directive; their enforcement was put on hold to provide 
additional  time  to  prepare  for  it.  An  assessment  of  the  capacity  of  the  centre  for  irregular 
migrants confirmed that, for the time being, the facilities appear to be coping with the inflow 
of  migrants  arriving  in  the  country.  In  2014,  572  irregular  migrants  were  identified,  mostly 

62 

 
from  neighbouring  countries.  A  police  operation,  in  cooperation  with  other  countries  of  the 
region, resulted in the dismantling of an international smuggling network. Alignment with the 
EU  acquis  on  legal  and  irregular  migration  needs  to  continue,  following  up  on  the  analysis 
conducted by the government in 2014. At operational level, the focus should be on preventing 
people smuggling and increasing authorities’ awareness of vulnerable migrants. 

Asylum 

The  pressure  on  the  Montenegrin  asylum  system  has  continued,  showing  a  similar  trend  to 
that of recent years, despite the reduced number of applications (2 312 in 2014 compared with 
3 554 in 2013). Most of the applicants appear to leave a few days after registration. Subsidiary 
protection  was  granted  in  two  cases  and  refugee  status  in  two  cases.  During  the  peak  of 
arrivals in the second half of 2014, temporary asylum premises had to be used. These remain 
vulnerable  to  criminal  activities,  as  they  are  out  of  the  control  of  the  reception  centre  staff. 
The  official  reception  centre  has  continued  to  accommodate  families  and  individuals.  The 
accommodation  capacity  for  unaccompanied  minors  needs  to  be  increased.  Additional 
members  of  staff  were  allocated  to  the  Asylum  Office  and  its  capacity  has  been  increased. 
The  law  on  asylum  has  to  be  brought  into  line  with  the  EU  acquis,  including  on  appeal 
procedures  in  asylum  cases.  More  work  is  needed  to  remedy  the  lack  of  interpreters  and  to 
facilitate the integration of refugees into society. 

Visa policy 

An overall analysis in preparation of Montenegro's Schengen Action Plan was completed in 
April  2014.  In  September,  Montenegrin  diplomatic  and  consular  posts  abroad  started  being 
connected  to  headquarters  with  a  secure  IT  system:  the  completion  of  the  network  is  a 
prerequisite for future implementation of the national visa system. The number of visas issued 
at the borders remained limited. In March, Montenegro amended the decree on the visa-free 
regime, suspending short-stay visa requirements for nationals of Azerbaijan. The same regime 
remains  in  place  for  citizens  of  Moldova  and  the  United  Arab  Emirates.  Citizens  of 
Kazakhstan, Armenia, Kuwait and Qatar were exempt from short-term visas for the summer 
season (April to October 2015). 

The  implementation  of  the  visa-free  regime  with  the  European  Union  continued  to  run 
smoothly  overall.  There  was  an  increase  in  the  number  of  unfounded  asylum  applications 
lodged  by  Montenegrins  nationals  in  the  EU  and  Schengen-associated  countries,  although 
their relative impact remains low, accounting for around 3 % of the total number of applicants 
from  the  Western  Balkans.  Montenegro  has  focused  on  preventive  measures,  such  as 
circulating instructions to border-crossing points and raising awareness of people travelling to 
EU  Member  States  and  Schengen-associated  countries.  Efforts  should  also  include  more 
effective  border  controls  in  line  with  fundamental  rights  and  implementation  of  short-  and 
long-term  measures  to  improve  the  social  and  economic  situation  of  the  most  vulnerable 
groups of the population most likely to migrate, including Roma. 

Schengen and external borders 

The  implementation  of  the  integrated  border  management  strategy  and  action  plan  has 
continued, with a focus on bilateral issues with neighbouring countries. Further investments in 
border  management  are  required  to  keep  pace  with  the  evolving  challenges  stemming  from 
cross-border crime and mixed migrations. Analyses of border premises, technical equipment 
and human capacity are being finalised and will be used to plan future investments. It appears 
that  departments  in  the  north  have  significantly  less  resources  compared  with  other  areas, 
despite the challenges they face owing to the presence of potential migration and smuggling 
routes in that part of the country.  

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The border police reorganisation was launched with a view to increase efficiency, freeing up 
more  resources  for  fieldwork.  A  mobile  unit  has  been  established  at  central  level,  to  be 
deployed  according  to  risk  analysis  findings.  The  reorganisation  should  be  followed  by  the 
establishment of a well-structured, cost-effective ‘train-the-trainer’ system. An agreement was 
signed with the Ministry of Defence on cooperation on border control, including the joint use 
of radars. Montenegro has continued to participate in training organised by Frontex or based 
on its models, and works  within  the  framework of the Frontex risk  analysis network on the 
Western Balkans. 

On  enforcement,  Montenegro  has  improved  its  track  record  on  detecting  counterfeit 
documents  at  border-crossing  points,  thanks  to  enhanced  cooperation  with  Interpol.  Border 
police  and  customs  have  continued  to  seize  goods  and  drugs  during  their  checks.  However, 
the border police do not yet use their investigative powers.  

Cooperation with neighbouring countries continues to be good, particularly at technical level. 
Montenegro worked with Albania and Kosovo on identifying unauthorised routes across state 
borders.  Efforts  need  to  be  stepped  up  on  this  issue  with  Serbia.  Border  agreements  with 
Bosnia  and  Herzegovina  and  with  Kosovo  were  signed  in  August.  Liaison  officers  from 
Bosnia  and  Herzegovina  and  Montenegro  continued  their  work  on  a  24/7  basis  at  the  Joint 
Centre  for  Police  Cooperation  between  Bosnia  and  Herzegovina,  Montenegro  and  Serbia  in 
Trebinje  to  improve  regional  capacity  to  counter  cross-border  crime  and  illegal  migration.  
The  establishment  of  a  similar  trilateral  centre  in  Plav  is  planned  for  the  next  period.  With 
Serbia, limited progress was registered on border-related bilateral activity. 

Judicial cooperation in civil and criminal matters 

An analysis of the legal framework on criminal matters was completed in October 2014 and 
should now provide concrete steps and timelines for aligning with the relevant parts of the EU 
acquis. A similar analysis was made in December 2014 on aligning with the acquis in civil 
and  enforcement  matters.  In  January,  a  software  application  for  record-keeping  and 
monitoring  of  cases  of  mutual  legal  assistance  in  civil  and  criminal  matters  became  fully 
operational. An agreement on cooperation between Montenegro and Eurojust was initialled in 
April, following Eurojust’s positive assessment of Montenegro’s data protection framework. 

Fight against organised crime 

Track record 

Despite  some  new  cases  in  the  areas  of  drugs,  arms  trafficking,  cybercrime  and  migrant 
smuggling, Montenegro’s track record has shown little progress on complex and cross-border 
crimes  such  as  trafficking  in  human  beings  and  money  laundering.  Financial  investigations 
and seizure and confiscation of assets are used only in a limited number of cases, as there are 
legal issues to be resolved and a lack of know-how on carrying out such operations. 

Two new indictments for money laundering were brought in 2014. One trial is ongoing, while 
the second case resulted in an acquittal. Only few cases of trafficking in human beings were 
launched  and  four  victims  identified,  despite  the  fact  that  Montenegro  is  a  transit  country 
towards Western Europe and remains vulnerable to both domestic and regional trafficking. In 
November, the Podgorica High Court sentenced in absentia a Moldovan national, who was a 
former  victim  of  human  trafficking  and  a  witness  in  a  case  involving  state  officials,  to  one 
year of imprisonment for perjury. This was after the Podgorica Basic Court first acquitted her 
of all charges and then sentenced her to one year on probation.   

64 

 
The  number  of  final  convictions  remains  low  compared  with  the  estimated  scale  of  the 
regional  criminal  market.  A  track  record  of  proactive  investigations  and  final  convictions 
remains to be established.  

Institutional and operational capacity 

Preparations  on  police  cooperation  have  continued  broadly  on  schedule,  including  on 
establishing  a  DNA  database,  for  which  the  software  is  now  operational.  Montenegro’s 
operational agreement with Europol was signed in October 2014 and a police liaison officer to 
be  sent  to  The  Hague  was  appointed  in  April.  The  operational  agreement  needs  to  be  fully 
implemented. Training on intelligence-led policing was provided and the concept now needs 
to  be  expanded  at  national  level,  including  by  adopting  appropriate  operational  rules. 
Montenegro’s newly-established Special Prosecutor’s Office has centralised powers to tackle 
organised crime and allows for specialisation, including on the police side. The special police 
unit is not yet operational.   

