COMMISSION STAFF WORKING DOCUMENT Montenegro 2016 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 2016 Communication on EU Enlargement Policy
Date: 2016-11-09
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Montenegro, accession criteria, accession negotiations, pre-accession strategy

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 9.11.2016  SWD(2016) 360 final   COMMISSION STAFF WORKING DOCUMENT Montenegro 2016 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 2016 Communication on EU Enlargement Policy {COM(2016) 715 final}  
 
 
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 the protection of minorities ................................................... 18 
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 .......................................................................................................................... 28 

4.  

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP ...................... 31 

4.1. Chapter 1: Free movement of goods ................................................................... 31 
4.2. Chapter 2: Freedom of movement for workers ................................................... 32 
4.3. Chapter 3: Right of establishment and freedom to provide services .................. 33 
4.4. Chapter 4: Free movement of capital .................................................................. 33 
4.5. Chapter 5: Public procurement ............................................................................ 34 
4.6. Chapter 6: Company law ..................................................................................... 36 
4.7. Chapter 7: Intellectual property law .................................................................... 36 
4.8. Chapter 8: Competition policy ............................................................................ 37 
4.9. Chapter 9: Financial services .............................................................................. 39 
4.10. Chapter 10: Information society and media ...................................................... 40 
4.11. Chapter 11: Agriculture and rural development ................................................ 40 
4.12. Chapter 12: Food safety, veterinary and phytosanitary policy ......................... 41 
4.13. Chapter 13: Fisheries......................................................................................... 42 
4.14. Chapter 14: Transport policy ............................................................................ 42 
4.15. Chapter 15: Energy ........................................................................................... 44 
4.16. Chapter 16: Taxation ......................................................................................... 46 
4.17. Chapter 17: Economic and monetary policy ..................................................... 47 
4.18. Chapter 18: Statistics......................................................................................... 48 
4.19. Chapter 19: Social policy and employment ...................................................... 49 
4.20. Chapter 20: Enterprise and industrial policy ..................................................... 51 
4.21. Chapter 21: Trans-European networks .............................................................. 52 
4.22. Chapter 22: Regional policy and coordination of structural instruments ......... 53 
4.23. Chapter 23: Judiciary and fundamental rights .................................................. 53 
4.24. Chapter 24: Justice, freedom and security ........................................................ 66 
4.25. Chapter 25: Science and research ..................................................................... 73 
4.26. Chapter 26: Education and culture .................................................................... 74 
4.27. Chapter 27: Environment and climate change .................................................. 75 
4.28. Chapter 28: Consumer and health protection .................................................... 77 
4.29. Chapter 29: Customs union ............................................................................... 78 
4.30. Chapter 30: External relations ........................................................................... 79 
4.31. Chapter 31: Foreign, security and defence policy ............................................. 80 
4.32. Chapter 32: Financial control ............................................................................ 81 

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4.33. Chapter 33: Financial and budgetary provisions ............................................... 83 

Annex I - Relations between the EU and Montenegro ............................................................. 85 

Annex II – Statistical Annex .................................................................................................... 86 

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1.  

INTRODUCTION

1 

1.1.   Context 

The  Stabilisation  and  Association  Agreement  between  Montenegro  and the  EU  entered  into 
force  in  May  2010.  The  European  Council  granted  the  status  of  candidate  country  to 
Montenegro in December 2010. Accession negotiations were opened in June 20122. EU and 
NATO accession are the two key foreign policy priorities of Montenegro. In December 2015, 
Montenegro  received  an  invitation  to  join  NATO.  The  relevant  Accession  Protocol  was 
signed in May 2016 and is currently being ratified by NATO members.  

Four  negotiating  chapters  were  opened  during  the  reporting  period.  Holding  the  accession 
conferences was made possible also due to the progress made in the area of the rule of law, as 
per  the  requirements  of  the  Negotiating  Framework.  Progress  towards  meeting  the  interim 
benchmarks set in the rule of law chapters will be key for further progress in the negotiations 
overall.  

1.2.   Summary of the Report 

Concerning  the  political  criteria,  a  political  agreement  on  the  organisation  of  free  and  fair 
elections  led  to  the  establishment  of  a  "government  of  electoral  trust"  in  May.  Despite 
persisting  polarisation  of  the  political  environment,  this  has  demonstrated  the  capacity  to 
reach  compromises  between  the  government  and  parts  of  the  opposition.  The  parliamentary 
elections  of  October  2016  were  conducted  under  a  substantially  revised  legal  framework. 
Despite  the  technical  delays  and  difficult  relationships  between  responsible  institutions, 
overall  the  election  preparations  were  conducted  in  a  more  participatory  and  transparent 
manner. The elections were held in a competitive environment and characterised by general 
respect  for  fundamental  freedoms.  The  relevant  national  authorities  are  expected  to  swiftly 
and  transparently  investigate  alleged  procedural  irregularities,  the  arrests  made  and  the 
temporary  closure  of  two  mobile  communication  platforms.  There  has  been  no  political 
follow-up to the alleged abuse of public funds for party political purposes ("audio recordings 
affair").  

Montenegro  is  moderately  prepared  with  the  reform  of  its  public  administration.  Some 
progress  has  been  made,  notably  with  the  adoption  of  the  public  administration  reform 
strategy 2016-2020, the public financial management reform programme, the entry into force 
of  the  new  law  on  salaries  and  the  simplification  of  administrative  procedures.  However, 
strong political will is needed to effectively address the de-politicisation of public service and 
right-sizing of the state administration. 

The  judicial  system  is  moderately  prepared.  During  the  reporting  period,  Montenegro  made 
some  progress  in  this  field.  The  capacity  of  the  Judicial  and  Prosecutorial  Council  has 
improved.  However,  the  new  legislative  framework  for  increasing  the  independence, 
accountability and professionalism of the judiciary, as well as the code of ethics, have not yet 
been fully implemented. Measures to reduce the number of pending cases and the total length 
of proceedings need to continue.  

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. The Anti-Corruption 

1  This  report  covers  the  period  from  October  2015  to  September  2016.  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, 24 negotiating chapters have been opened, of which two have been provisionally closed. 

4 

 
 
 
 
 
 
                                                            
Agency started its work in 2016. The process of institution building is largely complete. All 
institutions should demonstrate a more proactive attitude to fulfilling their mandate. Despite 
some further steps taken, the track record both on successful investigations and convictions, in 
particular  in  high-level  corruption  cases,  and  on  prevention  of  corruption  remains  limited. 
Montenegro needs to increase the capacity to carry out financial investigations and establish 
track records of seizure and confiscation of criminal assets. 

Montenegro  has  achieved  some  level  of  preparation  in  the  fight  against  organised  crime. 
Some  progress  was  made,  notably  on  strengthening  the  legal,  regulatory  and  institutional 
framework.  Efforts  should  continue  to  develop  the  track  record  in  organised  crime  cases, 
especially  as  regards  trafficking  in  human  beings  and  money  laundering  where  results  are 
limited. The number of suspicious bank transactions detected remains low. 

Montenegro  completed  several  legislative  reforms  to  further  align  with  the  EU  and 
international  human  rights  standards  and  ensure  that  adequate  mechanisms  are  in  place  to 
protect  vulnerable  groups  from  discrimination.  Implementation  of  the  legislation  remains 
weak.  Amendments  to  the  overall  legislative  framework,  to  ensure  a  coherent  sanctioning 
policy for human rights violations, have not been adopted yet. Institutional capacity needs to 
increase 
the  most  vulnerable  and  most 
further.  The  Roma  minority 
discriminated-against community in various areas of life. 

remains 

Montenegro has achieved some level of preparation in the area of freedom of expression, but 
no further progress was made in the past year. The number of defamation cases remains high, 
which points to weak self-regulation mechanisms, as  well as  to challenges in understanding 
the role of the media. Montenegro still needs to achieve overall alignment with the case-law 
of  the  European  Court  of  Human  Rights.  The  premises  of  one  commercial  media  company 
were damaged and several journalists were physically and verbally assaulted and threatened 
during anti-government protests in October 2015. There has been no progress in the resolution 
of cases of attacks on journalists. Transparency and non-discrimination in state advertising in 
the media should be ensured. The revised Code of Ethics for Journalists must be effectively 
and uniformly applied across the media community.  

Montenegro continued to play a constructive role in regional cooperation. It ratified its border 
agreements with Bosnia and Herzegovina and with Kosovo.  

As  regards  economic  criteria,  Montenegro  is  moderately  prepared  in  developing  a 
functioning market  economy.  Some  progress  was  made  to  strengthen  the  functioning  of  the 
financial and labour markets, as well as on improving the business environment. Investments 
in infrastructure and tourism support economic activity. However, rapidly rising public debt 
and high fiscal deficits, together with high external imbalances and high unemployment are of 
concern.  The  combined  effects  of  large-scale  public  infrastructure  investments  and  several 
new  expensive  social  expenditure  programmes  challenge  fiscal  sustainability.  Immediate 
corrective measures are required, as called for by the ERP policy guidance. Other problems to 
be tackled include high external imbalances and low labour market participation and still low 
credit growth amid high impaired bank loans. 

Montenegro  is  moderately  prepared  in  its  capacity  to  cope  with  competitive  pressure  and 
market  forces  within  the  Union.  Some  progress  was  achieved  in  improving  the  quality  of 
infrastructure,  the  energy  market  and  the  digitalisation  of  the  economy.  SMEs  support  is 
modest  but  developing  gradually.  However,  substantial  efforts  are  still  required  to  develop 
human capital and a competitive export-oriented industry. 

  This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ 
Opinion on the Kosovo declaration of independence. 

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Concerning  its  ability  to  assume  the  obligations  of  membership,  important  work  on 
alignment  and  preparation  for  the  implementation  of  the  acquis  has  taken  place  and 
Montenegro is  moderately  prepared in  many chapters, such as  the free movement of goods, 
public  procurement,  statistics  as  well  as  justice,  freedom  and  security.  Montenegro  has 
continued to align with all EU common foreign and security policy positions and declarations. 
Montenegro is at an early stage of preparation regarding fisheries and budgetary and financial 
provisions  and  at  some  level  of  preparation  in  the  area  of  environment  and  climate  change. 
Good progress has been made in the areas of free movement of goods, agriculture and rural 
development,  food  safety,  veterinary  and  phytosanitary  policy,  energy,  environment  and 
climate  change,  customs  union,  external  relations  and  financial  control.  Looking  ahead, 
Montenegro  should  focus  in  particular  on  competition  policy  and  economic  and  monetary 
policy.  Strengthening  the  administrative  capacity  for  ensuring  the  application  of  the  acquis 
remains a substantial challenge for Montenegro. 

2.  

POLITICAL CRITERIA 

2.1.   Democracy 

Elections 

The  parliamentary  elections  of  October  2016  were  conducted  under  a  substantially  revised 
legal framework. Despite the technical delays and difficult relationships between responsible 
institutions,  overall  the  election  preparations  were  conducted  in  a  more  participatory  and 
transparent manner. The elections were held in a competitive environment and characterised 
by general respect for fundamental freedoms. The relevant national authorities are expected to 
swiftly and transparently investigate alleged procedural irregularities, the arrests made and the 
temporary closure of two mobile communication platforms.  

The parliamentary elections of October 2016 were prepared by the "Government of Electoral 
Trust" and conducted under a substantially revised legal framework: including new provisions 
on  voter  registration  and  identification,  gender  equality  and  political  parties  and  electoral 
campaign  financing,  among  others.  The  State  Electoral  Commission  (SEC)  received  and 
registered  17  candidate  lists  to  contest  the  elections.  The  preparatory  phase  was  marked  by 
difficult relationships between institutions in charge for the preparation of the elections, most 
notably  Ministry  of  Interior  and  SEC,  disagreements  around  the  single  voters  list  and 
concerns about the capacities of SEC and the Anti-Corruption Agency to fulfil their mandate 
in accordance with the new electoral legislation. Despite delays and technical difficulties the 
preparatory  phase,  supervised  by  the  "parliamentary  committee  for  monitoring  the 
implementation  of  the  laws  and  other  legislation  relevant  for  building  trust  in  the  electoral 
process", has been conducted in a more transparent manner, than previous elections.  

The  elections  were  observed  by  national  and  international  observers,  including  the 
OSCE/ODIHR Monitoring Mission, who concluded that the conduct of the Election Day itself 
proceeded in a calm and orderly manner, with few cases of procedural irregularities observed. 
The  voters'  turnout  was  73.2  %,  almost  3  %  higher  than  in  the  previous  parliamentary 
elections. None of the political contenders won an absolute majority in the parliament. Of the 
81  seats,  the  seat  allocation,  in  accordance  of  the  results  released  by  the  State  Electoral 
Commission, is as follows: DPS 36, DF 18, Key coalition 9, Democratic Montenegro 8, SDP 
4, Social Democrats 2, Bosniak Party 2, Croatian Civic Initiative 1 and Albanians Decisively 
Coalition 1. 

6 

 
 
 
 
 
 
While the SEC has met the relevant deadlines and put in place all the necessary arrangements, 
deficiencies  were  clearly  visible  in  terms  of  lack  of  collective  leadership,  efficient 
management and transparency, as well as politicization.   

The Anti-Corruption Agency focused its activities in the pre-election period on the control in 
the  area  of  political  party  and  electoral  campaign.  During  the  campaign  period  several 
proceedings have been initiated against parties for not complying with their obligations under 
the  campaign  finance  legislation.  However,  The  Agency’s  capacity  in  this  area  needs  to  be 
further  strengthened  and  the  Agency  needs  to  become  more  proactive  in  checking  the  data 
submitted  by  public  institutions  and  political  organisations  (see  also  chapter  23  –  Judiciary 
and fundamental rights).  

Despite  the  progress  made  in  the  recent  years,  the  electoral  legislative  and  institutional 
framework requires further alignments with the international standards.  

Local  elections  in  the  Municipality  of  Tivat  were  held  in  April,  and  the  new  system  of 
electronic identification of voters applied for the first time. Four opposition parties boycotted 
the elections. Together with the October parliamentary elections local elections were held in 
Kotor,  Budva,  Andrijevica  and  Gusinje.  The  results  of  local  elections  in  several  locations 
have been challenged. 

The  involvement  of  women  in  politics  remains  low,  at  all  levels,  including  in  the  electoral 
administration. There are no women among the political party leaders in the country and very 
few in the parties' leaderships, as evident during the recent electoral campaigns and the earlier 
negotiations  for  the  government  of  electoral  trust.  Electoral  lists  complied  exclusively  with 
the  minimum  requirements  in  term  of  gender  equality.  Following  the  preliminary  election 
results  the  number  of  women  Members  of  Parliament  (MPs)  is  expected  to  increase  to  18, 
from the previous 15, now accounting for 22 %.  

There were some developments in judicial follow-up of the alleged misuse in 2012 of public 
funds  for  party  political  purposes  (the  ‘audio  recordings  affair’),  but  it  has  not  been 
completed. To date, there has been no political follow-up. 

 Parliament 

The party-political scene is fragmented. Parliament was at times disrupted by partial or full 
boycotts  before  resuming  normal  functioning  after  an  agreement  between  government  and 
parts of the opposition.  

Overall, the political scene, especially the opposition, is fragmented, with a multitude of small 
political parties. 

Partial or full boycotts by parts of the opposition presented a key challenge to parliamentary 
work.  Following  intensive  talks,  an  agreement  on  power  sharing  with  a  view  to  fostering 
confidence  in  upcoming  elections  was  signed  in  April,  and  the  law  implementing  the 
agreement  was  adopted  in  May  (see  under  Governance).  Following  these  positive 
developments, parts of the opposition returned to parliament. As part of the preparations of the 
October elections, a parliamentary committee for monitoring the implementation of the laws 
and other legislation relevant for building trust in the electoral process was set up in July. 

The protests organised by part  of the opposition since September 2015  continued during the 
reporting  period.  Results  of  investigations  into  all  incidents  of  violence  and  allegations  of 
excessive  use  of  force  by  the  police  during  the  October  2015  opposition  protests  are  still 
pending. Subsequent protests were, overall, without incident. In December, parliament waived 

7 

 
 
the  immunity  of  three  opposition  MPs,  to  allow  prosecution  for  their  actions  during  the 
protests (for incitement to violence with the aim of changing the constitutional order).  

 Legislative  activity  decreased  over  the  reporting  period  due  to  boycotts  by  the  opposition 
parties.  The  backlog  of  laws  pending  in  parliament,  was  reduced  after  the  return  of  the 
opposition  to  the  parliament.  The  acquis  alignment  process  requires  close  and  structured 
dialogue between the government and parliament. The parliament regularly takes the initiative 
in  presenting  laws  and  amendments,  and  voting  does  not  always  correspond  to  government 
priorities. Although this reflects parliament's seriousness in discharging its democratic duties, 
it  also  raises  the  need  for  additional  responsibility  for  and  scrutiny  of  legislation,  especially 
EU related legislation.   

In line with the law on the prevention of corruption, parliament’s integrity plan was adopted in 
March.  One  report  on  an  alleged  breach  of  the  code  of  ethics  was  submitted  to  the  human 
rights committee. The formal procedure for acting upon this complaint is pending. The right to 
file complaints, limited to MPs and parliamentary bodies, should be extended to the public, the 
media  and  other  external  stakeholders.  There  is  also  room  for  improvement  in  other  areas, 
including MPs’ obligation to declare private interests, the statute of limitations and the range 
of penalties. No progress has been made on increasing parliament’s capacity to follow up on 
conclusions and recommendations adopted in oversight hearings. 

Parliament continued to exhibit a high level of transparency. It continued to reply to all access 
to information requests.  No action was taken to establish procedures for addressing citizens’ 
petitions  and  complaints.  Administrative  and  expert  capacity  needs  further  improvement. 
Additional premises should be provided for parliament’s administrative services. Parliament’s 
premises are now accessible to persons with disabilities. 

Governance 

The  establishment  of  the  government  of  electoral  trust  has  demonstrated  Montenegro's 
capacity  to  overcome  a  difficult  domestic  political  situation.  Transparency  and  stakeholder 
participation should be further strengthened. Local public finances remain to be consolidated 
and  the  budgetary  positions,  transparency,  efficiency  and  accountability  of  local  self-
government strengthened.  

The government won a vote of confidence in parliament in January, following a break with 
the junior partner in the governing coalition. This led to intensive discussions among political 
parties and to the signing of an agreement on holding credible elections. The establishment of 
the ‘government of electoral trust’ in May, with the participation of opposition parties, was a 
way to bring the political stalemate to an end. In line with the agreement, several cabinet posts 
were allocated to candidates suggested by (former) opposition parties. 

In  addition  to  EU  accession,  Montenegro’s  key  foreign-policy  priority  during  the  reporting 
period  was  securing  an  invitation  to  join  NATO,  which  Montenegro  received  in  December 
2015. The Accession Protocol was signed in May. 

The 2016-2018 programme for Montenegro’s accession to the EU sets out what the country 
needs  to  do  in  relation  to  accession  negotiations  in  that  period,  and  how  to  coordinate  the 
various institutions involved in the process. Overall, coordination, and the transparency of the 
process, is satisfactory, although the inclusion of stakeholders can be further improved.   

In December, parliament amended the law on the territorial organisation of Montenegro, the 
law on local self-government, the law on the capital city and the law on local self-government 
financing.  Local  self-government  units  are  not  financially  self-sufficient.  Despite  plans  to 
rationalise  them,  two  new  municipalities  were  established.  Overall,  both  the  financial 

8 

 
 
situation  of  local  self-government  and  the  public  financial  management  of  local  self-
government entities remain unsatisfactory. 

To  date,  21  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  (CSOs).  Civil  society’s  active  role  in  the  accession  process  is  now  formally 
acknowledged,  but  full  participation  remains  to  be  achieved.  Additional  resources  and 
transparency are needed in government structures and procedures for collaboration with and 
consultation  of  CSOs.  It  is  a  matter  of  concern  that  smear  campaigns  and  intimidation 
attempts  continued  against  certain  CSO  activists.  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.  Montenegro  still  needs  to  develop  an 
overall  societal  approach,  institutional  culture  and  legal  framework  that  facilitate  grassroots 
activities  by  civil society,  and to  deal  constructively  with  criticism  of  state  institutions.  The 
priorities  identified  in  the  strategy  for  development  of  non-governmental  organisations 
(NGOs) 2014-2016 on transparent procedures for free concessions of public spaces to NGOs 
have not been addressed. 

Relations between civil society and the government have occasionally been overly adversarial 
and  characterised  by  distrust,  especially  on  the  political  situation,  the  rule  of  law  and 
fundamental rights. NGOs participate in working groups, including for accession negotiations, 
but  are  dissatisfied  with  their  level  of  involvement  in  policy-making  and  access  to 
information.  The  government  needs  to  find  a  balance  between  the  requirements  of  efficient 
policy-making and the need for transparency and inclusiveness of civil society. 

In  the  past,  some  civil  society  activists  had  been  targeted  on  a  personal  basis  by  the  media 
through  smear  campaigns.  There  have  also  been  instances  of  intimidation  attempts  against 
civil  society  organisations.  The  Council  for  the  Development  of  NGOs,  comprised  of 
government  and  NGO  representatives,  needs  to  improve  its  capacity  and  become  more 
proactive and effective in influencing government decisions directly related to civil society.  

Montenegro needs to establish a sustainable and efficient system of public funding for CSOs 
and  an  appropriate  institutional  and  legal  framework.  Amendments  to  the  law  on  public 
gatherings  have  been  adopted,  providing  a  clearer  and  more  favourable  framework  on 
freedom  of  association,  in  line  with  European  standards.  Amendments  to  the  law  on  NGOs 
are  pending.  The  necessary  by-laws,  which  will  determine  the  procedure  for  funding, 
monitoring, evaluation and audit of NGO projects, also need to be adopted. Moreover, the law 
on  gaming,  currently  the  largest  source  of  public  financing  for  CSOs,  is  not  being 
implemented  properly  and  the  amount  allocated  to  CSO  projects  has  not  been  in  line  with 
legal requirements. 

2.2.   Public administration reform 

Montenegro  is  moderately  prepared  with  the  reform  of  its  public  administration.  Some 
progress  has  been  made,  notably  with  the  adoption  of  the  public  administration  reform 
strategy 2016-2020, the public financial management reform programme, the entry into force 
of  the  new  law  on  salaries  and  the  simplification  of  administrative  procedures.  However, 
strong political will is needed to effectively address the de-politicisation of public service and 

9 

 
 
 
right-sizing  of  the  state  administration  (recommended  last  year,  and  still  needed).  In  the 
coming year, Montenegro should in particular: 

→ allocate the appropriate budgetary resources to the 2016-2020 PAR strategy, and start to 
implement and regularly monitor it in close coordination with the 2016-2020 public financial 
management reform programme; 

→  improve  the  quality  of  regulatory  impact  assessment  and  ensure  public  consultations  are 
conducted in line with the existing legislation; 

→ further amend the civil service framework in order to fully ensure merit-based recruitment, 
an improved career path across the public service at national and local self-government level, 
and objective dismissal procedures for senior managers. 

Policy development and coordination 

The legal framework and institutions are in place to ensure a coherent policy-making system, 
including  for  European  integration.  However,  policy  coordination  remains  weak,  more 
focused  on  formal  and  procedural  issues  than  substance.  Medium-term  policy  planning  is 
fragmented and is not given priority by the government. There are a number of overlapping 
strategies  without  fully  developed  budget  planning;  this  jeopardises  implementation  and 
hinders  the  relevant  reforms.  More  structured  dialogue  between  the  government  and 
parliament on policy priorities, and on acquis alignment, is needed. Montenegro’s programme 
for accession to the EU for 2014-2018 is revised every year; the last update was adopted in 
January. 

Inclusive  and  evidence-based  policy  and  legislative  development  is  only  partially  ensured. 
The  number  of  civil  servants  working  on  policy  development  and  analysis  is  still  limited. 
Public consultations on legislative proposals are regulated by law; however, in practice, they 
are often quite formalistic and timelines are too short for effective civil society input. Impact 
assessments  are  not  systematically  performed,  other  than  budget  impact  assessments.  The 
quality  of  regulatory  impact  assessments  is  minimal  and  they  are  often  done  too  late  in  the 
legislative process. 

With  regard  to  public  scrutiny  of  government  work,  monitoring  and  parliamentary  scrutiny 
are often quite weak. 

Public financial management 

A  multiannual  public  financial  management  (PFM)  reform  programme  and  action  plan  was 
adopted in December 2015, designed to address the main weaknesses identified and improve 
the  functioning  of  the  budget  system.  A  coordination  group  has  been  set  up  to  manage  and 
monitor progress in different areas. Its priorities are the development of a stronger medium-
term budget framework, improved programme budgeting, better  planning of capital projects 
and  enhanced  debt  management,  upgrading  of  the  tax  and  customs  administration,  further 
alignment  of  public  procurement  with  the  EU  acquis  and  development  of  an  e-procurement 
system,  improved  public  internal  financial  control  and  greater  transparency  in  financial 
reporting and accounting. 

As concerns other ongoing reforms, the law on the budget was adopted in 2015 in accordance 
with procedures and timeframes laid down in the law on the budget and fiscal sustainability. 
Financial management and control capacity was strengthened and internal auditors trained. A 
strategy for development of public procurement was adopted (see chapter 5), the State Audit 
Institution (SAI) improved its capacity for performance audits (see chapter 32), and progress 
was made on the IT system for taxation (see chapter 16). 

10 

 
 
The  law  on  the  budget  and  the  law  on  final  statements  of  accounts  are  published  on  the 
website  of  the  Ministry  of  Finance.  However,  budget  transparency  could  be  improved:  the 
budget  could  be  made  more  understandable  and  accessible  to  the  public  by  improving  its 
presentation  and  readability,  and  that  of  monthly  and  quarterly  reports.  The  PFM  reform 
transparency,  e.g.  on  multiannual 
programme 
commitments  and  capital  projects.  Parliament’s  capacity  for  budget  oversight  needs  to  be 
strengthened and MPs given enough time to process budgetary information. 

includes  specific  action 

improve 

to 

Public service and human resources management 

The law on civil servants and state employees regulates the public service. Even though the 
law  establishes  merit-based  recruitment  and  promotion  as  a  principle,  loopholes  in  the 
organisation of the selection process allow for arbitrary selection at all levels. Montenegro has 
made  little  progress  in  ensuring  merit-based  recruitment  for  senior  civil  servants,  though 
standard guiding questions for interviews have been drafted, and a competency framework for 
the  selection  process  is  envisaged.  In  practice,  non-objective  criteria  have  been  used  in 
selections  and  dismissals,  which  have  resulted  in  a  considerable  number  of  appeals.  The 
efficiency  of  both  internal  and  external  recruitment  procedures  remains  a  matter  of  concern 
due  to  the  low  number  of  candidates.  Dismissal  of  senior  managers  is  allowed  after  one 
negative performance appraisal or if their position is abolished by an internal reorganisation, 
creating the risk of abusive practices.  

Human  resources  management  units  are  in  place  across  the  state  administration.  However, 
they are generally weak and lack competent staff, and they focus more on legal compliance 
than management of human resources. The central personnel register is not updated regularly, 
but plans to link it to the salary system should prompt improved compliance levels. 

As concerns remuneration  of civil servants, a new law on  public sector  pay was adopted in 
February.  The  law  is  based  on  job  classifications;  it  establishes  better  control  of  salaries, 
corrects inequalities, and increases transparency and fiscal accountability.  

Professional development is not consistently provided or monitored for any category of civil 
servants. There is also no clear link between performance appraisal and career development 
for civil servants. 

Integrity in public service is promoted through the 2015 code of ethics for civil servants. In 
January the Anti-Corruption Agency started monitoring the preparation/implementation of the 
integrity plans that each service must draw up. 

Accountability of the administration 

The way the state administration is organised in Montenegro does not ensure effective lines of 
accountability. There has not been sufficient control over the creation of new institutions, and 
so there are a lot of small institutions, many with less than ten staff. Some report to ministries, 
some to the council of ministers and some even to parliament. The managerial autonomy and 
accountability of the heads of administrative bodies reporting to ministries remains weak and 
there is still very little delegation of powers within institutions (see chapter 32). Those bodies 
that are under the council of ministers and parliament are not efficiently supervised either. 

Citizens’  right  to  good  administration  is  regulated  and  subject  to  internal  and  external 
oversight  mechanisms,  including  the  Ombudsman  (see  Governance).  Right  to  access  public 
information  is  regulated  by  the  law  on  free  access  to  public  information.  It  lacks  effective 
monitoring  and  supervision.  The  proportion  of  requests  refused  by  the  administration  fell 
from  24 %  in  2014  to  18 %  in  2015.  The  2016  budget  of  the  Agency  for  the  Protection  of 
Personal Data and Access to Information was increased by 50 %. This is expected to improve 

11 

 
 
the  Agency’s  capacity  to  deal  with  complaints  received  and  better  monitor  and  supervise 
proactive  disclosure  of  public  information,  e.g.  on  websites.  Administrative  silence  in  the 
public administration is still an issue and the major cause of complaints from the public.  

The  legal  framework  for  the  right  to  administrative  justice  will  be  enhanced  by  the  newly 
amended  law  on  administrative  procedures  (see  below  under  service  delivery).  A  law  on 
administrative  disputes  was  adopted  on  30  July.  The  right to  seek compensation  is  not  well 
understood  by  the  general  public,  as  Montenegro  does  not  have  a  specific  law  on  public 
liability.  

Service delivery to citizens and businesses 

The government is committed to a more user-oriented administration, and it regularly reports 
on the implementation of the 2014 law on e-governance, which has set specific deadlines for 
development of e-services and interoperability. The main electronic registers (e.g. the central 
population register, the business register and the property register) are now in place, but not 
yet  interoperable.  Satisfaction  surveys  on  government  services  are  not  yet  regularly 
conducted. 

Simplification  of  administrative  procedures  is  ongoing.  Sectoral  laws  containing  over  150 
special  procedures  are  being  gradually  brought  into  line  with  the  law  on  administrative 
procedures,  but  a  substantial  workload  remains.    So  far,  amendments  to  80  laws  have  been 
drafted,  and  they  are  in  various  stages  of  adoption.  An  amendment  to  the  law  on 
administrative  procedures  was  adopted  on  30  June,  however  the  government  decided  to 
postpone its implementation until 1 July 2017.  

Strategic framework for public administration reform 

On  28  July,  Montenegro  adopted  its  2016-2020  public  administration  reform  strategy,  by 
means  of  a  consultative  and  transparent  process.  There  is  political  support  for  the  reform, 
which  was  also  declared  a  priority  in  the  government’s  structural  reform  plan.  Consistent 
political support will be needed to implement the strategy, e.g. for measures to rationalise and 
right-size  the  administration,  while  ensuring  capacity  for  European  integration.  Montenegro 
needs to assure the financial sustainability of the strategy by allocating the appropriate budget 
for  implementation  both  in  the  medium-term  expenditure  framework  and  in  the  annual 
budgets. 

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.  Last  year’s  recommendations  have  been 
partially  met;  in  particular,  the  capacity  of  the  Judicial  and  Prosecutorial  Council  has 
improved.  The  new  legislative  framework  for  increasing  the  independence,  accountability 
and  professionalism  of  the  judiciary  as  well  as  the  code  of  ethics,  have  not  yet  been  fully 
implemented. Measures to improve efficiency of judiciary need to continue.  

In the coming year, Montenegro should in particular: 

  strengthen the independence and professionalism of the judiciary by fully implementing 
the new recruitment, professional appraisal and promotion system; 

 strengthen  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; 

12 

 
 
 
  ensure  better  human  resources  management  to  rationalise  the  judicial  network  and 
improve capacity building.  

Strategic documents 

Montenegro’s  action  plan  for  chapter  23  outlines  comprehensive  judicial  reforms.  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  being  implemented.  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  and  the  Prosecutorial  Councils  are  the  key  bodies  in  charge  of  managing  the 
judicial system and the careers of judges and prosecutors. Their composition and appointment 
procedures are broadly in line with European standards.  

The  capacities  of  both  Councils  and  their  secretariats  have  been  strengthened,  but  they 
continue to lack strategic planning for budget and human resources. While access to decisions 
and information of the Judicial Council continued to improve, the operation of Prosecutorial 
Council still lacks transparency.  

Independence and impartiality 

the  2013  amendments 

Following 
to  Montenegro’s  constitution,  reforms  aimed  at 
strengthening the independence of the judiciary, by formally  reducing political  influence on 
the  appointment  of  high-level  judicial  and  prosecutorial  offices,  have  continued.  However, 
concerns remain about attempts at political interference. 

The new misdemeanour court system became operational in November 2015. The procedure 
for  reappointing  state  prosecutors  was  finalised  in  December  2015  in  line  with  European 
standards. 

Judges  and prosecutors have  permanent  tenure and  decisions  on  their dismissal  can  only  be 
taken by the Judicial or Prosecutorial Councils respectively. They enjoy functional immunity, 
except for crimes committed in the performance of official duties. 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 invoked. 

The  principle  of  random  allocation  of  cases  is  guaranteed  by  the  law  on  courts  and 
implemented  automatically  through  the  judicial  information  system,  the  PRIS,  although  for 
very small courts there are certain limits. In 2016, a new procedure was introduced, assigning 
cases  to  judges  as  soon  as  they  are  submitted.  The  Supreme  Court  practice  of  reallocating 
large  numbers  of  cases  between  courts,  with  the  aim  of  reducing  the  backlog  in  the  most 
overloaded courts, risks interfering with the right to a lawful judge.     

Failure  to  seek  recusal  in  circumstances  where  it  is  mandatory  constitutes  grounds  for 
disciplinary action. Rules for withdrawing allocated cases are set out in the law on courts. 