In the fight against money laundering, a new economic crime unit has been set up following 
the reorganisation of the police. The new unit includes seven officers, whereas to date there 
was  only  one  police  officer  in  charge  of  this  type  of  crime.  The  new  law  on  the  Special 
Prosecutor’s  Office  centralises  powers  to  tackle  this  offence,  allowing  for  specialisation  at 
prosecutorial level. A similar level of specialisation is needed within the judiciary. 

In  the  fight  against  trafficking  in  human  beings,  multi-disciplinary  cooperation  was 
strengthened by setting up a coordination team. A specialised police unit was also established 
and  requires  further  training.  Training  continued  for  the  authorities,  including  the  judiciary, 
the  police  and  local  authorities.  The  Montenegrin  authorities  need  to  look  for  and  identify 
victims of human trafficking in a proactive manner (e.g. using their inspection services). The 
shelter for victims requires internal reorganisation due to the low number of victims hosted. 

Legal framework 

The  Criminal  Procedure  Code  was  amended  in  June  to  improve  cooperation  between  the 
prosecution and the police and to provide the latter with additional powers during preliminary 
investigations.  Amendments  to  the  law  on  internal  affairs  on  eliminating  possible  political 
influence in the work of the police and on procedural safeguards were adopted in December. 
New units on organised and economic crime have been established. 

A new law on the seizure and confiscation of assets was adopted in September 2015, with a 
view to expand confiscation powers by providing more detail on the relevant provisions of the 
Criminal Procedure Code. A new law on witness protection was adopted in 2014.  

The  overall  criminal  justice  reform  and  the  police  reorganisation  increase  the  capacity  and 
specialisation of the national administration in fighting serious and organised crime. This now 
needs to be followed by appropriate training for the staff involved and a solid track record on 
implementation,  including  better  cooperation  between  judicial  and  law  enforcement 
authorities.  Future  amendments  to  the  law  on  internal  affairs  should,  in  particular,  focus  on 
the issue of single entry point and on transparent and merit-based recruitment to increase the 
professionalism  of  the  police.  The  police  academy  invests  in  training  future  police  officers, 
while only part of its graduates is actually hired by the Police. 

Montenegro  needs  to  put  in  place  a  solid  system  to  prevent  and  combat  money  laundering.  
The  lack  of  strong  coordination  mechanisms  between  the  various  actors  in  the  chain  makes 
that results in this area are limited. The new law adopted in 2014 aims at incorporating the EU 
Fourth Directive and the standards of the Council of Europe’s Committee of Experts on the 

65 

 
Evaluation  of  Anti-Money  Laundering  Measures  (MONEYVAL).  A  new  2015-2018  action 
plan on fighting money laundering and the financing of terrorism was adopted in May.  

Trafficking in human beings remains a concern. Despite progress on the legal and institutional 
aspects,  results  are  limited,  both  in  terms  of  victims  identified  and  cases  prosecuted.  In 
January, the government adopted the 2015 action plan to implement the strategy for the fight 
against  trafficking  in  human  beings.  Amendments  to  the  law  on  foreigners  and  the  law  on 
compensation  to  victims  of  crime  include  victims  of  human  trafficking  in  the  list  of 
beneficiaries. 

Strategic framework 

Montenegro  drew  up  a  national  serious  and  organised  crime  threat  assessment  (SOCTA)  in 
September  2014,  inspired  by  the  EU  SOCTA  methodology.  It  outlines  the  main  areas  on 
which  law  enforcement  authorities  will  focus  in  the  next  few  years:  cocaine  and  heroin 
trafficking, the smuggling of cigarettes and other goods, the smuggling of illegal migrants and 
human  trafficking,  high-level  corruption  and  robberies.  The  national  SOCTA  is  currently 
being  implemented  and  a  mid-term  assessment  was  done  in  June  2015.  A  strategy  and  an 
action plan for the Fight against Illicit Trade in Tobacco Products were adopted in July. 

Fighting  organised  crime  and  corruption  remains  fundamental  to  countering  criminal 
infiltration of the political, legal and economic systems. 

Fight against terrorism 

In March, amendments to the Criminal Code were adopted, criminalising the phenomenon of 
foreign terrorist fighters in line with UN Security Council Resolution 2178 (2014). An inter-
ministerial group has been set up to monitor the situation in the country and to assess terrorist 
threats.  Cooperation  with  international  partners  has  intensified,  particularly  on  exchanging 
information on people suspected to have travelled to conflict zones. Montenegro must further 
strengthen its preventive tools and anti-radicalisation measures. Efforts need to be enhanced 
to identify, prevent and disrupt any movement of foreign terrorist fighters traveling to conflict 
areas such as Iraq and Syria. In February, parliament adopted the law on firearms, introducing 
a  moratorium  on  firearms.  In  response  to  the  moratorium,  the  public  has  started  to  hand 
firearms in to the authorities. Work has been finalised to secure two warehouses. 

Cooperation in the field of drugs 

Montenegro prepared its second annual report on the implementation of the 2013-2020 national 
action plan on drugs. Implementation of the action plan has resulted in progress on aligning 
the legal and institutional system with international standards, including through training on 
drug prevention. A draft plan has been prepared and training has been given to civil servants 
on  setting  up  a  national  drug  information  system  and  a  national  early  warning  system. 
Cooperation  is  in  place  with  Europol  on  new  detected  drugs  and  with  civil  society 
organisations  on  the  rehabilitation  of  drug  addicts.  The  capacity  of  the  Montenegrin 
authorities to identify new psychoactive substances is limited and needs to  be strengthened. 
Destruction of seized drugs is not yet systematic. An appropriate process for the destruction of 
precursors  has  yet  to  be  set  up. In  October  2014,  Montenegro  submitted  to  the  European 
Monitoring  Centre  for  drugs  and  drug  addiction  (EMCDDA)  its  first  report  on  the  use  of 
drugs in the general population as well as information on the new psychoactive substances. 

On  enforcement,  in  2014  Montenegro  reported  a  30 %  increase  in  drug  seizures.  The  good 
performance  achieved  in  2014  appears  to  be  the  result  of  a  quality  risk  analysis  and  of  the 
high number of joint controls by police and customs, notably in the port of Bar.  

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Customs cooperation 

initial 

investigative  powers 

to  customs  officials 

The  amendments  to  the  Criminal  Procedure  Code  adopted  in  June  2015  include  provisions 
giving 
to  examine  suspects.  The 
administrative  capacity  of  Montenegro’s  customs  administration  was  improved  through 
cooperation  with  EU  Member  States,  including  on  the  exchange  of  intelligence  among 
customs administrations and in the operational application of the Naples II Convention. The 
Montenegrin  customs  authorities  participated  in  regional  operations  to  prevent  distribution 
and  smuggling  of  counterfeit  goods  and  piracy.  The  anti-smuggling  department  of  the 
customs administration stepped up joint inspections with the tax authorities and the police to 
prevent  illegal  trade  in  excise  products,  including  cigarettes  and  alcohol.  These  inspections 
resulted in seizures of significant quantities of tobacco, cigarettes and pyrotechnic devices. 

For measures against counterfeiting of the euro see Chapter 32 — Financial control. 

4.25.  Chapter 25: Science and research 

The  EU  provides  significant  support  to  research  and  innovation.  All  Member  States  can 
benefit from the EU’s research programmes, the more so where there is scientific excellence 
and solid investment in research. 

There is a good level of preparation in this chapter and some progress was made in the past 
year. In the coming year, Montenegro should in particular: 

→ enhance efforts to increase investment in research, in particular through stimulating 
investment by the private sector; 

→ increase and focus efforts on participation in the EU Programme 'Horizon 2020'. 

Montenegro  participates  in  the  EU  Research  and  Innovation  programme  'Horizon  2020' 
(H2020)  as  an  associated  country.  Administrative  capacity  for  H2020  is  good,  with  a 
nominated  network  of  National  Contact  Points  (NCPs)  and  representatives  in  the  H2020 
Programme Committees. Workshops and information days were organised, and regular "Open 
Door Days" on specific H2020 topics were held, aimed at increasing participation by bringing 
together  relevant  stakeholders.  However,  based  on  the  first  H2020  Statistics,  successful 
participation is very low. Montenegro should assess its current H2020 performance; increase 
and  focus  efforts  on  areas  of  strategic  interest  to  the  country;  and  stimulate  further 
participation  of  SMEs  in  these  actions.  Participation  in  EUREKA  is  also  limited.  In  May, 
Montenegro  became  a  full  member  of  COST.  Montenegro  signed  the  new  2014-2020 
Framework  Programme  for  Cooperation  with  the  International  Atomic  Energy  Agency  in 
October. Montenegro cooperates at regional level as co-signatory of the Regional Strategy on 
Research for  Innovation,  with  the  Central European Initiative, and UNESCO.  In  December, 
parliament adopted amendments to the law on scientific research activities. 

Regarding integration into the European Research Area (ERA), Montenegro nominated an 
observer delegate and regularly attends meetings with the European Research and Innovation 
Committee; but participation in other related ERA advisory bodies should also be considered.  

Despite  a  continuous  increase  in  public  funding  over  recent  years,  overall  the  level  of 
investment  in  research  remains  low:  0.38%  of  GDP  in  2013,  far  from  Montenegro's  own 
target of 1.40% by 2016. From improved statistics, this represents, moreover, a decrease from 
the level of investment reported last year. This highlights the importance of good and reliable 
statistics, in particular for private expenditure. Serious efforts will thus be required to increase 
the  level  of  investment  in  research,  particularly  from  the  private  sector.  Construction  works 
started in July on the Science and Technology Park, 'Technopolis' and the BIO-ICT Centre of 

67 

 
Excellence was further supported to increase capacity. In September, a National Roadmap for 
Research Infrastructure - giving a good overview of the current infrastructures and potential - 
was adopted by the Montenegrin Council for Scientific Research Activities, which is a step in 
the  right  direction.  Under  the  Higher  Education  and  Research  for  Innovation  and 
Competitiveness  (HERIC)  project,  a  study  mapping  Montenegro's  scientific  and  research 
diaspora  was  adopted  by  the  Government  in  November  aimed  at  stimulating  the  return  of 
scientists abroad to engage in the research community in Montenegro.    

On Innovation Union, new legislation on innovation activities has yet to be adopted.   

4.26.  Chapter 26: Education and culture 

The  EU  supports  cooperation  in  education  and  culture  through  funding  programmes  and 
through  the  open  method  of  coordination.  Member  States  must  also  prevent  discrimination 
and facilitate education of children of EU migrant workers. 

There is a good level of preparation in this chapter. Some progress was made in education; 
the  national  qualifications  framework  is  now  referenced  with  the  European  Qualifications 
Framework.  In the coming year, Montenegro should in particular: 

→  continue  with  curricular  reform  in  primary  and  secondary  education  to  teach  basic  and 
transversal skills and focus on learning outcomes; improve teacher education accordingly; 

→ revise enrolment policies for vocational and higher education. 

On education, training and youth, a new law on higher education was adopted in October 
2014.  It  provides  for  non-discriminatory  access  to  education  for  EU  and  Montenegrin 
nationals  and  introduces  stricter  criteria  on  quality  assurance,  study  programmes  and 
financing.  Concerning  students  with  disabilities,  the  law  also  includes  the  principle  of 
affirmative  action  for  enrolment,  as  well  as exemption  from  tuition  fees.  Implementation  of 
the  new  law  should  be  ensured..  An  external  evaluation  report  on  higher  education 
programmes and labour market relevance carried out by the European University Association 
was  adopted  by  the  government  in  December.  Its  recommendations  should  be  followed  up, 
with employers actively engaged in the process. Several allegations of plagiarism of master’s 
and PhD theses are under investigation. 

Montenegro’s national qualifications framework (NQF) is now harmonised with the European 
Qualifications Framework. In line with the NQF, Montenegro needs to revise and implement 
outcome-based  curricula  at  all  levels  of  education.  Teacher-training  programmes  should  be 
modernised to result in basic and transversal skills being taught. 

The  annual  budget  for  education  is  just  above  4%  of  GDP.  Statistics  for  2013  show  that 
participation  in  life-long  learning  programmes  (aged  25-64)  remains  limited  at  3.1 %.  The 
figure for early school leavers (age 18-24) in 2013 was 5.7%, well within the EU 2020 goal of 
<10%.  The  rate  of  youth  unemployment  with  tertiary  education  in  2014  was  28.2%. 
Numerous teacher seminars were held to address the low 2012 PISA results. Reform planning 
to  rationalise  entry  from  vocational  to  higher  education  should  continue.  Awareness-raising 
activities were carried out on the importance of pre-school education (enrolment was 35.8% 
for 2013-14 school year). Further actions must be taken to provide adequate support services 
for children with special education needs.   

The government's professional development training programme for graduate traineeships of 
nine months is now in its third year of implementation. An evaluation survey by employers 
shows that 20-25% of trainees were employed upon completion of the traineeship each year. 

68 

 
Montenegro  participates  actively  in  the  Erasmus+  programme  and  major  information  days 
were held promoting its opportunities.   

On culture, the 2015 action plan to implement the national programme for the development 
of culture and the 2015 programme for the protection and preservation of cultural assets were 
adopted.  The  memorandum  of  understanding  on  Montenegro’s  participation  in  the  ‘Europe 
for  citizens  2014-2020’  programme  was  signed  in  October.  Montenegro's  participation  in 
Creative Europe and the Media Programme could be improved. 

4.27.  Chapter 27: Environment and climate change 

The  EU  promotes  strong  climate  action,  sustainable  development  and  protection  of  the 
environment. EU law contains provisions addressing climate change, water and air quality, 
waste  management,  nature  protection,  industrial  pollution,  chemicals,  noise  and  civil 
protection.  

Preparations  in  this  area  are  still  at  an  early  stage.  Montenegro  made  some  progress  on 
aligning and implementing legislation on environment and climate change. 

In the coming year, Montenegro should in particular: 

→ further step up its strategic planning on climate change and start implementing its intended 
nationally determined contribution to the expected 2015 Paris Climate Agreement; 

→ strengthen its administrative and coordination capacity and intensify its work on strategies 
and action plans; 

→ make resolute efforts to protect and manage the Ulcinj Salina nature and bird reservation 
site, in line with the requirements of nature conservation. 

In the area of horizontal legislation, the new law on the environment is still to be adopted. 
Montenegro  needs  to  do  more  both  at  national  and  local  level  to  carry  out  environmental 
impact  assessments  (EIA)  and  strategic  environmental  assessments.  On  access 
to 
environmental  information,  the  three  Aarhus  Centres  have  continued  to  function  well. 
Montenegro has taken some steps to improve cooperation with civil society organisations, but 
more work is needed to achieve a satisfactory level of cooperation.  

On air quality, Montenegro amended in July its law on air quality, to align more closely with 
the acquis. The national network of air quality monitoring was expanded in March with the 
opening of five pollen monitoring stations. 

In July, the government adopted the national strategy for waste management until 2030 and 
the national waste management plan 2015-2020. The law on waste management needs to be 
adopted. 

On  water  quality,  amendments  to  the  law  on  waters  to  further  align  with  the  acquis  were 
adopted  in  July.  The  Ministry  of  Agriculture  adopted  the  2015  programme  to  encourage 
projects in the water sector. 

On  nature  protection,  in  February  the  government  adopted  the  2015  forest  management 
programme. In April, Montenegro designated its first regional park: the ‘Piva’ regional park 
in the municipality of Plužine. This will increase the percentage of Montenegrin territory that 
is protected. The government also took some initial steps to protect the Ulcinj Salina nature 
and  bird  reservation  site.  Resolute  efforts  are  needed  to  protect  this  site  by  preserving  its 
ecosystem,  implementing  sustainable  management  of  the  site  compatible  with  the  nature 
protection  requirements  and  ensuring  legal  protection.  Investments  in  hydropower  need  to 
ensure that EIA, water legislation and nature protection obligations are respected, especially 

69 

 
for  national  protected  areas  and  areas  of  high  natural  value  that  could  potentially  become 
protected Natura 2000 sites.  