Accountability 

Codes  of  ethics  for  judges  and  prosecutors  are  in  line  with  the  relevant  European  and 
international standards and linked to mechanisms for complaints from members of the public. 
Compliance  is  monitored  by  specialised  bodies  in  the  Judicial  and  Prosecutorial  Councils. 
Some efforts were made to raise public awareness of the Code of Ethics. Specialised bodies in 

13 

 
 
the  Judicial  and  Prosecutorial  Councils  are  also  responsible  for  the  system  of  disciplinary 
accountability.  However,  their  track  record  of  enforcing  disciplinary  accountability  and  the 
code  of  ethics  is  limited.  The  Councils’  Decisions  in  these  fields  do  not  give  sufficient 
reasons. 

All public officials, judges and prosecutors have an obligation to declare their assets annually 
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 and Prosecutorial Councils respectively. 

Legislation adopted in February 2015 introduced a single, countrywide recruitment system for 
judges  and  prosecutors,  and  a  new  system  of  promotion  based  on  periodic  professional 
assessment. Necessary secondary legislation has been adopted. Both systems are designed to 
be transparent and merit-based, and to seek to apply objective criteria. They have not yet been 
fully implemented.   

Quality of justice 

The  Judicial  Training  Centre  is  an  independent  body  that  provides  initial  and  in-service 
training to judges, prosecutors and legal advisers. While its budget for 2016 has increased, it 
continues  to  dependent  on  donor  support,  for  certain  specialist  training.  Its  administrative 
capacity  needs  to  be  considerably  strengthened  and  adequate  premises  must  be  secured 
without delay. Montenegro has the observer status in the European Judicial Training Network. 

The PRIS, the judicial information system, is used by all courts for tracking cases, for some 
aspects  of  case  management  and  for  communication  with  parties.  However,  the  system  still 
has security gaps and does not operate reliably outside Podgorica. It is also not backed by a 
clear  institutional  framework  and  remains  under-developed  with  regard  to  the  prosecution 
service.  The  system  also  facilitates  the  collection  of  comprehensive  statistics,  but  their 
reliability continues to raise concerns. A new IT strategy for replacing the PRIS was adopted 
in  June  2016.  Its  implementation  needs  to  be  backed  with  adequate  financial  and  human 
recourses and clear allocation of responsibilities. 

Final  court  decisions  are  publicly  accessible  online.  The  law  on  courts  provides  for 
mechanisms to ensure that court rulings are consistent. 

The judiciary’s current budget of EUR 34.6 million represents 1.63 % of the national budget 
and 0.89 % of GDP. The number of judges and prosecutors in Montenegro is above the EU 
average in relation to the size of the population, as is the percentage of the budget spent on 
staff. Spending on salaries limits the scope for other expenses such as investment in ICT or 
free legal aid. 

Alternative dispute resolution is available through court settlement, arbitration and mediation, 
but it is not systematically used. 

Efficiency 

In  general,  the  courts  are  managing  to  cope  with  the  influx  of  cases.  However,  the  overall 
length of proceedings from initiation to final judgment and the backlog of cases before some 
courts  remain  a  cause  for  concern.  Also  enforcement  of  civil  and  administrative  decisions 
remains  problematic.  Despite  further  reduction  of  the  number  of  cases  as  a  result  of  the 
introduction  of  the  bailiff  system  in  2014,  in  particular  the  backlog  of  the  old  enforcement 
cases is still considerable. There is a need for further rationalisation of the judiciary and better 

14 

 
 
human resources management. Reforms in these areas should draw on data and conclusions of 
a proper needs analysis, and a cost-benefit analysis of the past and planned reforms.    

 Fight against corruption 

Montenegro has achieved some level of preparation in the fight against corruption. Despite 
some  progress,  corruption  remains  prevalent  in  many  areas  and  continues  to  be  a  serious 
problem.  Good  progress  was  made  on  meeting  last  year’s  recommendation  on  the 
establishment  of  the  Anti-Corruption  Agency,  which  started  work  on  1 January  2016.  The 
process  of  institution  building  is  in  general  at  an  advanced  stage.  All  institutions  should 
demonstrate a more proactive attitude to fulfilling their mandate. Some progress was made on 
the recommendation on establishing a track record in the area of repression of corruption, in 
particular  high-level  corruption,  but  the  track  record  both  on  successful  investigations  and 
convictions and on prevention of corruption remains limited. In addressing the shortcomings 
outlined below, in the coming year Montenegro should in particular: 

→  improve  the  operational  capacity  of  the  institutions,  so  that  they  are  able  to  fulfil  their 
mandates effectively; 

→  increase  the  capacity  to  carry  out  financial  investigations  and  establish  track  records  of 
seizure and confiscation of criminal assets; 

→ improve track records in the areas of repression and prevention of corruption, including by 
imposing effective sanctions. 

Track record 

As regards the development of track records in investigation, prosecution and final conviction 
in  corruption  cases  some  results  have  been  reached  also in  high-level corruption  cases.  The 
first  final  and  enforceable  judgment  in  a  high-level  corruption  case  was  issued  in  February 
against a former mayor of Budva. The Special Prosecutor’s Office also focused its work on 
high-level  cases.  It  started  investigations  in  several  cases  involving,  among  others,  former 
mayors, a former President of the State Union of Serbia and Montenegro, and a high-ranking 
DPS  party  official.  It  concluded  18  plea  bargain  agreements,  some  of  which  remain  to  be 
confirmed  by  the  court,  including  the  two  concluded  with  the  aforementioned  former 
President of the State Union of Serbia and Montenegro.   

Financial  investigations  have  started  being  used  in  corruption  cases  but  are  still  not 
systematic. Confiscation of assets has been ordered in two corruption cases. 

As  regards  political  influence  on  law  enforcement  and  judicial  officials,  members  of  the 
executive and the legislative branch should not interfere in the independent functioning of the 
judicial system. 

In respect of prevention of corruption, some progress has been made in detecting irregularities 
in the areas of incompatibility of functions and asset declarations, while the number of cases 
remains  limited  in  the  areas  of  conflict  of  interest,  political  party  financing,  and  codes  of 
ethics.  In  all  areas  of  prevention  of  corruption,  sanctions  provided  for  by  the  law  have  not 
been  applied  effectively.  The  practice  among  misdemeanour  bodies  of  imposing  low 
penalties, in most cases below the statutory minimum, counteracts enforcement of the rules. 
The Anti-Corruption Agency should use its power to directly issue misdemeanour penalties. 
The  Agency  must  also  ensure  effective  investigation  of  potential  whistle-blower  cases, 
adequate whistle-blower protection, and  demonstrate a more proactive attitude  in awareness 
rising in this area.   

15 

 
 
Institutional framework 

On the prevention of corruption, an independent Anti-Corruption Agency with administrative 
investigation powers was set up on 1 January 2016. The Agency has taken over the staff and 
responsibilities  of  the  Commission  for  the  Prevention  of  Conflicts  of  Interest  and  the 
Directorate  for  Anti-Corruption  Initiative,  which  both  ceased  to  exist.  Staff  recruitment 
remains  to  be  fully  completed.  The  necessary  expertise  for  all  areas  of  the  Agency’s  remit 
needs to be ensured, including through specialised training.  

On  law  enforcement,  the  institutional  and  operational  capacity  of  prosecutors,  judges  and 
police  to  fight  corruption  still  needs  improvement.  The  prosecution  service  has  the  lead  in 
criminal investigations. However, cooperation between the police and the prosecution in pre-
trial  investigations  needs  to  improve  in  practice.  The  police  and  prosecution  service  lack 
financial  investigation  skills.  This  needs  to  be  addressed  through  targeted  specialised  long-
term training as a matter of priority. 

The  new  Special  Prosecutor’s  Office  for  the  fight  against  corruption,  organised  crime,  war 
crimes,  terrorism  and  money  laundering  was  set  up  in  July  2015.  By  June  2016  all  special 
prosecutors  had  been  appointed.  The  formation  of  the  Special  Police  Unit  supporting  the 
Special  Prosecutor’s  Office  is  ongoing,  but  the  unit  is  not  yet  working  to  full  capacity.  To 
carry out its mandate effectively, the Special Prosecutor’s Office needs to be provided with all 
the human and material resources it requires. 

Since  December  2015,  the  State  Property  Administration  has  become  an  independent  body 
and includes a department in charge of confiscated assets. The authorities should ensure that 
law  enforcement  bodies  are  fully  empowered  to  act  effectively  and  impartially  when 
investigating corruption allegations. 

Legal framework 

Passive  and  active  corruption  are  punishable  offences  under  the  criminal  code,  which  lays 
down sentences ranging from three months to 15 years. Montenegro is a party to all relevant 
international  anti-corruption  conventions.  Illicit  enrichment  has  not  been  made  a  criminal 
offence. 

Secondary legislation necessary to implement the anti-corruption legislative framework is in 
place. In December 2015 a new law on customs service was adopted which aims to strengthen 
the prevention of corruption and integrity of customs officers.   

Strategic framework 

The  action  plan  for  chapter  23  outlines  comprehensive  reforms  to  prevent  and  combat 
corruption.  It  is  monitored  through  the  chapter  23  inter-institutional  working  group,  which 
also includes representatives of civil society. Sectoral action plans for some areas particularly 
vulnerable to corruption, such as public procurement, privatisation, urban planning, education, 
health care, local government and police, have had little impact. 

An operational document which includes non-implemented measures contained in the expired 
2010-2014  national  strategy  for  the  fight  against  corruption  and  organised  crime  and  in  the 
relevant 2013-2014 action plan on areas vulnerable to corruption was adopted in July 2016. 

Fight against organised crime 

Montenegro  has  achieved  some  level  of  preparation  in  the  fight  against  organised  crime. 
Some  progress  was  made,  notably  on  strengthening  the  legal,  regulatory  and  institutional 
framework. Little progress was made on carrying out last year’s recommendations. Its track 
record  on  organised  crime  remains  limited  in  the  fields  of  anti-money  laundering  and 

16 

 
 
trafficking  in  human  beings.  It  needs  to  consolidate  its  track  record  on  the  seizure  and 
confiscation  of  criminal  assets,  which  remain  very  low.  Inter-agency  cooperation  has  only 
marginally improved.  In the coming year, Montenegro should in particular: 

→  establish  a  track  record  of  investigations,  prosecutions,  final  convictions,  seizures  and 
confiscations  in  organised  crime  cases,  with  strong  focus  on  those  crimes  where  results  are 
still lacking, such as money-laundering and trafficking in human beings; 

→  ensure  stronger  inter-agency  cooperation  between  recently  established  institutions  (the 
Special Prosecutor’s Office  and  the new specialised  police  units),  the  administration for the 
prevention of money laundering and terrorism financing, the central bank, the tax authorities 
and the customs administration; 

→  complete  the  police  reform,  by  ensuring  a  centralised  recruitment  process,  with  a 
transparent and merit-based entrance exam. 

Track record 

Montenegro’s initial track record of investigations, prosecutions and convictions in organised 
crime  cases  has  been  mostly  developed  in  the  fields  of  drugs,  smuggling  of  migrants, 
cigarettes,  weapons,  and  cybercrime.  No  progress  was  reported  as  regards  cases  of  money 
laundering or  trafficking in  human beings, partly for the lack of consolidated case-law. The 
identification and protection of victims of trafficking also remains a persistent concern in the 
country.  The  lack  of  understanding  of  international  human  rights  standards  and  case-law  in 
this area continues to affect the performance of the judiciary. 

Financial  investigations  are  still  not  systematically  launched  in  parallel  with  regular 
investigations,  especially  in  lower-level  prosecutions.  On  anti-money  laundering  action, 
despite  additional  specialised  training  and  other  measures,  no  new  cases  were  brought  to 
court;  reporting  of  suspicious  bank  transactions  remains  low  compared  to  reporting  of  cash 
payments. These weaknesses related to addressing effectively various types of financial and 
economic crimes need to be remedied. 

Large  quantities  of  cigarettes  continue  to  be  declared  transiting  through  the  Port  of  Bar 
destined to third countries, including to certain destinations considered as suspect. 

Institutional and operational capacity  

Since  2013  Montenegro  has  in  place  a  system  of  prosecutor-led  investigations  but  practical 
problems  in  coordinating  and  exchanging  information  between  the  law  enforcement  and 
judicial  structures,  though  they  have  improved,  have  not  yet  entirely  been  resolved.  This  is 
one of the major shortcomings affecting results. 

Efforts are being made to gradually foster further specialisation in the Ministry of Interior and 
the  police  in  particular.  Changes  aimed  at  improving  cooperation  between  the  Special 
Prosecution  and  the  police  by  establishing  a  ‘double-hatted’  Special  Unit.  Its  chief  was 
appointed in April 2016; the unit still has various posts remaining vacant. The intelligence-led 
policing project has continued. 

Since  December  2015,  the  State  Property  Administration  has  become  an  independent  body 
and includes a department in charge of confiscated assets. 

An operational agreement with Europol is being implemented and a liaison officer has been 
posted in The Hague since November 2015. Capacity-building activities, and involvement of 
Montenegro in the work of Europol, need to continue. 

17 

 
 
 
Legal framework 

In recent years, Montenegro’s legal system went through several reforms to boost its response 
to  organised  crime,  while  at  the  same  time  aligning  the  national  framework  with  EU  and 
international standards. A specific working group is currently monitoring the broad range of 
changes to  the  system and their impact on policies  and  enforcement. 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, 
including by reconsidering the role and position of the Police Academy. 

Strategic framework 

On  the  basis  of  the  intelligence-led  policing  system,  Montenegro  produced  a  serious  and 
organised crime threat assessment (SOCTA) in 2014, which was updated in 2015. In addition, 
Montenegro is implementing a series of sectoral strategies covering areas such as trafficking 
in human beings, trafficking in arms, anti-money laundering, and trafficking in drugs. 

Fight against terrorism 

Montenegro  has  not  been  seriously  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.  In 
October  2016  Montenegro  has  signed  the  Additional  Protocol  to  the  Council  of  Europe’s 
Convention on the Prevention of Terrorism. An action plan for fighting money laundering and 
terrorism  financing  has  been  adopted  and  cooperation  with  international  partners  has 
intensified. Montenegro has adopted a new strategy to combat violent extremism 2016-2018, 
which  complements  the  national  strategy  for  preventing  and  combating  terrorism,  money 
laundering  and  the  financing  of  terrorism.  Institutional  awareness  needs  to  be  increased  to 
monitor possible terrorist threats, including radicalised Montenegrin nationals returning from 
battlefields. There is evidence of approximately 20 nationals on the battlefield in Syria since 
the beginning of the conflict, of which five reportedly died. Preventive activities in this area 
need to be strengthened and anti-radicalisation measures implemented. A track record in the 
area of preventing terrorism financing needs to be developed. 

2.4.   Human rights and the protection of minorities  

Overall situation 

Montenegro  completed  several  legislative  reforms  to  further  align  with  the  EU  and 
international  human  rights  standards  and  ensure  that  adequate  mechanisms  are  in  place  to 
protect  vulnerable  groups  from  discrimination.  Implementation  of  the  legislation  remains 
weak.  Amendments  to  the  overall  legislative  framework,  to  ensure  a  coherent  sanctioning 
policy for human rights violations, have not been adopted yet. Institutional capacity needs to 
increase  further.  The  Roma  minority  remains  the  most  vulnerable  and  most  discriminated-
against community in various areas of life. Last year’s recommendations have been partially 
implemented. 

Shortcomings particularly affect the following areas: 

  Human rights institutions, including the Ombudsman and the Ministry of Human Rights 
and  Minorities,  need  to  be  strengthened  further  and  their  knowledge  of  international  and 
European human rights law and standards increased. The Ministry’s capacity to handle and 
supervise the spending of funds for minorities and religious communities remains limited; 

 Implementation  of  the  anti-discrimination  framework  needs  to  be  more  effective,  and 
awareness by the general public needs to increase; lack of a uniform approach and low levels 

18 

 
 
 
of penalties for human rights violations continues to create legal uncertainty; 

 Impunity  is  still  an  issue  of  concern  in  connection  with  abuses  in  prisons  and  by  the 
police.  Judges  and  law  enforcement  officials’  knowledge  of  European  standards  and  case-
law  should  be  improved.  Legislative  measures  to  increase  police  accountability  should  be 
considered. 

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  policy  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  and  recommendations  were  only  partially 
implemented.  