On  industrial  pollution  control  and  risk  management,  amendments  to  the  law  on 
integrated prevention and control of environment pollution were adopted in July.  

On  chemicals,  in  January  the  government  adopted  the  2015-2018  national  strategy  for  the 
management of chemicals. The amendments to the law on flammable liquids and gases were 
adopted in July.  

In  March,  parliament  ratified  the  agreement  between  Montenegro  and  the  EU  on 
Montenegro’s participation in the EU Civil Protection Mechanism. 

On  climate  change,  Montenegro  made  some  progress  on  legislative  alignment  and  on 
implementation,  in  particular  on  fuel  quality,  ozone-depleting  substances  and  fluorinated 
gases  through  amendments  to  the  law  on  air  protection.  The  law  should  also  enable  the 
Environment Agency to improve its monitoring and reporting of greenhouse gases emissions, 
and  enable  alignment  with  the  EU  monitoring  mechanism  regulation.  The  government 
submitted  a  Second  National  Communication  under  the  UN  Framework  Convention  on 
Climate Change in May 2015 and adopted and submitted its intended nationally determined 
contribution  (INDC)  to  the  expected  2015  Paris  Climate  Agreement.  INDC  is  part  of  the 
Climate Strategy, also adopted in September 2015. Their implementation should be consistent 
with the EU 2030 Framework. Significant efforts are also needed to integrate climate action 
into  all  relevant  sectoral  policies  and  strategies.  Montenegro  needs  to  continue  paying 
attention to adaptation to climate change. 

Steps  were  taken  to  improve  coordination  and  strengthen  administrative  capacity  with  the 
creation  of  two  new  Directorates-General  within  the  Ministry  of  Sustainable  Development 
and  Tourism,  and  the  recruitment  of  staff.  Administrative  capacity  must  continue  to  be 
strengthened throughout all sectors.  

4.28.  Chapter 28: Consumer and health protection 

EU rules protect consumers in relation to product safety, dangerous imitations and liability 
for  defective  products.  The  EU  also  ensures  high  common  standards  for  tobacco  control, 
blood, tissues, cells and organs, patients’ rights and communicable diseases.  

Montenegro is moderately prepared on consumer and health protection. Some progress was 
made in this area. However, substantial further alignment of legislation is needed in order to 
meet EU standards and quality on both consumer protection and public health.  

In the coming year, Montenegro should in particular: 

→ do more to improve health promotion and prevention and achieve sustainable improvement 
in patient safety and the quality of healthcare. 

As regards consumer protection, in February Montenegro adopted the annual action plan to 
implement the 2012-2015 national consumer protection programme. Consumer representation 
in the first collective lawsuit launched by the Consumer Protection Centre (CEZAP) increased 
to  300;  to  date,  one  hearing  has  been  held.  Implementing  legislation  was  adopted  for  the 
consumer  protection  law.  More  public  awareness  of  the  banking  ombudsman  and  the 
possibility  to  seek  out-of-court  settlements  is  needed,  as  well  as  additional  support  for  civil 
society organisations in the field of consumer protection. The number of inspections (safety 
and  non-safety  related)  performed  by  the  Administration  for  Inspection  Affairs  and  of 
consumer complaints has increased, as has the number of irregularities found following such 
inspections and complaints. 

70 

 
On safety-related issues, the law on general product safety was adopted in October. Further 
amendments are necessary to this law, as well as the law on consumer protection, to achieve 
full  alignment  with  the  acquis.  In  addition,  administrative  and  enforcement  capacity  needs 
improving to ensure correct implementation.  

On non-safety related issues, more work is needed on consumer education and information. 

Public health promotion for disease prevention and the implementation of e-health remains 
insufficient. The death of a new-born baby and infections at the Bijelo Polje hospital led to the 
resignation of the Minister of Health and to demonstrations for better health governance and 
transparency. On tobacco control, the law allowing smoking in public places was extended 
until  1 January 2017.  This  needs  to  be  addressed  to  meet  EU  recommendations  on  the 
prevention of smoking and on smoke-free environments. 

The 2015 communicable disease programme for mandatory immunisation was adopted and a 
multi-sectoral  committee  for  surveillance  and  reporting  of  Ebola  was  set  up.  Montenegro 
needs  to  further  align  its  legislation  with  the  acquis  on  communicable  diseases,  to  ensure 
adequate capacity for its implementation and prepare for participation in the EU Surveillance 
System  and  reporting  to  the  EU  communicable  diseases  networks.  Montenegro  needs  to 
provide  sustainable  financing  for  services  dealing  with  HIV/AIDS  and  to  improve  capacity 
for and provision of psychosocial support and help to patients with chronic diseases. 

Montenegro  needs  to  do  more  to  implement  its  national  drug  abuse  prevention  strategy, 
especially among young people, and civil society needs to be actively involved in the National 
Council for the prevention of drug abuse. National capacity on non-communicable diseases 
was  strengthened  to  manage  and  implement  screening  for  early  detection  of  alcohol  abuse. 
Consultations started on implementing the national early detection and treatment programme 
for breast cancer and cervical cancer. 

On  blood,  tissues,  cells  and  organs,  activities  took  place  to  support  the  establishment  of  a 
modern  blood  transfusion  system,  based  on  EU  quality  and  safety  standards.  A  new  Blood 
Transfusion Institute has  been opened but is not yet fully functional. Blood handling,  blood 
component and tissue and cell facilities need upgrading and restructuring to meet EU quality 
and safety standards and voluntary blood donation needs more promotion. Montenegro needs 
to align its legislation with the acquis on substances of human origin and to provide adequate 
administrative capacity to implement and enforce legislation covering blood, tissues, cells and 
organs.    

Montenegro  needs  to  improve  its  mechanisms  for  the  sound  implementation  of  the  law  on 
patients’  rights  in  cross-border  healthcare  and  raise  awareness  on  this  subject  and  on 
existing  procedures.  Preparations  to  establish  legal  bases  and  sufficient  administrative 
capacity for EU cross-border healthcare are still at an early stage. An action plan to improve 
the quality of mental health care was adopted in July. Community services also need to be 
strengthened  and  sufficient  financial  resources  provided.  On  health  inequalities,  activities 
have  been  carried  out  to  inform  the  Roma  population  about  their  right  to  healthcare  in  all 
health facilities. A working group has been established to prepare the relevant framework and 
develop appropriate training to standardise the profession of Roma health mediator. 

71 

 
 
 
4.29.  Chapter 29: Customs union 

All Member States are part of the EU customs union and follow the same customs rules and 
procedures.  This  requires  legislative  alignment  as  well  as  adequate  implementing  and 
enforcement capacity and access to the common computerised customs systems. 

Montenegro  is  moderately  prepared  for  customs  union.  Some  progress  was  made  on 
customs legislation. In the coming year, Montenegro should in particular: 

→ ensure full implementation of business and IT strategies for the customs authorities; 

→  step  up  preparations  for  possible  accession  to  the  Convention  on  a  common  transit 
procedure, accompanied by the necessary capacity-building. 

On customs legislation, the decree on the conditions and procedures for exercising the right 
to  exemption  from  customs  duties  was  adopted  in  March,  further  aligning  Montenegrin 
provisions on duty relief. The customs tariff was updated in line with the 2015 version of the 
EU’s  combined  nomenclature.  Progress  was  also  made  with  the  adoption  in  June  of 
implementing  legislation  for  the  authorised  economic  operator  programme.  Areas  where 
further harmonisation is required include transit, intellectual property rights, drug precursors, 
customs'  risk  management  and  security  aspects.  As  of  February,  the  rules  of  origin  in  the 
Stabilisation  and  Association  Agreement  are  harmonised  with  the  Regional  Convention  on 
pan-Euro-Mediterranean preferential rules of origin.  

In  January,  the  customs  administration  became  fully  responsible  for  the  administration  of 
excise duties, taking over the tasks previously performed by the tax administration. As regards 
its  administrative  and  operational  capacity,  the  customs  administration  strengthened  the 
risk analysis system by developing its IT capacity. Despite such improvements, the IT units 
remain  understaffed  and  full  implementation  of  the  business  and  IT  strategies  needs  to  be 
ensured. More work is also needed to increase the customs authorities’ operational capacity to 
apply  simplified  procedures  and  security  measures.  Finally,  Montenegro  should  prioritise 
preparations for the implementation of a customs transit system in compliance with the EU’s 
new  computerised  transit  system.  The  agreement  between  the  EU  and  Montenegro  on 
participation in the Customs 2020 programme entered into force in December 2014. 