The  number  of  defamation  cases  remains  high,  which  points  to  weak  self-regulation 
mechanisms,  as  well  as  to  challenges  in  understanding  the  role  of  the  media.  Montenegro 
still needs to achieve overall alignment with the case-law of the European Court of Human 
Rights.  The  premises  of  one  commercial  media  company  were  damaged  and  several 
journalists  were  physically  and  verbally  assaulted  and  threatened  during  anti-government 
protests  in  October  2015.  There  has  been  limited  progress  in  the  resolution  of  cases  of 
attacks on journalists. In addressing the shortcomings, Montenegro should in particular: 

→  solve  older  cases  of  violence  against  media,  including  the  2004  murder  case  and  other 
sensitive ones, review such cases and identify not only the perpetrators but also those who 
ordered the attacks; 

→ continue to provide guidance to the judiciary on aligning decisions with the case-law of 
the  European  Court  of  Human  Rights  on  freedom  of  expression,  notably  by  establishing  a 
pool of specialised first instance judges; 

→  ensure  transparency  and  non-discrimination  in  state  advertising  in  the  media,  including 
through adequate legislative solutions; 

→ reinforce the capacity of the self-regulatory bodies. 

Intimidation of journalists 

While  attacks  on  journalists  and  media  property  were  observed  during  the  anti-government 
protests  in  September  and  October  2015,  there  is  no  systematic  trend  of  attacks  against 
journalists  resulting  in  threats  to  life  or  serious  injuries.  However,  such  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, while one suspect 
is on trial there is no information as to the instigators of the crime.  

An ad hoc commission was set up by the government in 2013 to monitor investigations into 
cases  of  violence  against  journalists.  The  commission  failed  to  fulfil  its  tasks  partly  due  to 
strong  polarisation  between  its  government  and  civil  society  components:  this  made  it 
difficult  even  to  adopt  joint  recommendations.  In  2014,  it  issued  recommendations  on 
prioritising cases and accelerating the resolution of prominent cases.  

Some of these recommendations were followed up by the government formed in May 2016, 
notably  as  regards  reinstating  a  reward  for  information  on  the  2004  murder  case.  The 

19 

 
 
Commission was re-established in June 2016, with a larger representation of civil society. The 
parliament formed an ad-hoc committee with a similar mandate. 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 environment 

Defamation was decriminalised in 2012, leading to a fall in the number of lawsuits against the 
media.  However,  the  continuing  high  number  of  defamation  cases  point  to  weak  self-
regulation  mechanisms,  as  well  as  at  challenges  in  understanding  the  role  of  the  media.  To 
help  judges  in  setting  standards  for  penalties,  the  Supreme  Court  has  issued  guidelines  that 
refer  to  European  Court  of  Human  Rights  (ECtHR)  case-law.  Challenges  remain  in  their 
implementation. Fines imposed on the media and journalists, although generally in line with 
ECtHR  case-law,  should  reflect  the  local  context,  particularly  as  regards  the  amounts. 
Although not used in practice, articles on insult and damage to reputation and honour should 
be removed from the criminal code to create a more favourable environment for the work of 
investigative journalists. 

Amendments to the law on electronic media aimed at further alignment with the acquis have 
been adopted. 

Implementation of legislation/institutions 

Some media outlets continue to use occasional smear campaigns against civil society activists 
and  politicians.  Recent  decisions  by  the  competent  court  and  regulatory  bodies  against  one 
TV  station  that  targeted  civil  society  activists  show  that  some  progress  has  been  made  in 
applying the media law. However, the effectiveness of media self-regulation is hampered by 
the fact that it is split into different forms, reflecting divisions within the media community. 
The lack of a uniform approach to penalties in this area suggests that ECtHR case-law is not 
sufficiently known, despite the guidelines issued by the Supreme Court in 2012. 

Weaknesses of the media sector, notably those related to editorial independence and in-depth 
reporting, polarisation as well as self-regulation were evident also during the recent electoral 
campaign.  The 
telephone 
communication  platforms  during  the  election  day  raised  concerns  in  relation  to  alignment 
with European standards and case-law. 

temporary  suspension  of  certain  social  media  mobile 

Public service broadcaster 

Amendments  to  the  law  on  public  broadcasting  services,  providing  more  financial 
independence  and  sustainability  for  the  public  broadcaster  RTCG  (Radio  i  televizija  Crne 
Gore),  were  adopted  in  July.  The  editorial  independence  of  RTCG  needs  to  be  made  a 
priority, since a well-functioning and truly independent public service broadcaster represents 
a key aspect of media pluralism. It is essential for RTCG to secure both editorial and financial 
independence from political influence and to ensure that all management changes are in line 
with the law. 

Economic factors 

Rules governing transparency of media ownership, including media concentration, are set out 
in the law on electronic media. Concerns about transparency and non-discrimination in state 
advertising persist. Some major private media outlets are at risk of bankruptcy 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. 

20 

 
 
Professional organisations/professional conditions 

Journalists  are  jointly  represented  in  Montenegro’s  media  trade  union;  a  professional 
journalists association has been established in July. However, the media community remains 
is  not 
highly  divided  overall.  Membership  of  the  Media  Self-Regulatory  Council 
representative  of  the  entire  media  community.  Dialogue  on  improving  ethical  standards  in 
reporting,  facilitated  by  the  OSCE,  resulted  in  the  adoption  of  a  revised  code  of  ethics  for 
journalists in 2016. It must be effectively and uniformly applied across the media community. 
The media trade union denounces the poor pay and job insecurity of journalists.  

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  bilateral  immunity  agreement  with  the  United  States,  granting 
exemptions for US citizens from the jurisdiction of the International Criminal Court. In doing 
so, it does not comply 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. 

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.  Construction  of  62  apartments  in  Niksic  has  been 
completed through the regional housing programme and the construction of 120 housing units 
in Konik, Podgorica, has started. The contract for the construction of a home for the elderly in 
Pljevlja was signed in April. The tender for the construction of 94 apartments in Berane was 
also published in April. 

The  unresolved  fate  of  missing  persons  resulting  from  the  conflicts  of  the  1990s  remains  a 
humanitarian concern in the Western Balkans. The number of cases in Montenegro, currently 
at 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. They contribute to stability, reconciliation and a climate 
conducive  to  addressing  open  bilateral  issues  and  the  legacies  of  the  past.  The  country 
continued  to  participate  actively  in  regional  initiatives  such  as:  the  South  East  Europe 
Cooperation  Process,  the  Regional  Cooperation  Council,  CEFTA,  Western  Balkans  Six, 
Adriatic-Ionian  Initiative,  European  Union  Strategy  for  Adriatic  and  Ionian  Region,  Central 
European  Initiative,  the  Regional  Initiative  for  Migration  and  Asylum,  the  Igman  Initiative 
and RECOM. 

The impetus given through the ‘Berlin process’ and the Western Balkan Six initiative, notably 
regarding  the  EU’s  connectivity  agenda,  has  continued  to  foster  increased  regional 
cooperation.  Building  on  the  results  of  previous  Summits,  the  June  2016  Paris  summit  saw 
further  advances  on  the  connectivity  agenda  but  also  opened  cooperation  in  new  areas, 
notably through the establishment of the regional youth cooperation office to be established in 
Tirana.  Montenegro  needs  to  implement  the  connectivity  reform  measures  such  as  the 
implementation of the newly signed border crossing agreement with Albania in the transport 
field  or  the  implementation  of  the  Trans-European  Network  Regulation  with  regard  to 
licensing and permitting as well as one-stop shop procedures in the energy field. 

21 

 
 
 
Montenegro remained constructively committed to bilateral relations with other enlargement 
countries  and  neighbouring  EU  Member  States.  Montenegro  has  concluded  a  bilateral 
convention  on  regional  cooperation  with  Albania,  the  former  Yugoslav  Republic  of 
Macedonia  and  Serbia  under  Article  15  of  the  Stabilisation  and  Association  Agreement 
(SAA), and needs to do the same with other partners with an SAA in force. 

Relations  with  Albania  continue  to  be  good.  In  October  2015,  Montenegro  ratified  the 
agreement  on  economic  cooperation.  Albania  ratified  in  June  the  protocol  of  accession  to 
NATO of Montenegro. 

 The border demarcation agreement with Bosnia-Herzegovina entered into force in April. An 
agreement  on  cross-border  supervision  was  signed  in  December.  Negotiations  with  Bosnia 
and  Herzegovina  are  ongoing  with  regard  to  the  convention  on  regional  cooperation,  under 
Article 15 of the Stabilisation and Association Agreement. 

Relations  between  Montenegro  and  Kosovo  remained  good.  In  September  2015,  the 
agreement  on  police  cooperation  entered  into  force.  The  agreement  on  cooperation between 
the Commissions for Missing Persons of Montenegro and Kosovo was signed in October. As 
a positive step, the border demarcation agreement with Kosovo was ratified by Montenegro in 
December. There were no developments on the constitutional recognition of the Montenegrin 
minority in Kosovo. 

A  business  forum  on  investment  opportunities  in  the  former  Yugoslav  Republic  of 
Macedonia and on strengthening economic cooperation between the two countries was held 
in Podgorica in October 2015. 

Relations with Serbia remained good. A programme of cooperation between the two countries 
was signed in September. Regular cooperation in the defence sector has also continued. The 
Agreement  on  Cession  of  Submarines  Class  91  was  signed  in  April.  There  have  been  no 
developments on issues related to citizenship rights in the two countries. The demarcation of 
borders is still pending. 

As  regards  cooperation  with  Turkey,  in  December  the  agreement  on  social  security  entered 
into force. In October, a memorandum of understanding was signed to strengthen cooperation 
on  hydropower  development  in  Montenegro  between  Montenegro,  Turkey  and  Slovenia. 
Furthermore,  a  cooperation  agreement  between  the  Chamber  of  Commerce  of  Montenegro 
and  the  Union  of  Turkish  Business  and  Chambers  of  Commerce  (TOBB)  was  signed  in 
September 2015. In April, a plan for cooperation on defence was signed by the ministries of 
defence of the two countries. 

Joint work on finding a solution for the border demarcation between Montenegro and Croatia 
is  ongoing.  In  October  2015,  the  two  countries  signed  a  memorandum  of  understanding  on 
sports. The demarcation of borders is still pending. 

In March, the government adopted the draft law on ratification of the Agreement on scientific 
and technological cooperation with Italy. In May, the two countries signed an agreement on 
cooperation on veterinary and food safety. 

22 

 
 
3.   ECONOMIC CRITERIA  

Key economic figures 

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

GDP growth (%) 

2014 

41 

1.8 

2015 

41 

3.4 

Unemployment rate (female; male) (%) 

18.0 (17.8 ; 18.2) 

17.5 (17.7 ; 17.3) 

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

for  persons  aged  20–64: 
is 

Current account balance (% of GDP) 

Net Foreign direct investment (FDI) (% of GDP) 

67.6 

-15.2 

10.2 

68.5 

-13.3 

17.1 

Source: Eurostat 

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  central 
importance  of  economic  governance  in  the  enlargement  process.  Each  enlargement  country 
prepares  an  Economic  Reform  Programme  (ERP)  annually,  which  sets  out  a  medium-term 
macro-fiscal  policy  framework  and  a  structural  reform  agenda  aimed  at  ensuring 
competitiveness  and  inclusive  growth.  The  ERPs  are  the  basis  for  country-specific  policy 
guidance jointly adopted by the EU and the Western Balkans and Turkey at ministerial level 
in May each year. 

3.1.   The existence of a functioning market economy 

Montenegro  is  moderately  prepared  in  developing  a  functioning  market  economy.  Some 
progress was made to strengthen the functioning of the financial and labour markets, as well 
as on improving the business environment. Investments in infrastructure and tourism support 
economic activity. However, rapidly rising public debt and high fiscal deficits, together with 
high  external  imbalances  and  high  unemployment  are  of  concern.  The  combined  effects  of 
large-scale  public  infrastructure  investments  and  several  new  expensive  social  expenditure 
programmes  challenge  fiscal  sustainability.  Immediate  corrective  measures  are  required,  as 
called  for  by  the  ERP  policy  guidance.  Other  problems  to  be  tackled  include  high  external 
imbalances  and  low  labour  market  participation  and  still  low  credit  growth  amid  high 
impaired bank loans. 

In  line  with  the  2016  ERP  policy  guidance  and  in  order  to  support  long-term  growth, 
Montenegro should pay particular attention to: 

  stabilising  and  reducing  public  debt,  including  by  adopting  measures  to  restrain  current 
spending and improve revenue collection; 

  developing  a  comprehensive  strategy  to  further  foster  the  disposal  of  non-performing 
loans; 

 prolonging working lives and reducing disincentives to work. 

23 

 
 
 
 
Economic governance 

Prior  to  the  October  parliamentary  elections,  government  and  parliament  lacked  the 
commitment to adopt economic reforms. The measures presented in the 2016 ERP did not 
offer  an  appropriate  policy  response  to  cope  with  the  economic  challenges,  and  the  ERP 
policy  guidance  agreed  on  12  May  2015  has  only  been  partially  implemented.  Meanwhile, 
important  contingent  reform  measures  and  restructuring  plans  were  postponed  until  a  new 
government  is  formed  following  the  parliamentary  elections  of  October  2016.  Overall,  a 
strong political commitment to purse a stable fiscal policy and structural reforms is needed to 
improve the economic situation of Montenegro. 

Macroeconomic stability  

Figure 1 Montenegro GDP growth 

P
D
G

f
o
%

12,0
10,0
8,0
6,0
4,0
2,0
0,0
-2,0
-4,0
-6,0
-8,0

Economic  growth  improved  on  the 
back  of  investment  in  infrastructure 
and  tourism.  After  a  recession  in  2012 
and a slowdown in 2014, GDP expanded 
by  3.4  %  in  2015.  However,  despite  an 
overall  good  performance  of  investment, 
some  large  infrastructure  projects  were 
delayed, such as the priority section of the 
Bar-Boljare highway and the new thermal 
power plant. Growth in private and public 
consumption  remained  modest,  and  net 
exports  had  a  negative  contribution  to 
growth in 2015. In the first half of 2016, 
the economy decelerated to 1.9 % y-o-y, down from 3.4 % a year before. GDP per capita (in 
purchasing power standards) was 41 % of the EU average in 2015. 

GDP per capita in purchasing power standards, EU28=100 (RHS)
GDP growth (LHS)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

60
55
50
45
40
35
30
25
20
15
10
5
0

The external deficit is very high. The current account deficit narrowed to 13.3 % of GDP in 
2015, down from 17.6 % in 2011. However, this trend reversed in the first half of 2016 when 
the current account deficit rose to 18.0 % of GDP as the tourism-driven surplus in services did 
not suffice to offset the deterioration in the trade and primary income accounts. In 2015 the 
external deficit was financed by a sustained inflow of FDI from a diversity of countries. FDI 
inflows have remained close to or above 10 % of GDP since 2004. However, in the first half 
of 2016, there was a strong outflow of FDI as a result of recording transfers abroad of retained 
profits from one large company. In order to balance the financial account, a sizable inflow of 
transfers was recorded under net errors and omissions. 

Inflation  trends  were  largely  driven  by  food  and  international  commodity  prices.  The 
inflation  rate  was  decelerating  in  the  last  few  years,  reaching  negative  levels  in  2014.  The 
trend reversed in 2015 and inflation increased to 1.4 % as a result of rising prices for services 
(in particular accommodation and restaurants) and food. Since March 2016 inflation returned 
into  negative  territory  driven  by  a  new  decline  in  fuel  and  food  prices.  In  the  first  seven 
months of 2016, the inflation rate remained flat. 

The fiscal position deteriorated and poses risks to macroeconomic stability. After several 
years  of  fiscal  consolidation  efforts,  the 
budget deficit was reduced to 3 % of GDP 
in  2014,  compared  with  7  %  two  years 
before.  However,  the  deficit  surged  again 
in  2015, 
reaching  7.3  %  of  GDP, 
considerably  exceeding  the  target  of  6.6  %.  The  substantial  overrun  resulted  from  the 

ERP  policy  guidance:  Stabilise  the  debt-to-GDP 
ratio  net  of  debt  related  to  capital  investments 
already underway in 2016, and then reduce it over 
the remainder of the programme period. 

24 

 
 
 
 
 
 
unplanned  repayment  of  arrears  related  to  utilities,  pension  rights,  and  the  unfavourable 
resolution of several court cases against the state. Consequently, public debt rose to 64.1 % of 
GDP  at  the  end  of  2015,  exceeding  the  fiscal  rule's  mandatory  ceiling  of  60  %  and  legally 
compelling the government to  prepare a plan to  reduce the debt  under  this limit within  five 
years. However, such a plan was postponed until the elections in October. 

The execution of the 2016 budget is marked by poor planning.  

The 2016 budget originally planned for a deficit of 7.15 % of GDP, projecting the financing 
needs  for  the  Bar-Boljare  highway  and  increases  in  pensions  and  public  sector  wages. 
However, the budget plan was rapidly obsolete due to the unplanned deficit of the healthcare 
fund, the postponement of capital investments,  and  the introduction  of life-long  benefits  for 
mothers with three or more children. In 
the first half of 2016, budget revenues 
increased  by  7.7  %  y-o-y.  However, 
current  expenditure  rose  faster  (by  9.6 
%  y-o-y), 
in  a  central 
government  deficit  of  2.9  %  of  GDP. 
Nonetheless, 
the  cash-basis  budget 
fails to reflect all budget commitments 
on  time,  and  therefore remains  subject 
to  revision.  In  June  2016,  the  public 
debt -including municipalities- totalled 64.3 % of GDP. 