4.30.  Chapter 30: External relations 

The  EU  has  a  common  trade  and  commercial  policy  towards  third  countries,  based  on 
multilateral and bilateral agreements and autonomous measures. There are also EU rules in 
the field of humanitarian aid and development policy.  

Overall,  Montenegro  has  reached  a  good  level  of  preparation  on  external  relations.  Some 
progress was made on trade and Montenegro acceded to the WTO Government Procurement 
Agreement.  Preparations  on  development  and  humanitarian  aid  remain  at  an  early  stage.  In 
the coming year, Montenegro should in particular: 

→ complete the alignment of its legislation with the acquis on exports of dual-use goods.  

→ put together an action plan for its remaining preparations in terms of legislative alignment, 
bringing  international  agreements  into  conformity  with  the  acquis  and  enhancement  of 
administrative and control capacity. 

On  common  commercial  policy,  in  October  2014  the  WTO  Committee  on  Government 
Procurement adopted a decision on Montenegro’s accession to the Government Procurement 
Agreement. In May, Montenegro's parliament ratified this decision. Amendments to the law 
on  foreign  trade  were  adopted  in  December,  to  further  align  legislation  with  the  acquis.  In 
June  the  control  list  on  dual-use  goods  was  brought  in  line  with  Regulation  1382/2014. 

72 

 
Further  alignment  with  the  acquis  of  the  law  on  control  of  exports  of  dual-use  goods  is 
needed. Administrative and control capacity should be further improved.  

Regarding  bilateral  agreements  with  third  countries,  Montenegro’s  negotiations  with 
Russia on the protocol to the free trade agreement, and related negotiations with Belarus and 
Kazakhstan,  were  stalled  by  Russia  after  Montenegro  aligned  with  the  EU  sanctions  in  the 
context of Russia’s illegal annexation of Crimea and events in eastern Ukraine. An economic 
cooperation  agreement  was  signed  with  Albania  in  February.  Montenegro  is  currently 
negotiating bilateral investment treaties with 12 countries, including four EU Member States. 
Montenegro  continues  to  play  an  active  role  in  the  Central  European  Free  Trade  Area 
(CEFTA). 

Montenegro needs to further improve its institutional and financial capacity on development 
policy and humanitarian aid. Humanitarian contributions are still decided on a case-by-case 
basis  in  the  absence  of  a  legislative  framework.  Montenegro  has  joined  the  EU  Civil 
Protection Mechanism. 

4.31.  Chapter 31: Foreign, security and defence policy 

Member  States  must  be  able  to  conduct  political  dialogue  in  the  framework  of  the  foreign, 
security and defence  policy,  to  align with EU  statements, to take part in EU actions and to 
apply agreed sanctions and restrictive measures. 

Montenegro has a good level of preparation. Some progress was made with the adoption of 
the law on international restrictive measures. Montenegro continued to participate in civil and 
military crisis management missions and to align itself with relevant EU positions. 

The  regular  political  dialogue  between  the  EU  and  Montenegro  on  foreign  and  security 
policy  issues  has  continued  (For  more  information  on  bilateral  relations  with  other 
enlargement  countries  and  EU  Member  States,  see  Political  criteria  —  Regional  issues  and 
international obligations). 

On  the  common  foreign  and  security  policy  (CFSP),  Montenegro  aligned,  when  invited, 
with  all  relevant  EU  declarations  and  Council  decisions  (100 %  alignment).  This  included 
implementation of restrictive measures in the context of Russia’s illegal annexation of Crimea 
and events in eastern Ukraine. In December 2014, parliament adopted the law on international 
restrictive  measures.  (As  regards  the  International  Criminal  Court,  see  Political  criteria  — 
Regional issues and international obligations.) 

Montenegro  continued  to  participate  in  some,  but  not  all,  international  export  control 
arrangements  and  instruments  concerning  non-proliferation.  In  March,  parliament  adopted 
the law on ratification of the Convention on Nuclear Safety. Montenegro continued to comply 
with international commitments on small arms and light weapons, including the aims of the 
EU strategy on this subject.     

On cooperation with international organisations, preparations for NATO membership are 
under way, particularly in the area of security sector reform. 

On security measures, the EU-Montenegro security agreement continues to be implemented 
smoothly. Montenegro should continue to align with the EU security rules. 

Montenegro continued to participate in civil and military crisis management missions under 
the common security and defence policy (CSDP), in particular EU NAVFOR Atalanta and 
EUTM  Mali.  Montenegro  took  part  in  UN  operations,  in  particular  UNFICYP.  Montenegro 
also  participated  in  the  International  Security  Assistance  Force  (ISAF)  mission  in 

73 

 
Afghanistan. After the mandate of the ISAF expired at the end of 2014, the officers deployed 
by Montenegro continued to serve in the NATO-led Resolute Support mission. 

4.32.  Chapter 32: Financial control 

Based  on  international  standards,  EU  financial  control  rules  promote  sound  financial 
management  of  national  income  and  expenditure.  They  also  protect  the  EU's  financial 
interests against fraud in the management of EU funds and the euro against counterfeiting. 

Montenegro  is  moderately  prepared  on  financial  control.  Good  progress  was  achieved  in 
the past year in all areas. The managerial accountability principle is not yet fully embedded in 
the  management  culture  and  responsibilities  are  rarely  delegated.  Significant  efforts  are 
needed to implement public internal financial control (PIFC) in public administration and in 
state-owned enterprises. In the coming year, Montenegro should in particular: 

→  ensure  systematic  implementation  of  the  government’s  recommendations  following  the 
annual PIFC review to strengthen the internal control framework at central and local levels; 

→ improve capacity of the State Audit Institution and increase performance audit work; 

→ ensure implementation of the new national anti-fraud strategy. 

Public internal financial control 

Montenegro  is  implementing  its  2013-17  PIFC  strategy  and  action  plan,  to  be  updated  in 
line  with  the  new  public  financial  management  reform  programme  (2016-2020).  Links  to 
PIFC need to be further strengthened in the new PAR strategy, particularly on the delegation 
of responsibilities. The Central Harmonisation Unit reports annually on implementation of the 
strategy to the government, which adopts conclusions. While most of the conclusions on the 
2013 report were addressed, only 14 % were fully implemented. 

The  Central  Harmonisation  Unit  (CHU)  is  responsible  for  methodological  guidance, 
training  and  monitoring  of  implementation  of  the  PIFC  legislation.  Its  capacity  is  gradually 
improving  and  increase  focus  on  methodological  guidance  and  monitoring.  In  June  it 
published its first consolidated report on the public sector's internal financial control system. 
It provides a realistic picture of the state play and the challenges to further implementation.. 

The  PIFC  law  regulates  financial  management  and  control  (FMC)  in  line  with  the 
Committee  of  Sponsoring  Organisations  (COSO)  Internal  Control  framework  and  the 
guidelines  of  the  International  Organisation  of  Supreme  Audit  Institutions  (INTOSAI).  The 
amendments  adopted  in  December  provide  an  opportunity  to  improve  delegation  of 
responsibilities  within  organisations.  More  efforts  are  needed  to  integrate  risk  management 
into regular governance processes. Managers responsible for FMC are high-level officials, but 
their involvement in practise remains limited. Pilot mapping of internal control processes was 
launched at central and local level, and needs to continue on a larger scale. Few budget users 
have finalised FMC rulebooks. There are serious challenges at local level, where large arrears 
indicate  internal  control  failures.  The  2014  law  on  budget  and  fiscal  responsibility provides 
for  a  centralised  budget  inspection  function  to  act  on  reports  or  suspicions  of  fraud  and 
corruption in financial management. Implementing legislation is still to be adopted. 

Internal audit is governed by the PIFC law, in line with the international standards. Internal 
audit capacity continues to be an issue of concern. Most public sector entities legally required 
to establish an internal audit unit have done so, but some have no staff. There was progress on 
the  certification:  over  75 %  of  auditors  are  now  certified  by  either  national  or  international 
certification schemes. A structured in-service training programme needs to be put in place. 

74 

 
 
External audit 

Montenegro’s constitutional and legal framework ensures independence of the State Audit 
Institution  (SAI),  in  line  with  the  INTOSAI  standards.  The  president  and  four  members  of 
SAI's  senate,  nominated  by  parliament,  have  immunity  by  virtue  of  their  office,  cannot  be 
members of a political party and are not allowed to have any other professional activity.  

The SAI’s institutional capacity continues to be an issue of concern. The SAI should have 
83  staff  in  total.  To  date,  the  SAI  has  39  auditors,  which  is  half  the  number  of  auditors 
foreseen.  This  is  insufficient  for  the  SAI's  responsibilities,  including  a  20 %  increase  in  the 
number of audits in its 2015 audit plan. Limited office space restricts recruitments. The SAI 
made  progress  in  implementing  its  2012-2017  strategic  development  plan  and  adopted  new 
rules  of  procedure  in  January.  It  has  a  structured  training  policy,  including  a  certification 
programme:  70 %  of  external  auditors  are  certified.  The  SAI  foresees  an  internal  audit 
function and is in the process of recruiting its first internal auditor. 

The SAI improved the quality of audit work in January by adopting new methodologies for 
financial  and  regularity  audits  and  for  performance  audits,  in  line  with  the  international 
standards  of  the  Supreme  Audit  Institutions  (ISSAI)  and  the  guidelines  on  audit  quality 
control.  It  is  shortly  expected  to  adopt  a  revised  code  of  ethics.  It  has  started  to  assess  the 
internal control environment of audited bodies and has provided recommendations. The SAI's 
first  performance  audit  was  published  at  the  end  of  2014.  However,  its  capacity  to  conduct 
performance audits needs to be significantly strengthened and coverage increased.  

On the impact of audit work, SAI reports are public and its cooperation with media and non-
governmental  organisations 
its 
recommendations needs to improve. The government set up a formal mechanism to follow up 
on external audit recommendations  but it lacks transparency and no time limits are in place 
for addressing weaknesses. Parliament’s capacity to ensure effective scrutiny over the whole 
budgetary process, including SAI audit reports and recommendations, needs to be improved. 

improving.  However, 

implementation  of 

the 

is 

Protection of the EU’s financial interests 

Montenegro has reached a high level of acquis alignment. Montenegro’s national anti-fraud 
coordination  service  (AFCOS)  was  established  in  2013  under  the  direct  authority  of  the 
Minister  of  Finance  as  a  coordination  body  for  the  AFCOS  network,  which  includes  13 
different  institutions  and  services.  However,  the  AFCOS'  capacity  needs  to  be  significantly 
strengthened.  A  national  anti-fraud  strategy  was  adopted  by  the  government  in  April. 
Cooperation  with  the  European  Commission  has  been  established.  Montenegro  has 
adopted procedures on the reporting of irregularities and suspected fraud cases for all bodies 
involved in the management of EU funds. The first AFCOS report was submitted in February. 
On-line reporting through the European Anti-Fraud Office (OLAF) Irregularity Management 
System has been established and training has been provided in this respect. 

Protection of the euro against counterfeiting 

There  is  a  high  level  of  acquis  alignment  on  definitions,  competent  authorities  and 
procedures to deal with counterfeit money. In October 2014, a decision on medals and tokens 
was  adopted.  A  law  on  the  ratification  ratify  the  1929  International  Convention  for  the 
suppression of counterfeiting currency is in parliament for adoption. 

Technical analysis of suspicious euro banknotes and coins is performed by the Central Bank, 
which set up three national  centres for  this  purpose. Cash handlers are obliged to check the 
authenticity of euro notes and coins and to withdraw all ‘suspicious’ money from circulation 
immediately.  A  failure  to  report  is  punishable  under  the  Criminal  Code.  Cash  handlers  in 

75 

 
commercial  banks  and  the  post  office  are  trained  to  systematically  use  devices  to  detect 
counterfeits.  Montenegro  participates 
international  cooperation  on  counterfeiting 
prevention and information sharing. The Central Bank has cooperation agreements in place 
with the European Commission and the European Central Bank. 

in 

4.33.  Chapter 33: Financial and budgetary provisions 

Rules for funding the EU budget provide for contributions based mainly on the gross national 
income of each Member State as well as from value-added tax and customs duties. 

Preparations  in  this  area  are  at  an  early  stage.  There  was  some  progress  on  financial  and 
budgetary provisions. 

Montenegro’s  rules  of  administration  for  the  own  resources  system,  including  traditional 
own resources, the value added tax-based resource and the gross national income-based 
resource,  are  not  yet  aligned  with  the  acquis.  (For  developments  in  the  underlying  policy 
areas,  see  Chapters  16  —  Taxation;  18  —  Statistics;  29  —  Customs  union;  and  32  —
Financial control.) 

On  administrative  infrastructure,  the  administrative  capacity  of  the  institutions  in  policy 
areas  that  indirectly  affect  the  own  resources  system  (customs,  taxation,  statistics,  financial 
control) needs to be further strengthened. 

The  department  established  to  coordinate  and  manage  the  EU’s  own  resources  needs  to 
become fully operational to ensure the correct calculation, accounting, forecasting, collection, 
payment and control of own resources and reporting to the EU on the implementation of the 
EU’s own resources rules. 

76 

 
Annex I – Relations between the EU and Montenegro 

Within  the  framework  of  the  accession  negotiations,  by  September  2015,  20  chapters, 
including chapters 23 and 24 on the rule of law, had been opened, two of which, i.e. science 
and research, and education and culture, have been provisionally closed. 

Montenegro  is  participating  in  the  Stabilisation  and  Association  Process.  Overall, 
Montenegro  continued  to  broadly  implement  its  obligations  under  the  Stabilisation  and 
Association Agreement (SAA). On 1 December 2014, the Protocol to the Stabilisation and 
Association Agreement between the European Communities and their Member States, on one 
side, and the Republic of Montenegro, on the other side, to take account of the accession of 
Croatia to the EU, entered into force. It had been applied provisionally since 1 July 2013. 

Regular  political  and  economic  dialogue  between  the  EU  and  Montenegro  has  continued 
through the SAA structures. The Stabilisation and Association Council met in June 2014 and 
the  Stabilisation  and  Association  Committee  in  December  2014.  Various  subcommittee 
meetings  have  been  held  since  October  2014,  plus  two  meetings  of  the  Stabilisation  and 
Association Parliamentary Committee, in December 2014 and April 2015. 

Montenegro participates in ministerial dialogue between the economic and finance ministers 
of  the  EU  and  the  candidate  countries,  which  aims  at  helping  the  latter  gradually  meet  the 
economic  accession  criteria  and  be  better  prepared  in  terms  of  economic  reforms, 
competitiveness and job creation. The most recent meeting was held on 12 May 2015, where 
joint recommendations were adopted. 

Visa  liberalisation  for  citizens  of  Montenegro  travelling  to  the  Schengen  area  has  been  in 
force  since  December  2009.  As  part  of  the  monitoring  mechanism  in  place  since  visa 
liberalisation, the Commission has been regularly assessing the progress made by the country 
in implementing reforms introduced under the visa roadmap. The monitoring mechanism also 
includes an alert mechanism to prevent abuses, coordinated by Frontex. The Commission has 
regularly submitted its post-visa liberalisation monitoring reports to the European Parliament 
and the Council. The next report will be presented in the last quarter of 2015. A readmission 
agreement between the European Union and Montenegro has been in force since 2008. 

The EU provided financial assistance to Montenegro under the Instrument for Pre-accession 
Assistance (IPA) for the period 2007-2013, with a total allocation to Montenegro of € 235.7 
million. The implementation of the IPA Components I and II continues to be managed by the 
EU Delegation in Podgorica, while management for Components III and IV was conferred to 
Montenegro.  

Under  IPA  II,  Montenegro  will  continue  to  benefit  from  pre-accession  assistance  for  2014-
2020 in line with the priorities set out in the Indicative Strategy Paper, with a total indicative 
allocation  of  € 270.5  million.  The  Framework  Agreement  for  IPA  II  entered  into  force  in 
June.   