ERP  policy  guidance:  Take  immediate  measures  to 
restrain current spending, including on pensions and the 
public  sector  wage  bill.  To  generate  budgetary  savings 
and 
a 
comprehensive  review  of  tax  expenditure  as  well  as 
exemptions,  and  implement  tax  increase  in  a  growth-
friendly manner. 

resulting 

collection, 

improve 

conduct 

revenue 

increased 

Figure 2 Montenegro fiscal developments 

In  light  of  the  country's  monetary  regime,  the  fiscal  stance  has  not  been  appropriate. 
Fiscal  policy  has  been  loosened 
since  2015,  when  public  current 
spending 
significantly 
while 
revenues  underperformed. 
High  budget  deficits  and  a  fast 
growing  public  debt  would  have 
required  urgent  fiscal  consolidation 
measures and a credible public debt 
management  plan.  However,  such 
measures have not been taken so far.  

f
o
%

f
o
%

P
D
G

P
D
G

3,0

4,0

5,0

6,0

7,0

8,0

9,0

30

40

50

60

70

20

Functioning of product markets 

Business environment 

10

0

2,0

1,0

0,0

2015

2014

2013

2010

2011
Public debt (LHS)

2012

Budget deficit (RHS)

business 

The 
environment 
recorded  some  improvement,  but 
there is room for further progress. Efforts were made to enhance the protection of property 
rights,  streamline  legal  and  administrative  procedures,  and  reduce  backlogs  at  government 
offices. In 2015, the number of new companies registered was 4 113, similar to the previous 
two  years.  Companies  can  be  partially  registered  online,  although  payments  still  need  to  be 
done  in  person.  Cadastral  records  are  available  online,  covering  most  of  the  country,  but 
information is still problematic for some 7 % of rural area's territory. Users complain that the 
cadastre  is  not  always  updated,  in  particular  with  respect  to  encumbrances.  In  2015,  the 
average  registration  time  of  property  transaction  was  8  days,  compared  to  25  days  in  2008, 
and the average time to issue a construction permit was reduced to 33 days at municipal level 
or 49 days at central level, down from 6 months in 2008. 

25 

 
 
 
 
 
 
 
 
 
The number of enforcement cases in the courts has been reduced since the introduction of the 
bailiff  system,  but  is  still  considerable.  In  2015,  the  collection  rate  of  bailiffs  was  21  %, 
solving  30  %  of  received  cases.  This  represents  good  annual  progress.  However,  predicting 
the  outcome  of  judicial  proceedings  can  be  difficult  due  to  the  variability  in  speed  and 
problems  of  consistency  in  case-law.  Court  orders  are  not  always  enforced  or  followed  up. 
However, most bankruptcy liquidation proceedings – unless disputes arise – are completed in 
less  than  a  year,  compared  to  18  to  30  months  in  the  past.  The  informal  economy  remains 
large.  In  2014,  its  size  was  estimated  at  24.5  %  of  GDP3,  and  it  is  considered  as  a  major 
obstacle  for  conducting  business.  Corruption  continues  to  be  a  serious  concern,  negatively 
affecting the business environment. Intensified efforts are needed to strengthen the rule of law 
to ensure that regulatory improvements translate into an improved investment climate. 

State influence on product markets 

The  level  of  subsidies  remains  modest,  but  most  of  the  state  aid  was  allocated  to  one 
company  (Montenegro  Airlines).  In  2015,  the  general  government  budget  provided  for  a 
modest allocation of state aid of 0.6 % of GDP for subsidies (down from 0.8 % of GDP a year 
before),  plus  an  additional  0.3  %  of  GDP  for  new  state  guarantees.  However,  overall  state 
subsidies  and  recapitalisation  of  the  national  airways  represented  1.6  %  of  GDP.  The 
government expressed its commitment to stop providing state aid to the company as of 2016. 
Following  the  introduction  in  2015  of  tax  exemptions  to  attract  new  investments  in  priority 
sectors, the number of construction permits for 4-star hotels is estimated to have increased by 
140 %. However, this kind of incentive requires a comprehensive review to make sure it does 
neither hinder competition nor public finances. 

Privatisation and restructuring 

The  privatisation  process  is  quite  advanced.  State  ownership  in  the  economy  is  basically 
reduced  to  public  utilities,  some  transport  companies  (i.e.  the  railways, one  airline  and  four 
merchant  ships),  the  postal  services  and  some  other  companies.  Overall,  state-owned 
enterprises represent a small part of total employment. After being liquidated and sold to new 
owners,  state  support to  the  metal  industry  ended.  The  new  aluminium  and  steel companies 
are currently going through a process of restructuring. In April 2016, the aluminium company 
terminated  its  dependence  on  the  public  local  power  supply,  and  started  importing  its 
electricity instead. The restructuring of the formerly state-owned Adriatic Shipyard in Bijela 
advanced slowly through the concession or sales of its different parts. In September 2016, the 
construction contract for replacing the state-owned old thermal power plant by a new one was 
signed,  but  it  would  not  be  operational  before  2020.  The  difficult  financial  situation  of  the 
state-run Montenegro Airlines requires a comprehensive restructuring of the company. As a 
first  step  the  company  concluded  a  cooperation  agreement  with  Air  Serbia  in  August  2016, 
while continuing the negotiations to also establish a strategic partnership programme with the 
Arab Emirates national airline. Management of the bankrupt Ulcinj saltworks was taken for a 
second year in a row by the National Parks of Montenegro with the objective of revitalizing 
salt production. 

Functioning of the financial market 

Financial stability 

Although stable, the banking system suffers from low profitability. Three new banks have 
started operating since mid-2015, raising the total number of banks in the country to 15. There 
is a significant degree of concentration, with the five largest banks accounting for almost two-

3 UNDP National Human Development Report 2016. 

26 

 
 
                                                            
thirds of total assets. The sector is largely dominated by foreign banks (80 % of share capital). 
In June 2016, the aggregated capital adequacy ratio was 16.6 %, clearly above the minimum 
requirement  of  10  %.  However,  the  large  dependence  on  foreign  financing  makes  banks 
vulnerable  to  funding  cost  volatility.  The  share  of  non-performing  loans  (NPLs)  dropped  to 
11.7 % in 2015 from 16.5 % a year earlier, with a provision coverage ratio of 72.6 %. Overall, 
although the crisis preparedness and management framework of the financial system appear 
well  developed,  low  bank  profitability  remains  a  source  of  vulnerability  for  some  domestic 
banks,  requiring  further  development  of  the  macroprudential  framework  (See  chapter  9  - 
Financial services). 

Access to finance 

Lending to the private sector has not yet recovered to the pre-crisis level. The low credit 
growth is the result of risk aversion among banks due to the high level of NPLs but also poor 
investment readiness and financial literacy among SMEs. In the first half of 2016, corporate 
lending  recorded  some  improvement,  growing  by  3  %  y-o-y  (compared  to  0.7  %  a  year 
before),  while  household  loans  grew  by 
5.4 %  y-o-y.  The 
reduction  of  non-
performing  loans  allowed  some  reduction 
of financing costs for domestic companies. 
In June 2016, the average effective interest 
rate on new loans was 6.72 %, and 6.35 % 
for  business  loans,  the  latter  down  from 
7.82 % a year before. 

ERP  policy  guidance:  Develop  a  comprehensive 
strategy  to  further  foster  the  disposal  of  non-
performing  loans by banks, including participation 
by  all  relevant  stakeholders,  while  establishing  a 
bank  lending  survey  to  better  gauge  underlying 
credit dynamics. 

The  non-bank  financial  sector  is  small.  In  2015,  the  market  capitalisation  of  Montenegro 
Stock Exchange was significant, totalling 82 % of GDP, but its turnover was very low, at just 
1.8 % of GDP. The insurance market is also modest, accounting for 2 % of GDP; a similar 
size  as  domestic  micro-credit  institutions.  Leasing  accounts  for  less  than  1  %  of  GDP. 
Corporate  lending  of  the  state-run  Investment  Development  Fund  (IDF)  represents  3  %  of 
GDP, compared to 28 % of GDP from commercial banks.  

Functioning of the labour market  

The  unemployment  rate  is  high,  hindered  by  poor  labour  mobility,  labour  market 
rigidities  and  a  skills  mismatch.  The  strong  demand  for  foreign  labour  contrasts  with  the 
low  mobility  of  the  local  workforce.  The  working  population  (15-64)  activity  rate  in 
Montenegro  still  is  12  percentage  points  lower  than  the  average  in  the  EU,  even  if  it  has 
increased over the past five years from 57.3 % in 2011 to 62.6 % in 2015, and to 63.6 % in the 
first  half  of  2016.  Meanwhile,  the  unemployment  rate  declined  modestly,  from  19.7  %  in 
2011  down  to  17.7  %  in  June  2016.  However,  the  unemployment  and  participation  rates  of 
women  (17.3  %  and  56.6  %)  remain  lower  than  for  men  (18.0  %  and  70.6  %).  The  gender 
imbalance worsened as regulatory changes in the social care system, like the life-long benefits 
for mothers of at least three children, provided disincentives for women participation. More 
than 15 000 women have already applied for these lifelong benefits, effectively pushing many 
of them out of the labour market. In the second quarter of 2016, women labour force declined 
by  2.6  %  y-o-y,  while  men's  participation  increased  by  1.2 %.  The  unemployment  rate  of 
young people (15-24 years old) is also very high at around 35.5 % in the second quarter of 
2016. 

27 

 
 
Figure 3 Unemployment in Montenegro  (% of Active population) 

Figure 4 Participation rates in Montenegro (% of Labour Force) 

50,0
45,0
40,0
35,0
30,0
25,0
20,0
15,0
10,0
5,0
0,0

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Unemployment rate

Youth unemployment rate

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Women

Men

Active  labour  market  policies  continue  to  be  under-funded,  with  the  focus  on  young 
graduates and seasonal workers. Long-term 
unemployed  women  and  young  people  in 
particular  could  benefit  from  reductions  in 
work  disincentives,  like  the  benefits  for 
the 
mothers  mentioned 
introduction of active labour market policy 
instruments. 

ERP  policy  guidance:  Prolong  working  lives  and 
reduce disincentives to work through strengthening 
the  link  between  activation  measures  and  social 
assistance,  in  order  to  improve  the  labour  market 
participation of the long-term unemployed, women 
and youth. Implement strategies to align education 
and skills policies with labour market needs. 

above 

or 

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

Montenegro  is  moderately  prepared  in  its  capacity  to  cope  with  competitive  pressure  and 
market  forces  within  the  Union.  Some  progress  was  achieved  in  improving  the  quality  of 
infrastructure,  the  energy  market  and  the  digitalisation  of  the  economy.  SMEs  support  is 
modest  but  gradually  developing.  However,  substantial  efforts  are  still  required  to  develop 
human capital and a competitive export-oriented industry. 

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

  ensuring  effective,  efficient  and  independent  regulatory  and  safety  authorities  to 
implement the full opening of rail and energy markets; 

 facilitating provision and range of financial and non-financial support services for SMEs 
with a view to fostering participation in global value chains; 

 implementing strategies to align education and skills policies with labour market needs by 
improving  the  quality  of  education  and  equipping  students  with  better  basic  and  transversal 
skills. 

Education and innovation  

The school-to-work transition is not efficient for most youth. It takes nearly two years on 
average  to  attain  a  first  job  deemed  to  be  either  stable  or  satisfactory.  Public  spending  on 
education  represents  4.2  %  of  GDP,  compared  to  5.3  %  average  in  the  EU.  Early  childcare 
and pre-schooling (0-5 years) enrolment rates are low (at 38 %, and well below the EU target 
of  95  %  by  2020)  in  contrast  with  the  high  enrolment  rates  in  education  at  primary  and 
secondary levels at 98 % and 85 %, respectively. Enrolment at tertiary level is relatively high 

28 

 
 
 
 
 
 
 
at  35  %.  However,  Montenegrin  students'  poor  average  score  of  31/100  in  the  last  OECD's 
PISA tests for reading, science and mathematics underlines the need for improving the quality 
of basic education.  

The stagnation since 2011 of the unemployment rate of secondary VET graduates (at around 
18 %), suggests that the effectiveness of the VET system could also be further improved and 
the  enrolment  rates  in  VET  reduced.  Meanwhile,  the  provision  of  in-company  practical 
training in real work environment is still at an initial stage, with less than 2 % of employees 
participating  in  some  sort  of  training  or  skills  development.  In  2013,  only  23.7  %  of 
companies offered formal training to their employees.  

Overall,  although  educational  attainment  has  increased  significantly  in  a  generation,  the 
number of graduates from higher education is not easily absorbed into the limited number of 
available jobs.  In  addition, as  pointed out in  a recent  EU funded study, both  employers  and 
graduates  believe  that  the  education  institutions  do  not  equip  students  with  key  soft  skills, 
such as problem solving, organisational, decision-making, foreign languages, etc., which are 
important for employability. The educational provision in VET and higher education sectors 
should reflect and reinforce the country's economic development strategies. 

Considerable efforts are also required to increase the level of investment in research and 
innovation, particularly from the private sector. Investment in research is modest. In 2014, 
total investment on research and development amounted to 0.36 % of GDP, and of this, only 
0.14  %  came  from  private  sector.  The  construction  of  the  multi-purpose  innovation  and 
entrepreneurship  centre  'Tehnopolis'  was  completed  and  public  tenders  for  selection  of  14 
entrepreneur tenants finalised. The centre officially opened on 17 September. 

Physical capital and quality of infrastructure 

Some  progress  was  made  in  developing  transport  and  energy  infrastructure.  Ground 
transport  suffers  from  bottlenecks  and  a  lack  of  cross-border  roads  is  hindering  trade  and 
tourism. After one year of preparatory works, the highway priority section to connect the port 
of  Bar  with  the  Serbian  border  started  in  2016.  The  main  rail  line  Bar-Belgrade  is  being 
overhauled  to  increase  the  average  speed  of  trains  by  60  %.  Meanwhile,  there  has  been  a 
steady progress in liberalizing the railway sector in Montenegro. The rail market was legally 
opened in 2014 and capacity allocation process implemented, but further efforts are needed to 
and 
improve 
ensuring 
interoperability, 
sufficient 
the 
independence  of  the  rail  regulatory  body 
and  rail  safety  authority.  Air  fares  are 
rather high and low-cost carriers offer relatively few routes to Montenegro. 

ERP  policy  guidance:  Ensure  effective,  efficient 
and  independent  regulatory  and  safety  authorities 
to  implement  the  full  opening  of  rail  and  energy 
markets. 

including 

capacity 

railway 

safety 

and 

for 

In October 2015 a digital system (VTMIS) for maritime traffic control was established. The 
electric  power  system  is  being  upgraded  with  new  transmission  lines,  several  small 
hydropower plants and the construction of the first wind-farms. However, the construction of 
the  new  thermal  plant  was  delayed.  Improved  regional  cooperation  is  supported  by  the 
construction  of  a  submarine  cable  (to  become  operational  in  2019),  connecting  Montenegro 
and  Italy,  with  extensions  towards  Serbia  and  Bosnia  and  Herzegovina.  In  2016,  the 
unbundling  of  the  power  utility  EPCG  enabled  new  suppliers  to  compete  in  the  local 
electricity  market.  Development  of  an  offshore  oil  and  gas  industry  is  at  an  incipient  stage. 
However,  infrastructure  investments  can  be  better  embedded  in  wider  sector  policies, 
including regulatory measures. 

29 

 
 
The  digitalisation  of  the  economy  continues.  The  penetration  rate  of  fixed  broadband 
internet expands gradually, reaching 60.3 % in June 2016 compared to 50 % five years before. 
In 2015, 94.3 % of surveyed enterprises reported on the use of computers and the internet in 
their activities. At 170 %, Montenegro has one of the highest mobile phone penetration rates 
in Europe as well as world-wide. Montenegro's e-government portal is quite advanced. Online 
banking and e-commerce are rising and have a large potential for further expansion. 

Sectoral and enterprise structures 

Services are the main engine of growth and employment. Services account for 72.6 % of 
total gross value added, compared with 12.9 % for the industrial sector, 9.8 % for agriculture 
and  4.6  %  for  construction.  The  trend  in  the  last  years  reflects  a  continuous  growth  of 
services' gross value added. The development of services is also reflected in the share of jobs 
occupied by young people. The large majority of youth (88 %) work in services, and in the 
case  of  female  youth  this  percentage  reaches  95  %.  By  contrast,  young  workers  in  industry 
and agriculture represent 4 % and 1 %, respectively. 

Government  support  to  SMEs  aims  to  facilitate  access  to  finance  and  to  foster 
investment. SMEs represent 99 % of total 
firms and generate 75 % of value added as 
well  as  82  %  of  employment.  Access  to 
finance  is  one  of  the  major  challenges  for 
SMEs.  The  IDF  channels 
largest 
portion  of  public  sector  support  for  SMEs 
through credit lines for start-ups and financing programmes. However, the IDF discontinued 
funding  for  credit  guarantee  schemes.  The  government  is  implementing  a  pilot  project  to 
support the modernisation of industry by offering favourable financing conditions. 