The 2014 action programme for Montenegro provides € 35.7 million to support efforts on rule 
of  law  and  public  financial  management,  and  to  address  key  requirements  of  the  accession 
negotiations over a broad number of chapters (and to improve safety in the transport sector. 

Montenegro  continues  to  benefit  from  support  under  the  IPA  multi-country  and  regional 
programmes.  It  continues  to  participate  in  five  cross-border  cooperation  programmes  with 
neighbouring  Western  Balkan  countries  and  in  transnational  cooperation  programmes  with 
Member States under the European Regional Development Fund and the IPA Adriatic cross-
border programme. 

77 

 
 
Montenegro  participates  in  the  following  EU  programmes,  with  IPA  support:    Erasmus+, 
Creative  Europe  (Culture  and  Media  strands),  Employment  and  Social  Innovation,  Horizon 
2020, Customs 2020, Fiscalis 2020, Competitiveness of Enterprises and Small and Medium-
Sized Enterprises Programme (COSME). 

78 

 
Annex II – Statistical Annex 

STATISTICAL DATA (as of 7.09.2015) 
Montenegro 

Basic data 
Population (thousand) 
Total area of the country (km²) 

National accounts 
Gross domestic product (GDP) (million euro) 
GDP (euro per capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita), relative to the EU average (EU-28 = 100) 
Real GDP growth rate: change on previous year of 
GDP volume (%) 
Gross value added by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
Final consumption expenditure, as a share of GDP 
(%) 
Gross fixed capital formation, as a share of GDP (%) 
Changes in inventories, as a share of GDP (%) 
Exports of goods and services, relative to GDP (%) 
Imports of goods and services, relative to GDP (%) 

Business 
Industrial production volume index (2010 = 100) 
Number of active enterprises (number) 
Birth rate: number of enterprise births in the reference 
period (t) divided by the number of enterprises active 
in t (%) 
Death rate: number of enterprise deaths in the 
reference period (t) divided by the number of 
enterprises active in t (%) 
People employed in SMEs as a share of all persons 
employed (within the non-financial business economy) 
(%) 
Value added by SMEs (in the non-financial business 
economy) (EUR million) 
Total value added (in the non-financial business 
economy) (EUR million) 

Inflation rate 
Harmonised consumer price index (HICP), change 
relative to the previous year (%) 

Note 

Note 

1) 
1) 
2) 

2) 

Note 

2002 
608 
13 812 

2002 
1 360 
2 209 
: 

: 

1.9 

: 
: 
: 
: 
105.8 

14.6 
4.1 
35.3 
59.8 

2002 
111.1 
: 
: 

: 

: 

: 

: 

2010 
619b 
13 812 

2010 
3 104 
5 011 
10 200 

40 

2.5 

9.3 
14.8 
5.9 
70.1 
105.6 

21.1 
1.7 
34.7 
63.1 

2010 
100.0 
: 
: 

: 

: 

: 

1 870 

2011 
620 
13 812 

2011 
3 234 
5 211 
10 600 

41 

3.2 

9.5 
12.2 
5.8 
72.4 
104.0 

18.4 
-0.3 
42.7 
64.9 

2011 
89.8 
: 
: 

: 

: 

: 

: 

2012 
620 
13 812 

2012 
3 149 
5 063 
10 300 

39 

-2.5 

8.8 
12.4 
5.5 
73.3 
105.2 

18.5 
1.0 
44.1 
68.8 

2012 
83.5 
: 
: 

: 

: 

: 

2013 
621 
13 812 

2013 
3 327 
5 356 
10 700 

40 

3.3 

9.8 
13.8 
5.0 
71.4 
101.3 

19.2 
-0.3 
41.8 
62.1 

2013 
92.3 
: 
: 

: 

: 

: 

1 133 

1 271 

2014 
622 
13 812 

2014 
3 379p 
5 436p 
10 600p 

39p 

: 

: 
: 
: 
: 
: 

: 
: 
: 
: 

2014 
81.8 
: 
: 

: 

: 

: 

: 

Note 

2002 
: 

2010 
: 

2011 
3.3 

2012 
4.0 

2013 
1.8 

2014 
-0.5 

79 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance of payments 
Balance of payments: current account total (million 
euro) 
Balance of payments current account: trade balance 
(million euro) 
Balance of payments current account: net services 
(million euro) 
Balance of payments current account: net income 
(million euro) 
Balance of payments current account: net current 
transfers (million euro) 
of which government transfers (million euro) 
**3 year backward moving average of the current 
account balance relative to GDP (%) 
Net inward foreign direct investment (FDI) (million 
euro) 
Foreign direct investment (FDI) abroad (million euro) 
of which FDI of the reporting economy in the EU-28 
countries (million euro) 
Foreign direct investment (FDI) in the reporting 
economy (million euro) 
of which FDI of the EU-28 countries in the reporting 
economy (million euro) 
**Net international investment position, relative to 
GDP (%) 
Year on year rate of change in gross inflow of 
remittances (in national currency) from migrant 
workers (%) 

Public finance 
***General government deficit / surplus, relative to 
GDP (%) 
***General government gross debt relative to GDP 
(%) 
Total government revenues, as a percentage of GDP 
(%) 
Total government expenditure, as a percentage of 
GDP (%) 

Financial indicators 
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 
deposits, million euro) 
Money supply: M2 (M1 plus deposits with maturity up 
to two years, million euro) 
Money supply: M3 (M2 plus marketable instruments, 
million euro) 
Total credit by monetary financial institutions to 
residents (consolidated) (million euro) 
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 = … 
national currency) 
Trade-weighted effective exchange rate index (2005 = 
100) 

Note 

3) 

3) 

3) 

3) 

3) 

3) 
3) 

3) 

3) 
3) 

3) 

3) 

3) 

2002 
-175 

2010 
-710 

2011 
-573 

2012 
-588 

2013 
-487 

2014 
-526 

-433 

-1 267 

-1 306 

-1 389 

-1 329 

-1 376 

100 

464 

589 

612 

653 

690 

76 

82 

: 
: 

-22 

26 

54 

66 

46 

114 

117 

135 

123 

114 

16 
-33.5 

6 
-22.8 

18 
-19.8 

22 
-17.0 

24 
-16.3 

87.3 

552.1 

389.1 

461.6 

323.9 

353.9 

0.1 
0.1 

22.1 
18.9 

12.3 
-9.4 

20.8 
20.6 

13.0 
11.1 

20.7 
14.7 

87.4 

574.2 

401.4 

482.4 

336.9 

374.6 

73.3 

292.7 

204.9 

219.7 

79.8 

118.2 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

1.9 

Note 

2002 
: 

2010 
-4.6 

2011 
-5.2 

2012 
-5.9 

2013 
-2.3 

2014 
-3.1 

84.3 

40.9 

46.0 

50.9 

58.0 

56.7 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

39.5 

42.5 

Note 

2002 
: 

2010 
: 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

125 

2 166 

1 945 

1 842 

1 966 

1 929 

: 
: 
: 
1 

: 

: 
9.63 
3.26 
1 

: 
9.73 
3.02 
1 

: 
9.47 
3.23 
1 

: 
9.36 
2.54 
1 

: 
9.22 
1.86 
1 

: 

: 

: 

: 

: 

4) 

5) 
5) 

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Value of reserve assets (including gold) (million euro) 

55 

416 

303 

348 

424 

545 

External trade in goods 
Value of imports: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Trade balance: all goods, all partners (million euro) 
Terms of trade (export price index / import price index 
* 100) (number) 
Share of exports to EU-28 countries in value of total 
exports (%) 
Share of imports from EU-28 countries in value of total 
imports (%) 

Demography 
Crude rate of natural change of population (natural 
growth rate): number of births minus deaths (per 
thousand inhabitants) 
Infant mortality rate deaths of children under one year 
of age (per thousand live births) 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

Labour market 
Economic activity rate for persons aged 20–64: 
proportion of the population aged 20–64 that is 
economically active (%) 
*Employment rate for persons aged 20–64: proportion 
of the population aged 20–64 that are in employment 
(%) 
Male employment rate for persons aged 20–64 (%) 
Female employment rate for persons aged 20–64 (%) 
Employment rate for persons aged 55–64: proportion 
of the population aged 55–64 that are in employment 
(%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
People employed in the public sector as a share of 
total employment, persons aged 20–64 (%) 
People employed in the private sector as a share of 
total employment, persons aged 20–64 (%) 
Unemployment rate: proportion of the labour force that 
is unemployed (%) 
Male unemployment rate (%) 
Female unemployment rate (%) 
Youth unemployment rate: proportion of the labour 
force aged 15–24 that is unemployed (%) 
Long-term unemployment rate: proportion of the 
labour force that has been unemployed for 12 months 
or more (%) 
Unemployment rate for persons (aged 25–64) having 
completed at most lower secondary education (ISCED 
0–2) (%) 
Unemployment rate for persons (aged 25–64) having 
completed tertiary education (ISCED 5 & 6) (%) 

Note 

2002 
: 
: 
: 
: 

: 

: 

2010 
1 657 
330 
-1 327 
107 

2011 
1 823 
454 
-1 369 
102 

2012 
1 821 
367 
-1 454 
96 

2013 
1 773 
376 
-1 398 
102 

2014 
1 784 
333 
-1 451 
101 

57.2 

60.2 

51.5 

41.5 

35.8 

42.6 

44.3 

44.5 

44.2 

45.8 

Note 

2002 
4.9 

2010 
2.9b 

2011 
2.2 

2012 
2.5 

2013 
2.5 

2014 
2.4 

10.8 

6.7b 

4.4 

4.4 

4.4 

4.9 

: 
: 

Note 

2002 
: 

73.6 
78.5 

2010 
: 

73.3 
78.9 

2011 
: 

74.2 
78.4 

2012 
: 

74.1 
79.0 

2013 
65.1 

73.9 
78.9 

2014 
67.6 

: 

: 
: 
: 

: 
: 
: 
: 
: 

: 

: 

: 
: 
: 

: 
: 
: 
: 
: 

: 

: 

: 
: 
: 

: 

: 
: 
: 

5.6 
13.0 
6.0 
75.5 
: 

5.7 
11.7 
5.7 
76.9 
: 

52.6 

55.6 

57.8 
47.5 
38.7 

4.5 
11.9 
5.9 
77.7 
: 

61.4 
49.4 
38.7 

5.7 
11.1 
6.5 
76.7 
32.8 

: 

: 

: 

48.2 

20.7 

19.7b 

19.7 

19.7 

19.5 

18.0 

: 
: 
: 

: 

: 

: 

18.9 
20.7 
: 

19.5 
20.0 
: 

19.3 
20.3 
43.7 

20.1 
18.8 
41.6 

17.8 
18.2 
35.8 

15.5 

15.7 

15.6 

16.0 

14.0 

: 

: 

: 

: 

: 

: 

: 

: 

32.8 

9.0 

6) 

7) 

81 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Social cohesion 
Average nominal monthly wages and salaries 
(national currency) 
Index of real wages and salaries (index of nominal 
wages and salaries divided by the inflation index) 
(2000 = 100) 
GINI coefficient — see definitions 
Poverty gap 
*Early leavers from education and training: proportion 
of the population aged 18–24 with at most lower 
secondary education who are not in further education 
or training (%) 

Standard of living 
Number of passenger cars relative to population size 
(number per thousand population) 
Number of mobile phone subscriptions relative to 
population size (number per thousand population) 

Infrastructure 
Density of railway network (lines in operation per 
thousand km²) 
Length of motorways (kilometres) 

Innovation and research 
Public expenditure on education relative to GDP (%) 
*Gross domestic expenditure on R&D relative to GDP 
(%) 
Percentage of households who have internet access 
at home (%) 

Environment 
Energy intensity of the economy (kg of oil equivalent 
per 1 000 euro GDP at 2005 constant prices) 
Electricity generated from renewable sources relative 
to gross electricity consumption (%) 
Road share of inland freight transport (based on 
tonne-km) (%) 

Energy 
Primary production of all energy products (thousand 
TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of hard coal and lignite (thousand 
TOE) 
Primary production of natural gas (thousand TOE) 
Net imports of all energy products (thousand TOE) 
Gross inland energy consumption (thousand TOE) 
Electricity generation (thousand GWh) 

Note 

8) 

2002 
211 

2010 
463 

2011 
479 

2012 
484 

2013 
487 

2014 
479 

91.6 

219.6 

226.1 

221.6 

214.3 

206.1 

9) 
9) 

: 
: 
: 

24.3 
1.1 
6.6 

25.9 
2.0 
6.7 

26.5 
2.8 
6.6 

26.2 
2.4 
5.1 

: 
: 
5.1 

Note 

2002 
166.8 

2010 
267.1b 

2011 
278.2 

2012 
279.9 

2013 
287.0 

2014 
280.1 

775 

2 260b 

1 875 

1 595 

1 605 

1 630 

Note 

2002 
18.1 

2010 
18.1 

2011 
18.1 

2012 
18.1 

2013 
18.1 

2014 
18.1 

0 

0 

0 

0 

0 

0 

Note 

2002 
: 
0.74 

2010 
: 
: 

2011 
: 
0.32 

2012 
: 
: 

2013 
: 
0.38 

2014 
: 
: 

: 

: 

51.4e 

55.0e 

55.8e 

63.6 

Note 

2) 

2002 
: 

2010 
522 

2011 
488 

2012 
474 

2013 
: 

2014 
: 

: 

: 

: 

55.5 

65.8 

: 

51.7 

52.5 

43.1 

51.0 

100.0 

100.0 

Note 

2002 
: 

2010 
690 

0 
: 

0 
: 
: 
2.3 

0 
426 

0 
305 
994 
4.0 

2011 
700 

0 
434 

0 
443 
1 143 
2.7 

2012 
684 

0 
393 

0 
373 
1 057 
2.8 

2013 
761 

0 
372 

0 
239 
1 000 
3.8 

2014 
: 

: 
: 

: 
: 
: 
: 

82 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agriculture 
Agricultural production volume index of goods and 
services (at producer prices) (previous year = 100) 
Utilised agricultural area (thousand hectares) 
Livestock numbers: live bovine animals (thousand 
heads, end of period) 
Livestock numbers: live swine (thousand heads, end 
of period) 
Livestock numbers: live sheep and live goats 
(thousand heads, end of period) 
Production and utilisation of milk on the farm (total 
whole milk) (thousand tonnes) 
Harvested crop production: cereals (including rice) 
(thousand tonnes) 
Harvested crop production: sugar beet (thousand 
tonnes) 
Harvested crop production: vegetables (thousand 
tonnes) 

Note 

10) 
11) 

11) 

11) 

12) 

13) 

13) 

2002 
106 

518p 
183e 

2010 
: 

221b 
96 

2011 
: 

223 
87 

2012 
: 

223 
85 

2013 
: 

223 
89 

22e 

11 

21 

18 

20 

2014 
: 

: 
94 

22 

241e 

198 

232 

230 

220 

237 

198e 

143 

202 

159 

182 

192 

5p 

: 

: 

4b 

: 

40 

6 

: 

5 

0 

8 

0 

36 

34 

42 

: 

: 

: 

: = not available 
b = break in series 
e = estimated value 
p = provisional 
* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 
*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any 
assurance as regards their quality and adherence to ESA rules. 

Footnotes: 

1)  2014: source, Eurostat. 
2)  Source: Eurostat. 
3)  2013 and 2014 (where available): based on balance of payments manual edition 6 (BPM6). 
4)  Loans include total banks' loans granted to non MFI residents and other claims (factoring and forfeiting, claims on 

outstanding bills of acceptance, guarantees and bills of exchange). 2002: excludes other claims. 

5)  Weighted average effective interest rate, outstanding amounts. 
6)  Data of NGOs are excluded. 
7)  Comprises data of private companies or enterprises, entrepreneurs and private households. 
8)  2002: in German marks (DEM). 
9)  World Bank methodology, by consumption approach, source: MONSTAT (release Poverty Analysis of Montenegro), link 

http://www.monstat.org/eng/page.php?id=340&pageid=73. 

10)  Based on the reports of agricultural organisations (agricultural enterprises and cooperatives) engaged in crop production and 

estimates for private agricultural holdings. 
Including livestock held by enterprises, cooperatives and households. 
In million litres. Net quantity, from enterprises, cooperatives and households. 
Including production of enterprises, cooperatives and households. 

11) 
12) 
13) 

83