ERP  policy  guidance:  Continue  to  facilitate  the 
provision  and  range  of  financial  and  non-financial 
support  services  for  SMEs  with  a  view  to  foster 
participation  in  global  value  chains.  Support  the 
development of the private consultancy market. 

the 

Economic integration with the EU and price competitiveness 

The  EU  and  CEFTA  are  Montenegro’s  main  trading  partners.  Total  trade  with  the  EU 
has  gradually  deepened  in  the  last  five  years.  In  the  first  half  of  2016,  trade  with  the  EU 
accounted for 44.8 % of Montenegro's exports and 49.2 % of its imports, followed by trade 
with  CEFTA,  representing  40.7  %  of  exports  and  29.3  %  of  imports.  In  March  2016, 
Montenegro ratified the new WTO  Trade Facilitation Agreement to  facilitate the movement 
of  goods  and  customs  clearance  procedures.  Financial  integration  with  the  EU  is  also  high, 
accounting for 74 % of foreign assets in local banks and 63 % of the FDI in 2015. 

Figure 5 Montenegro trade integration with the EU 

80

100

120

20,0

60,0

40,0

50,0

70,0

80,0

30,0

Montenegro  needs  to  improve  its 
export  performance.  Montenegro 
is  a  small  and  open  economy.  In 
2015,  the  total  value  of  exports  of 
goods and services totalled 103.4 % 
of  GDP.  Yet,  the  country  has  a 
small  manufacturing  base  largely 
concentrated 
commodities. 
on 
Products  are  predominantly  of  low 
technological  and  value  added 
content. Moreover, the geographical 
from  major 
location  –  distant 
routes  and 
transit 
international 
Europe's industrial centres – excludes Montenegro from international transport and production 
networks.  The  competitiveness  of  domestic  companies  is  poor,  with  a  value  added  per 

Share of Imports from EU
Share of exports to EU
Trade with the EU (2008=100) (RHS)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

10,0

0,0

60

40

20

0

30 

 
 
 
employee of around EUR 11 000, compared to EUR 42 000 on average in the EU. 

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  in  this  area  over  the  past  year,  including  further  alignment  with  the  acquis  and  the 
adoption of a strategy to ensure compliance with Articles 34-36 of the Treaty on Functioning 
of  the  European  Union.  It  needs  to  strengthen  its  capacity  and  resources  to  ensure 
implementation, particularly on quality infrastructures, and also to implement REACH. 

In the coming year, Montenegro should in particular: 

→  ensure  that  sufficient  human  and  financial  resources  are  allocated  to  carry  out  the 
necessary strengthening of its market surveillance, standardisation and accreditation bodies; 

→ comply with the planning for alignment laid down in the amended 2014-2018 strategy and 
action plan for alignment with the acquis in this chapter. 

General principles 

Regarding  general  principles,  the  framework  for  the  free  movement  of  good  is  largely  in 
place.  There  are  legal  measures  that  restrict  the  distribution  and  marketing  of  medical 
products  and  tobacco,  but  the  2015-2018  action  plan  for  compliance  with  Articles  34-36  of 
the TFEU provides for their elimination by the end of 2018. Montenegro is implementing its 
2014-2018 strategy and action plan for alignment (the ‘alignment strategy’) to the  acquis 
in this chapter. This involves alignment with all the acquis in the chapter by the end of 2018. 
However, Montenegro had to  amend the alignment strategy in  June  2016 due to changes to 
the acquis and delays in alignment. 

Non-harmonised area 

In  December  2015  Montenegro  adopted  a  2015-2018  action  plan  for  compliance  with 
Articles  34-36  of  the  TFEU.  This  action  plan  provides  for  eliminating  legal  measures  that 
have  a  negative  impact  on  the  production,  distribution  and  marketing  of  industrial 
products, including the adoption of mutual recognition clauses. The Ministry of Economy is 
empowered ensure the obligation to notify legislation. 

Harmonised area: quality infrastructure 

The  legal  basis  and  administrative  structure  are  partly  in  place  for  technical  regulations, 
standards, conformity assessment, accreditation, metrology, market surveillance; plans for full 
alignment are laid down in the ‘alignment strategy’. ISME, the national standardisation body 
is  independent  and  able  to  implement  full  European  and  international  standards,  but  it  does 
not  have  adequate  staff  resources  and  financing.  ISME  has  adopted  13  818  Montenegrin 
standards  (MEST),  3,064  of  which  are  harmonised  MESTs,  which  are  aligned  with 
international and European standards. (Some MEST are issued in  Montenegrin  while others 
were  adopted  by  the  'cover  page'  method  (where  the  the  text  of  the  standard  is  in  another 
language, such as English)). Montenegro is an affiliate member of CEN, CENELEC and it has 

31 

 
 
 
 
 
 
one member of ETSI; full membership of CEN & CENELEC is foreseen by the end of 2018. 
In 2016 Montenegro fully aligned to Regulation (EU) 1025/2012 on standardisation. 

There are 29 conformity assessment bodies in Montenegro. Two more are in the process of 
being accredited, but their overall number remains low. A 2015-2018 strategy and action plan 
for  accreditation  have  been  adopted,  but  the  limited  resources  of  the  Accreditation  Body  of 
Montenegro  put  the  implementation  of  the  strategy  at  risk.  The  Metrology  Bureau  is  the 
official metrology body. A 2016-2018 strategy for development of metrology in Montenegro 
was adopted by the government in December 2015. 

On market surveillance, the law on general product safety is party aligned to the acquis. The 
market surveillance bodies monitor domestic and imported products and take preventive and 
restrictive  measures,  including  prohibiting  the  placing  of  certain  products  on  the  market  or 
withdrawing them for health or safety reasons. 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  Decree  establishing  the 
coordination body for market surveillance.  

On  product  safety,  1 884  inspections  were  performed  during  the  reporting  period.  These 
identified 236 dangerous products types (7 725 items, some of which were permanently taken 
off the market). However, the administration’s budget remains insufficient. 

Harmonised area: sectoral legislation 

For the ‘New and Global Approach’ product legislation Montenegrin legislation is aligned 
to  the  acquis  on  personal  protective  equipment  and  outdoor  noise  equipment.  However,  the 
quality infrastructure capacity issues mentioned above also mean that the implementation of 
aligned  legislation  is  not  always  fully  assured.  In  the  reporting  period,  new  legislation  was 
also  adopted  that  was  partly  aligned  to  the  acquis  on  aerosol  dispensers,  cableways, 
explosives  traceability,  pyrotechnic  articles  traceability,  the  setting  of  maximum  prices  of 
medicines, pharmacovigilance, traditional herbal medicines and homeopathic medicines.  

On  ‘Old  Approach’  product  legislation,  in  January  the  government  adopted  a  national 
strategy  and  a  related  action  plan  for  managing  chemicals.  Montenegrin  legislation  on  Pre-
packaged  Products  and  Bottles  used  as  Measuring  Containers  are  aligned  with  the  acquis, 
while  that  on  drug  precursors  and  several  sub-sectors  of  fertilisers  is  partly  aligned.  Some 
preparatory steps have been taken with the aim to move towards alignment with REACH. In 
addition,  national  legislation  on  chemicals  classification,  labelling  and  packaging  is  partly 
aligned with the CLP Regulation (Regulation (EC) 1272/2008). However, the administrative 
capacity necessary to implement REACH needs strengthening.   

On  drug  precursors,  there  is  a  national  list  of  controlled  substances  compliant  with  the 
acquis and mechanisms are in place to detect smuggled drug precursors. Economic operators 
are obliged to report suspicious orders or transactions.  

On good laboratory practices, practices are only aligned for industrial chemicals. 

On procedural measures, in the reporting period Montenegro adopted legislation designed to 
be partly aligned to the acquis on textiles and footwear and fully aligned on crystal glass. 

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. 

32 

 
 
 
 
Montenegro has achieved some level of preparation in this area. Some progress was made 
on freedom of movement for workers. 

On  access  to  the  labour  market,  amendments  to  the  law  on  foreigners  revoking  some 
limitations  on  the  employment  of  foreigners  in  Montenegro  came  into  force  in  March.  The 
amendments removed the obligation to issue the Employment Agency's certificate confirming 
that there were no unemployed persons registered with the Employment Office fulfilling the 
conditions to be employed at certain jobs or that the person registered refused to be employed 
at such jobs.  

On the coordination of social security systems, a bilateral agreement on social security was 
signed with Slovakia, while negotiations with Romania continued. Montenegro also initiated 
negotiations with Serbia on amendments to the existing agreement on social security. 

With  regard  to  the  health  card,  the  law  on  health  insurance  adopted  in  December  2015 
recognises the European Health Insurance Card. 

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: 

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

On  the  freedom  to  provide  cross-border  services,  preparations  for  alignment  with  the 
Services  Directive  continued.  The  report  on  the  implementation  of  the  action  plan  for 
transposition  of  the  Services  Directive  was  prepared  in  July  2016  but  still  has  not  been 
adopted by the government.  

There  were  some  developments  in  the  area  of  postal  services.  In  July,  the  parliament  
amended  the  law  on  postal  services.  The  postal  service  (Posta  Crne  Gore)  remained  in  the 
2016 privatisation plan. 

On mutual recognition of professional qualifications, the new law should be adopted by the 
3rd quarter of 2017. The list of regulated professions is being drafted and will be ready after 
the  adoption  of  the  new  law.  Regarding  nationality  requirements  for  the  professions  of 
notaries and court interpreters, Montenegro amended the relevant legislation in July 2016. 

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 and the fight against money laundering needs to continue.  

In the coming year, Montenegro should in particular: 

33 

 
 
 
 
increase institutional  capacity  to  perform  checks  over  all reporting  entities  regarding 

 
the prevention of money laundering.  

There were no significant developments on capital movements and payments. 

Some  progress  was  made  on  payment  systems,  with  the  number  of  registered  payment 
institutions’ agents reaching 13. 

On  the  fight  against  money  laundering,  the  Central  Bank  adopted  a  ‘Report  on  the 
Vulnerability of the Banking Sector and other Financial Institutions from Money Laundering 
and Financing of Terrorism’ in accordance with the World Bank methodology.  

In December, the government adopted the money laundering and terrorist financing national 
risk  assessment,  as  well  as  the  action  plan  specifying  measures  and  obligations  for 
government bodies.  

In  March,  the  Central  Bank  adopted  amendments  to  the  Decision  on  the  structure,  more 
detailed conditions and manner of transaction account opening and closing.  

In  September  2015,  the  Administration  for  Prevention  of  Money  Laundering  and  Terrorism 
Financing  drew  up  ‘Guidelines  for  the  assessment  of  the  risk  of  money  laundering  and 
terrorist financing in companies, legal persons, entrepreneurs and natural persons that perform 
the  activity  of  and/or  are  engaged  in  the  business  of  audit,  authorised  auditor,  accountancy 
and  tax  advisory  services’.  The  Central  Bank  carried  out  10  additional  bank  inspections. 
There  were  163  bank  reports  on  suspicious  clients  and  transactions,  an  increase  of  52 % 
compared  with  2014.  The  Central  Bank  amended  the  Decision  on  transaction  account's 
opening and closing in order to further align Montenegrin legislation in this field. 

4.5.   Chapter 5: Public procurement 

EU  rules  ensure  that  the  public  procurement  of  goods,  services,  and  works  in  any  Member 
State  is  transparent  and  open  to  all  EU  companies  on  the  basis  of  non-discrimination  and 
equal treatment. 

Montenegro is moderately prepared on public procurement, an area particularly vulnerable 
to  corruption.  Some  progress  was made thanks to  the start of the implementation  of a  new 
2016-2020 strategy on public procurement, which was one of the 2015 recommendations. No 
progress was made on legal alignment, where the area of concessions in particular remains at 
an  early  stage.  More  efforts  are  needed  to  strengthen  implementation  and  enforcement 
capacity at all levels and prevent corruption during the procurement cycle. 

In the coming year Montenegro should in particular: 

→  continue  to  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,  and  make  the  remedies  system  work 
better. 

Institutional set-up and legal alignment 

The  institutional  and  legal  framework  on  public  procurement  is  broadly  aligned  with  the 
acquis,  apart  from  on  concessions.  Montenegro  now  needs  to  address  remaining  gaps  and 
ensure full alignment with the 2014 EU Public Procurement Directives. A new draft law on 
public private partnership and concessions is under preparation.  

34 

 
 
 
Montenegro needs to ensure that any international bilateral agreement does not unduly restrict 
competition and that they comply with the EU acquis and related TFEU provisions on public 
procurement,  as  well  as  with  commitments  under  the  WTO  Government  Procurement 
Agreement. 

Montenegro’s new 2016-2020 strategy to develop the public procurement system, adopted in 
December 2015, is being implemented. A regular reporting mechanism has been set up. The 
new strategy focuses on reaching full alignment with the acquis and sets out how Montenegro 
seeks to ensure a strong implementation capacity at all levels. The strategy, however, does not 
cover  implementation  in  the  area  of  concessions  and  lacks  information  about  the  financial 
planning and resource allocation. 

Montenegro’s  Public  Procurement  Administration  (PPA)  is  responsible  for  implementing 
the  law  on  public  procurement  and  monitoring  and  implementing  the  2016-2020  public 
procurement development strategy. During the reporting period, rulebooks on standard forms 
and  the  sub-criteria  for  selecting  the  best  tenders  were  revised.  The  PPA  is  an  independent 
state body. 

Implementation and enforcement capacity 

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  and  a  third  inspector  was  recruited  in  January  2016,  the  service’s  capacity  remains 
insufficient  for  its  tasks.  In  addition,  better  internal  auditing  within  contracting  authorities 
remains  crucial  for  improving  monitoring  and  verifying  contract  implementation  (see  also 
chapter 32 — Financial control). 

Contracting  authorities’  capacity  to  manage  public  procurement  processes  continues  to 
improve. The planning, preparation and implementation of public procurement are generally 
in line with transparency and efficiency principles, although planning should be more realistic 
and in line with the allocated resources for procurement. Moreover, public procurement still 
suffers  from  an  overly  formalistic  approach  and  the  prevalence  of  price  as  the  only  award 
criterion.  

Montenegro  urgently  needs  to  invest  in  better  data  management  to  trace  the  complete 
procurement  cycle  and  make  the  system  more  user-friendly.  With  this  in  mind,  work  is 
ongoing to develop a full e-procurement system.  

The  PPA’s  capacity  to  promote  and  enforce  public  procurement  rules  and  monitor  the 
procurement  market  continues  to  improve.  However,  the  PPA  needs  to  invest  more  in 
assessing the performance of the procurement processes, including on the risk of irregularities 
and factors that reduce the competitiveness and efficiency of public procurement. The current 
level of the PPA’s resources remains insufficient to address this task effectively. 

The public procurement certification and training programme is updated each calendar year to 
reflect  recommendations  by  contracting  authorities  and  bidders,  and  includes  public 
procurement planning and contract management modules. By May 2016, some 57 % of public 
procurement  officers  employed  have  been  certified.  The  number  of  contracting  authorities 
could be further reduced to  gain  efficiency:  in 2016 the figure stood  at 614, compared with 
648 in 2015 and 621 in 2014. 

A  regulatory  and  institutional  framework  is  in  place  on  integrity  and  conflict  of  interest 
mechanisms  in  public  procurement.  At  the  end  of  2015  the  Ministry  of  Finance  adopted  a 
rulebook on an anti-corruption methodology which is a positive development. The number of 

35 

 
 
integrity-related reports remains low; 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 an 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.  The  decisions  of  the  PPC  and  the 
Concessions Commission are final, but can be challenged before the Administrative Court of 
Montenegro. 

In  2015,  the  PPC  upheld  30  %  of  submitted  appeals  and  cancelled  269  procurement 
procedures,  a  level  less  than  the  previous  year.  The  number  of  PPC  decisions  fell  by  10  % 
compared with 2014, albeit this follows three previous years of steady increases. The number 
of  Administrative  Court  rulings  annulling  decisions  of  the  PPC  remains  significant  with  a 
44 %  rejection  rate,  partially  deriving  from  conflicts  between  public  procurement  and 
administrative  procedure  rules.  This  undermines  the  functioning  of  the  remedies  system. 
Moreover,  Montenegro  needs  to  improve  the  transparency  of  PPC  rulings  by  upgrading  the 
register of decisions and introducing user-friendly online search functions. The PPC at present 
is understaffed, particularly considering the steady increase in the number of appeals.  

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  has  reached  a  moderate/good  level  of  preparation  on  company  law.  Some 
progress was made towards legislative alignment and on statutory audit oversight capacity. In 
the coming year, Montenegro should in particular: 

→ establish the public audit oversight system following adoption of the draft law on audit; 

→ continue work on aligning with EU accounting and statutory audit acquis. 

National legislation on  company law is largely in line with the  acquis. Work on legislative 
alignment continues, in particular through the drafting of the law on capital markets, including 
transparency  requirements.  Amendments  to  the  law  on  takeovers  of  joint-stock  companies 
were adopted in June Alignment on cross-border mergers needs to be ensured. 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 adoption of the law 
on accounting in July, while the draft law on auditing is currently in parliamentary procedure. 
Once implementing legislation has been prepared, these laws will facilitate compliance with 
the  most  recent  EU  legislation  on  accounting  and  statutory  audit.  The  World  Bank  project 
concerning the setting up and operation of a public audit oversight body and a related system 
of quality assurance was completed in August. 

4.7.   Chapter 7: Intellectual property law 

The EU has harmonised rules for the legal protection of intellectual property rights (IPRs), as 
well  as  rules  for  the  legal  protection  of  copyright  and  related  rights.  Rules  for  the  legal 
protection  of  IPRs  cover,  for  instance,  patents  and  trademarks,  designs,  biotechnological 

36 

 
 
 
 
inventions and pharmaceuticals. Rules for the legal protection of copyright and related rights 
cover, for instance, books, films, computer programmes and broadcasting. 

Montenegro  has  a  good  level  of  preparation  on  intellectual  property  law.  Some  progress 
was made on further legislative alignment but serious challenges remain on enforcement. In 
the coming year, Montenegro should in particular: 

  further  strengthen  cooperation  mechanisms  of  all  intellectual  property  rights-related 
bodies; 

  improve  its  track  record  on  investigations,  prosecutions  and  judicial  treatment  of 
violations, including reporting. 

On  copyright  and  neighbouring  rights,  amendments  to  the  law  on  copyright  and  related 
rights and the law on protection of semiconductor topographies were adopted in July and June 
respectively. 

On industrial property rights, parliament adopted amendments to the laws on trademark and 
on protection of industrial design were adopted in June. 

On enforcement, the Intellectual Property Office (IPO) created a working group on collection 
and  analysis  of  statistical  data;  a  new  and  more  complete  reporting  template  was  created. 
Criminal prosecution remains unsatisfactory. Montenegro's enforcement record, even though 
the  presentation  of  statistics  is  good,  is  limited  with  no  court  cases  on  trade  mark 
infringements, and only 2 on patents reported in June. Despite numerous checks on software 
licences by the Market Inspectorate, the level of unlicensed software in Montenegro is high. 
Staffing of the IPO remains low. 

The  IPO’s  IT  infrastructure  improved  thanks  to  the  establishment  of  a  new  information 
system  for  the  patent  register.  The  IPO’s  website  was  also  made  more  user-friendly  and 
accessible. 

4.8.   Chapter 8: Competition policy 

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

Montenegro  has  some  level  of  preparation/is  moderately  prepared  in  this  area.  Some 
progress  has  been  achieved,  in  particular  on  legislative  alignment.  Montenegro  has  a  good 
level  of  preparation  as  regards  alignment  with  the  rules  on  antitrust  and  mergers.  However, 
implementation of these rules has demonstrated some weaknesses. Further efforts are needed 
to improve legislative alignment and the enforcement record on State aid. In the coming year, 
Montenegro should in particular: 

→ empower the Agency for the Protection of Competition to directly impose fines; 

→ ensure the operational independence of the State Aid Control Commission and improve the 
effectiveness of its control on State aid at all levels; 

→  complete  the  alignment  of  the  law  on  State  aid  control  with  the  acquis,  in  line  with  the 
Stabilisation and Association Agreement (SAA) obligations. 

Antitrust and merger 

The  legislative  framework  is  broadly  in  line  with  the  acquis  and  the  SAA.  The  law  on 
protection of competition is largely aligned with TFEU Articles 101 on restrictive agreements 
and  102  on  abuses  of  dominant  position.  It  also  provides  for  an  ex  ante  control  of  mergers 

37 

 
 
 
 
above  certain  turnover  thresholds,  in  line  with  the  principles  of  the  Merger  Regulation. 
Secondary  legislation  providing  further  substantive  rules  and  guidance  on  how  competition 
rules  should  be  applied  is  largely  in  place  and  in  line  with  the  relevant  regulations  and 
Commission guidelines. 

As regards the institutional framework, the Agency for Protection of Competition (APC) is 
responsible  implementing  the  law  on  the  protection  of  competition.  It  is  an  operationally 
independent authority, whose director is appointed by the government. 

The powers of the APC are broadly comparable to those of the European Commission. It may 
act  upon  a  complaint  or  a  notification  (e.g.  for  mergers)  or  act  of  its  own  initiative.  When 
carrying  out  an  investigation,  it  may  issue  requests  of  information  and  carry  out  on-site 
investigations. A leniency policy allowing for reduced fines for self-reporting cartel members 
is  in  place.  However,  fines  cannot  be  imposed  by  the  APC,  but  only  by  a  decision  of 
misdemeanour courts. The APC may approve mergers, with or without conditions, or prohibit 
them.  The  APC  may  also  provide  an  opinion,  of  its  own  initiative  or  upon  consultation,  on 
draft legislation that may affect competition, although it may not do this in a systematic way. 
The APC’s decisions may be the object of appeal before the Administrative Court. 

As  regards  enforcement  capacity,  the  APC  has  13  staff  members  (including  seven  case 
handlers). Its level of staffing and expertise is insufficient. In terms of  implementation, the 
number  of  decision  on  cartels  and  abuses  of  dominant  position  remained  stable,  with  three 
decisions in 2013, six in 2014 and three in 2015. The APC started an in-depth investigation of 
a merger for the first time in 2015, which resulted in its conditional approval. However, only 
one  fine  was  imposed  by  the  misdemeanour  court  in  2014,  for  the  low  amount  of  EUR 
36.000. The APC needs to step up its enforcement policy, in particular by conducting more 
on-site  inspections  (only  one  was  carried  out  so  far)  and  by  promoting  the  use  of  leniency 
policy  as  a  means  to  uncover  cartels.  The  APC  provided  eight  opinions  on  the  relevant 
secondary legislation. However, these should be actively followed up.  

The  APC’s  decisions  on  appeals  were  upheld  to  some  extent  by  the  courts  but  sometimes 
hampered  by  their  application  of  the  statute  of  limitation.  The  courts’  capacity  to  handle 
complex competition cases must be strengthened. 

State aid 

The legislative framework is partially in line with the acquis and with the SAA. The law on 
State aid  control is  aligned with  TFEU Articles  107 and 108.but  only  partially  aligned with 
the secondary EU legislation. The revised law on free zones was adopted in July. Montenegro 
continued with the adoption of further decrees ensuring the alignment with this acquis, in line 
with the SAA obligations. 

As  regards  the  institutional  framework,  the  State  Aid  Control  Commission  (SACC)  is 
responsible for implementing the law on State aid control. The SACC is administratively part 
of the Ministry of Finance and its members are nominated by aid-granting ministries, and it is 
assisted  by  the  State  Aid  Control  Unit.  The  current  SACC  does  not  yet  meet  the  SAA 
requirement for it to be an operationally independent authority. The SACC’s decisions can be 
appealed before the Administrative Court. 

The law on State aid control provides that all new State aid measures must be notified to the 
SACC and found to be compatible by the Commission before they can be implemented. The 
SACC can take a negative decision. If an aid measure is not notified, the SACC may, either 
on the basis of a complaint or acting on its own initiative, investigate the measure. 

38 

 
 
The  SACC’s  enforcement  capacity  is  insufficient.  The  level  of  staffing  is  inadequate.  The 
level of expertise and the budget need to be strengthened. The enforcement track record of the 
SACC  needs  to  further  improve.  The  number  of  decisions  adopted  by  the  SACC  increased 
from 12 in 2013 to 31 in 2015, with two negative decisions in that year.  

The  SACC  received  no  complaints  between  2013  and  2015,  which  could  indicate  a  low 
awareness of State aid rules among stakeholders. There is evidence that a certain number of 
aid  measures  granted  at  central  or  local  level,  in  particular  to  large  companies  (e.g. 
Montenegro Airlines), are not notified or properly investigated by the SACC.  Awareness of 
the State aid rules among aid grantors is weak and advocacy must be stepped up. 

Liberalisation 

The law on protection of competition and the law on State aid control are applicable to public 
undertakings and undertakings with special or exclusive rights, except when their application 
would obstruct the performance of the particular tasks of services of general economic interest 
that are assigned to them, in line with Article 106 of the TFEU and with the SAA. The rules 
on the financing of services of general economic interest are largely aligned with the State aid 
acquis.  However,  Montenegro  needs  to  further  demonstrate  that  these  rules  are  properly 
enforced. There are no monopolies of a commercial character within the meaning of Article 
37 of the TFEU. 

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 but more work is required to implement the financial services' acquis. In the 
coming year, Montenegro should, in particular: 

→ step-up preparation for adopting the EU acquis in the financial market infrastructure field; 

→ make further efforts in addressing NPLs (non-performing loans); 

→ take additional steps to align with CRR/CRD IV. 

On banks and financial conglomerates, the Central Bank and other supervisory authorities 
in  the  region  signed  a  cooperation  agreement  with  the  European  Banking  Authority  in 
October  2015.  In  2015,  the  Central  Bank  prepared  legislation  to  bring  it  into  line  with  the 
banking  CRD 4  package  and  with  Directive  2014/59/EC  establishing  a  framework  for  the 
recovery and resolution of credit institutions and investment firms (CRRD). 

On  insurance  and  occupational  pensions,  the  Insurance  Supervision  Agency  adopted  two 
rulebooks. In July 2016, the parliament adopted the amended law on insurance. 

On financial market infrastructure, no developments were recorded. 

On securities markets and investment services, the parliament adopted the amended law on 
takeovers  of  joint-stock  companies.  The  Security  and  Exchange  Commission  initiated  the 
adoption  of  amendments  to  the  law  on  investment  funds  and  amendments  to  the  law  on 
voluntary pension funds. 

39 

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

In the coming year, Montenegro should in particular: 

→  ensure  the  financial  and  editorial  independence  of  the  public  broadcaster  through 
appropriate financial resources and a sustainable funding model. 

On  electronic  communications  and  information  and  communications  technologies,  the 
new strategy on information society development in Montenegro by 2020 was adopted on 21 
July. The Ministry and EKIP adopted eight new regulations. As of January, EKIP is no longer 
required to transfer any budget surplus to the state budget. Parliament still continues to have 
the authority to dismiss the entire EKIP Council if it does not approve EKIP’s financial report  

Both amendments to the law on postal services and to the law on electronic communications 
should  be  fully  consistent  when  it  comes  to  ensuring  that  revenues  from  electronic 
communications will not cover postal services costs.  
On 2nd August, EKIP completed the multi-band auction of frequencies in the 800 MHz, 900 
MHz,  1800  MHz,  2GHz  and  2.6  GHz  bands.  All  three  existing  mobile  operators  secured 
frequency  resources,  as  well  as  spectrum  freed  from  previous  digital  dividend.  The  auction 
did not attract interest from any new player. 

The prices for regional roaming services further decreased on 1 July 2016 following the 2014 
agreement  with  Bosnia  and  Herzegovina,  the  former  Yugoslav  Republic  of  Macedonia  and 
Serbia.  Telecommunication  operators  launched  a  court  case  against  the  decision  on  the 
grounds that it had no legal basis.  

On information society services, amendments to the law on information security have been 
adopted in June 2016, which included the establishment of a National Council for Information 
security, as well as the protection of the national critical IT infrastructure. 

On  audiovisual  policy,  the  Agency  for  Electronic  Media  (AEM)  is  no  longer  required  to 
transfer any budget surplus to the state budget or to submit its financial and technical reports 
to parliament for approval. AEM’s independence is undermined by unclear divisions of rights 
and duties in the course of control hearings before parliament. Further, the Agency launched a 
second call for the distribution of funds to commercial radio broadcasters. Amendments to the 
law  on  public  broadcasting  services  and  the  law  on  electronic  media  have  been  adopted. 
Radio Televizija Crne Gore still lacks the appropriate and stable financial resources to have 
the  necessary  independence  to  meet  its  role  and  obligations  in  public  broadcasting  and 
digitalisation. 

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. 

40 

 
 
 
 
 
Montenegro is moderately prepared in the area of agriculture and rural development. Good 
progress was made in this area, including the adoption of legislation and advances towards 
entrustment with budget implementation tasks for IPARD II. 

In the coming year, Montenegro should in particular: 

→ fulfil outstanding obstacles towards entrustment with budget implementation tasks so as to 
move ahead with the implementation of the IPARD II programme; 

→  continue  implementing  the  action  plan  for  acquis  alignment  on  agriculture  and  rural 
development. 

On general agricultural issues, direct support measures will need to be brought into line with 
the  acquis  by  fully  decoupling  them  from  production  and  linking  the  payments  to  cross-
compliance  standards  and  conditions.  Montenegro  is  in  the  process  of  establishing  a  land 
parcel identification system. This  is part of the overall integrated administrative and control 
system 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, a law on wine, and a law on spirits and a law amending 
the  law  on  olive  oil  were  adopted.  A  draft  law  on  the  market  organisation  for  agricultural 
products  is  under  preparation.  Strengthening  administrative  capacity  and  implementation  is 
important. 

On  rural  development,  Montenegro  submitted  a  request  to  be  entrusted  with  budget 
implementation  tasks  for  IPARD  II  Programme  in  December  2015  and  continues  to  make 
progress in this regard. The entrustment with budget implementation tasks is likely be granted 
by the Commission at the end of 2016. Entrustment signifies the start of the implementation 
of  the  IPARD  II  programme.  The  sectoral  agreement  was  signed  in  November  2015.  On 
quality  policy,  capacity  building  is  ongoing  in  this  area.  A  draft  law  on  quality  schemes 
aligning  to  the  EU  acquis  is  currently  being  prepared.  In  the  area  of  organic  farming, 
implementing legislation on controls and registers was adopted.  

On quality policy, capacity building is ongoing for the certification body that will implement 
compliance assessment of products and product specification. The law on quality systems and 
the law on geographical indications are being prepared. 

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, protection against harmful organisms and animal nutrition. 

Montenegro  is  moderately  prepared  on  this  chapter.  Good  progress  was  made  in  this 
area, including with the adoption of implementing legislation. 

In the coming year, Montenegro should in particular: 

 implement the strategy for transposing and implementing the acquis; 

 continue to improve its administrative capacity, in particular for inspection services and 
laboratories; 

 continue upgrading food establishments. 

41 

 
 
 
On  general  food  safety,  a  number  of  rulebooks,  decrees  and  bylaws  were  adopted.  A  new 
Administration for Food Safety, Veterinary and Phytosanitary Affairs was established within 
the Ministry of Agriculture and Rural Development. 

On  veterinary  policy,  implementing  legislation  was  adopted  in  various  fields.  The  Animal 
Identification and Registration system was extended to pigs and the actual identification and 
registration of pigs and pig holdings has been completed. The multiannual programme for the 
eradication  of  rabies  continued.  The  autumn  2015  and  spring  2016  vaccination  campaigns 
were  completed.  Capacity  building  for  veterinary  services  was  further  pursued.  The 
vaccination campaign for lumpy skin disease has been completed.  

On  the  placing  on  the  market  of  food,  feed  and  animal  by-products,  Montenegro 
completed  its  classification  of  food  establishments  and  establishments  handling  animal  by-
products  into  three  categories:  compliant  with  EU  requirements,  establishments  with  minor 
non-compliance and establishments with major non-compliance. 

Implementing  legislation  on  food  safety  rules  was  adopted  in  various  fields.  Capacity 
building  for  food  safety  services  continued.  There  were  no  developments  on  genetically-
modified organisms. 

There were no developments on specific rules for feed. 

Implementing  legislation  on  phytosanitary  policy  was  extensively  adopted.  Capacity 
building for phytosanitary services was pursued. 

4.13.  Chapter 13: Fisheries 

The  common  fisheries  policy  lays  down  rules  for  management  of  fisheries,  protects  living 
resources  of  the  sea  and  limits  the  environmental  impact  of  fisheries.  This  includes  setting 
catch quotas, managing fleet capacity, rules for markets and aquaculture as well as support 
for fisheries and coastal communities. 

Preparations  remain  at  an  early  stage.  No  progress  was  made  in  this  area,  particularly  as 
regards the legislative framework. 

In the coming year, Montenegro should in particular: 

 continue implementing the action plan for transposing, implementing and enforcing the EU 
acquis; 

 strengthen administrative capacity.  

Regarding  resource  management,  implementing  legislation  was  adopted  on  the  content  of 
the permit for commercial fishing and on prohibition to for prohibiting the catch and trade in 
fingerlings, juvenile fish and other marine organisms. In the area of inspection and control, 
implementing legislation was also adopted on how to keep and submit the data from farming 
of fish and other marine organisms, as well as on issuing catch certificates.  

During  the  reported  period,  there  were  no  substantial  developments  on  fleet  management; 
structural actions; market policy; State aid; international fisheries agreements. 

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/has a good level of preparation in the area of transport 
policy. Some progress was achieved in the past year, in particular in the area of maritime, rail 

42 

 
 
 
 
and  air  transport.  However,  more  work  is  needed  to  strengthen  administrative  capacity  and 
coordination  for  all  modes  of  transport  and  to  further  align  with  the  acquis  on  inland 
waterways and intelligent transport systems. 

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

→ ensure the independence and the staffing of the railway regulatory body; 

→ increase effort for achieving full membership to the Paris Memorandum of Understanding 
(MoU); 

→ prepare and ensure timely publication of the network statement for the rail facilities in the 
port of Bar and start the reviewing process for national technical safety rules. 

On  the  general  transport  acquis,  the  key  strategic  documents  were  adopted.  However, 
Montenegro should further strengthen its strategic framework by revising the 2008 transport 
development  strategy  to  ensure  alignment  with  the  regional  agenda  on  connectivity. 
Coordination with the neighbouring countries is very limited and should become part of any 
planning process. The national legislation is partially aligned with the acquis on summertime 
arrangements.  Further  efforts  are  needed  to  complete  alignment  with  the  acquis  on  public 
service  obligations,  including  on  procedure  and  criteria  for  the  award  of  public  service 
contracts in the field of road and rail transport.  

The  legislation  on  air,  railway  and  maritime  safety  was  strengthened  in  2015  by  the 
establishment  of  a  national  accident  investigation  body  for  air,  maritime  and  rail  transport. 
The  National  Investigation  Commission  of  Serious  Incidents  and  Accidents  in  Transport 
established in 2014 has worked independently of the Ministry of Transport since 2015 and has 
its own budget. It is now fully operational. 

On  road  transport,  Montenegro  is  partly  aligned  with  the  EU  acquis.  Further  efforts  are 
needed, particularly on the transposition and implementation of the social acquis, road safety 
rules and standards and on updated road safety statistics. The law on road traffic safety was 
adopted  in  2012  and  followed  up  with  subsequent  amendments  and  relevant  implementing 
legislation.  Montenegro  also  strengthened  its  legislative  framework  with  the  adoption  of 
yearly  action  plans  to  implement  the  2010-2019  road  safety  strategy.  The  2016  programme 
for reconstruction and maintenance of state roads amounts to EUR 44 million.  

The law on transport of dangerous goods was adopted in 2014. However, Montenegro must 
monitor better its implementation, including by establishing a national body for the control of 
transport of dangerous goods. Montenegro is partially aligned with the acquis on access to the 
market for goods and passenger transport. The legal framework regulating driving times and 
introducing tachographs has been partially harmonised with the acquis, but Montenegro needs 
to further improve enforcement in the areas of roadside checks and inspections.  

Access  to  the  haulage  market  and  to  the  international  market  for  coach  and  bus  services  is 
regulated  by  the  law  on  road  transport  which  does  fully  align  with  the  acquis.  No  progress 
was  made  on  clean  and  energy-efficient  road  transport  vehicles  or  on  intelligent  transport 
systems. Cycling as an alternative and environmentally friendly form of transport in cities has 
not been given sufficient attention. 

On  the  rail  transport  acquis,  the  State  and  the  passenger  operator  concluded  a  contract  to 
compensate  for  losses  in  operating  rail  passenger  services.  The  authorities  of  Albania  and 
Montenegro completed talks on five different protocols under new border crossing agreement. 
The role and functioning of the Railway Directorate, the national safety and regulatory body, 
needs to be further enhanced. The Railway Directorate also serves as the procurement body 

43 

 
 
for  railways.  However,  it  does  not  yet  function  independently  of  the  Ministry  of  Transport. 
Although the railway market in Montenegro has been open to competition since 2014, to date, 
no private operators have shown interest in entering the market.  Open access to the railway 
market,  with  transparent  track  access  charges  and  capacity  allocation,  needs  to  be  further 
aligned with the acquis. The law on railway safety and interoperability was adopted in 2014, 
but further efforts should be made for its implementation. 

On  maritime  transport,  in  October  2015,  phase  I  of  the  Vessel  Traffic  Monitoring  and 
Information  System  became  fully  operational,  thus  establishing  a  legislative  and  technical 
framework  for  maritime  transport  monitoring.  In  July  2015  the  parliament  ratified  the 
Paris MoU on Port State Control. However, Montenegro needs to ensure the implementation 
of  the  procedures,  forms  and  information  system,  in  particular  with  regard  to  port  state 
control,  selection  of  ships,  expanded  inspection  procedures,  recognised  organisation 
responsibility,  banning  provisions  and  code  of  good  practice.  Montenegro  ratified  the  1974 
Athens  Convention  and  the  2006  Geneva  Maritime  Labour  Convention.  In  July  2016,  the 
parliament adopted the law on ships and port facility security. With regard to the systems for 
maritime  education,  training  and  certification  for  seafarers,  Montenegro  took  measures  to 
address the shortcomings in order to achieve EU recognition.  

On inland waterway transport, the relevant EU legislation needs to be transposed and a new 
authority responsible  for  inland  waterways  established.  Montenegro  has  not  yet  adopted  the 
law on merchant shipping. Montenegro participates in the EU strategy for the Danube Region. 
A  roadmap  for  the  transposition  of  the  inland  waterway  acquis  exists  but  has  not  yet  been 
used.  However,  it  is  not  a  signatory  of  international  agreements  on  internal  navigation  or 
bilateral agreements with neighbouring countries. 

On  aviation,  Montenegro  further  advanced  with  the  acquis  alignment  under  the  first 
transitional phase of the European Common Aviation Area Agreement. However, some issues 
in the field of economic regulation still need to be addressed. To a large extent Montenegro 
has aligned its legislation with the EU acquis on the Single European Sky. On aviation safety, 
legislation  is  aligned  with  the  EU  acquis.  Following  the  successful  completion  of  the  'One-
Stop Security' project in December 2015, Montenegro is now included in the EU list of third 
countries  applying  security  standards  equivalent  to  the  common  basic  standards  on  civil 
aviation security. 

On combined transport,  Montenegro adopted in 2014 a law on combined freight transport 
that  transposes  the  objectives  and  general  principles  of  the  acquis.  However,  significant 
efforts  are  needed  to  ensure  full  alignment  with  EU  legislation  and  to  further  develop  a 
balanced intermodal transport, also reflecting on the possible evolution of the EU legislation 
in this field.  

4.15.  Chapter 15: Energy 

Montenegro is moderately prepared/has a good level of preparation in the field of energy. 
Good progress was made in the reporting period, especially on legislative alignment with the 
third  energy  market  package  in  electricity  through  the  adoption  of  the  new  energy  law  in 
December 2015 and June 2016. In the coming year, Montenegro should, in particular: 

 set up the stockholding body for the mandatory oil stocks; 

 adopt implementing legislation for energy laws and begin their implementation; 

 complete the alignment with the acquis on energy efficiency and implement it. 

44 

 
 
 
In  the  area  of  security  of  supply,  Montenegro’s  energy  policy  up  to  2030  was  adopted  in 
2011  and  its  2030  energy  development  strategy  was  adopted  in  2014.  In  January  2016 
Montenegro adopted an action plan for its implementation for the period 2016-2020.  

An action plan on compulsory strategic reserves of oil and/or petroleum products was adopted 
in  April  2015.  Montenegro  still  needs  to  adopt  the  law  on  safety  of  supply  of  petroleum 
products, which will provide the basis for starting implementation of the Oil Stocks Directive. 
The current level of stocks is close to zero.  

Montenegro  has  participated  in  ENTSO-E  since  its  beginning.  The  interconnection  of  the 
electricity  systems  of  Montenegro  and  Italy  by  undersea  cable  is  under  way  and  additional 
interconnections with Serbia and Bosnia Herzegovina are planned. Montenegro does not have 
a gas market. It signed a regional multilateral memorandum of understanding under the Berlin 
process to establish a day-ahead market and merge it with a neighbouring market by 2018. 

Whereas the Third Energy Package on the internal energy market (both electricity and gas) 
was  transposed  through  the  energy  law  adopted  in  December  2015  and  the  law  on  cross-
border  exchange  of  electricity  and  natural  gas  adopted  in  June  2016,  the  implementing 
legislation still needs to be put in place. In June 2016, the power distribution activities of the 
Montenegrin Electric Power Company were legally separated from the supply function.  

The electricity market has been fully opened for households since 1 January 2015, but no new 
providers  entered  the  market.  Customers  connected  to  the  high  voltage  network  have  been 
supplied under negotiated prices but the only consumer who switched to a new supplier was 
KAP, the country’s aluminium plant which as of 2016 appears independently in the wholesale 
market as a self-supplier with its own balancing responsibility.  

The  Energy  Regulatory  Agency  (ERA)  is  an  operationally  and  financially  independent 
authority with 30 employees. However, the framework guaranteeing its independence should 
be further improved. The ERA regulates prices for power from domestic producers based on 
market  prices  and  also  regulates  the  prices  of  grid  services.  Wholesale  electricity  market 
prices are freely formed. Cross-subsidies were abolished in 2010 for electricity  and in 2011 
for grid services. Tariffs for supply to vulnerable buyers were introduced in 2012. 

Montenegro  has  a  favourable  environment  for  energy  investments.  Challenges  concern  the 
connection  of  new  generation  facilities  to  the  electricity  system.  Investments  are  often 
hampered by expropriation procedures and preparation of detailed planning documents. 

The  Hydrocarbons  Licensing  Directive  has  been  transposed  into  national  legislation. 
Montenegro is at an advanced stage of preparation for full implementation of the Directive on 
the Safety of Offshore Operations. A concession contract for production of hydrocarbons was 
signed in September 2016. The gasification master plan has been finalised, including the list 
of the priority investment projects, but its strategic environmental impact assessment is still to 
be  finalised.  The  Ionian-Adriatic  Gas  Pipeline  is  the  leading  option  for  the  gasification  of 
Montenegro.  

The  national  action  plan  on  the  use  of  renewable  energy  sources  by  2020  was  adopted  in 
December 2014. According to Montenegro's targets, by 2020, 33 % of its energy should come 
from  renewable  sources  in  gross  final  consumption,  although  the  preliminary  2014  energy 
balance figure showed it had already reached this target. Montenegro has partially transposed 
the Renewable Energy Directive; implementing legislation still has to be adopted.  

There  are  incentives  for  the  use  of  renewable  sources.  However,  their  development,  in 
particular  on  hydropower,  should  be  in  conformity  with  the  relevant  EU  legislation  on 
environment. The assessment of potential new projects should take into account the impact on 

45 

 
 
areas  of  high  nature  interest.  The  Energy  Regulatory  Agency  issues  certificates  of  origin. 
Administrative and grid related procedures are cumbersome for renewable energy producers. 
Sustainability criteria for biofuels and bio-liquids are yet to be implemented.  

In the area of energy efficiency (EE), the Energy Efficiency Action Plan for 2016-2018 was 
adopted  in  June  2016.  Montenegro  plans  to  save  9 %  of  the  average  five-year  final  energy 
consumption  by  2018.  It  set  a  1 %  renovation  target  for  central  government  buildings  in 
February  2016,  and  adopted  an  annual  Energy  efficiency  operating  plan  of  public 
administration  institutions  in  April  2016.  The  Energy  Efficiency  Fund  has  not  yet  been 
established.  The  EE  obligation  schemes  are  yet  to  be  established.  Some  parts  of  the  energy 
efficiency  acquis  are  yet  to  be  transposed,  in  particular  provisions  related  to  the  further 
transposition of the Energy Efficiency Directive and on the energy labelling of energy-related 
products. 

The Directive on Energy Performance of Buildings has been transposed. Compliance with the 
minimum EE requirements is mandatory for all new and reconstructed buildings. Certification 
of  energy  performance  of  buildings  has  not  started.  Administrative  capacities  should  be 
considerably strengthened, in particular for inspection supervision and local administration. 

As regards nuclear energy, nuclear safety and radiation protection, Montenegro does not 
have  a  nuclear  industry,  a  research  reactor  or  any  other  facility  producing  radioactive 
materials, and national legislation prohibits the construction of nuclear facilities. Montenegro 
has a licensed and operational storage facility for radioactive waste, mainly from medical and 
industrial applications, in compliance with international standards since June 2012. National 
legislation  on  ionising  radiation  protection  and  basic  safety  standards  is  partly  aligned  with 
the acquis. The Nuclear Safety Directive is partly transposed. Montenegro does not intend to 
align with it fully because of the prohibition on nuclear facilities.  

Montenegrin  legislation  is  not  aligned  with  the  Directive  on  the  supervision  and  control  of 
shipments  of  radioactive  waste  and  spent  fuel.  The  amendments  to  the  Convention  on  the 
physical  protection  of  nuclear  material  were  ratified  in  2016.  Montenegro  implements  the 
Treaty on the non-proliferation of nuclear weapons and additional protocols.  

Montenegro  is  not  part  of  the  European  Community  Urgent  Radiological  Information 
Exchange  (ECURIE)  but  it  intends  to  join  the  European  Radiological  Data  Exchange 
Platform.  The  national  regulatory  body  for  radiation  and  nuclear  safety  and  security  and 
radioactive  waste  management  is  under  the  Ministry  of  Sustainable  Development  and 
Tourism, the Environmental Protection Agency and the Administration for Inspection Affairs. 
Eight civil servants are working on protection against ionising radiation and radiation safety. 
A  five-  member  advisory  committee  for  protection  against  ionising  radiation  and  radiation 
safety was set up in April 2012.  

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 the exchange of information 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: 

→ adopt and start implementing an action plan to address the issues highlighted by the Tax 
administration diagnostic assessment tool (TADAT) analysis.  

46 

 
 
 
On indirect taxation, there was no progress in alignment with the acquis. 

On direct taxation there was no progress in alignment with the acquis. However, cooperation 
between  the  tax  and  customs  authorities  was  strengthened.  Montenegro  should  avoid  tax 
measures  that  are  difficult  to  administer  and  aimed  only  at  some  businesses,  as  they  can 
potentially distort the market. 

On operational capacity and computerisation, the tax authority’s IT strategy was adopted 
in September 2015 and improvements were made to its IT system. 

A TADAT diagnostic was made during the reporting period and its final report was accepted 
by  Montenegro.  This  was  produced  by  a  consortium  of  international  and  national 
organisations,  including  the  European  Commission.  Its  findings  were  mixed:  some  areas, 
including  the  achievement  of  tax  revenue  outcomes  and  external  oversight  of  the  tax 
administration  were  assessed  as  adequate.  However,  the  report  found  that  several  areas 
needed  attention,  notably  the  reliability  of  the  taxpayer  database.  It  also  highlighted  issues 
regarding risk assessment, the cross-checking of reports, disputes, the efficiency of collection 
and reporting systems and the public’s perception of the tax system. 

4.17.  Chapter 17: Economic and monetary policy 

EU rules require the independence of central banks and prohibit them from 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.  No 
significant  progress  was  achieved.  The  work  is  advanced  on  finalising  an  action  plan  for 
acquis alignment on economic and monetary policy, as recommended last year.  

In the coming year, Montenegro should in particular: 

→ adopt and implement the action plan for alignment with the acquis; 

→ ensure compliance with the law on budget and fiscal responsibility.  

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 macroeconomic policy 
instrument. A Central Bank decision on bank reserve requirements to be held at the Central 
Bank was adopted  in  May, allowing banks  to  hold  up to  25 %  of  mandatory  reserves in  the 
form of domestic treasury bills until the end of March 2017. After that, the option is repealed 
to align with EU rules on the prohibition of public authorities' privileged access to financial 
institutions. 

On  economic  policy,  further  alignment  with  the  Directive  on  requirements  for  budgetary 
frameworks  is  needed.  Work  progressed  under  the  strategy  for  implementing  the  2010 
methodology  of  the  European  System  of  Accounts  standards  (ESA  2010)  in  public  finance 
statistics.  The  National  Statistical  Office  MONSTAT,  the  Central  Bank  and  the  Ministry  of 
Finance  signed  an  agreement  on  cooperation  on  general  government  national  accounts 
statistics in May.   

While  the  macroeconomic  framework  is  broadly  consistent,  the  medium-term  fiscal 
framework  as  presented  in  the  economic  reform  programme  (ERP)  does  not  offer  an 
appropriate policy response to cope with fiscal challenges. The 2015 budget has surpassed the 
fiscal rules’ deficit and debt limits of 60 % and 3 % of GDP. The government plans to release 
a recovery plan after the October parliamentary elections.  

47 

 
 
 
While  Montenegro  has  put  in  place  a  multiannual  budgetary  framework,  its  content  and 
reliability  has  to  be  further  improved.  Since  2015,  the  State  Audit  Institution  reviews  the 
application of the fiscal rules. Montenegro continued to regularly submit fiscal notifications, 
which need to be gradually aligned with EU requirements.  

The government submitted its 2016-2018 ERP on time. The authorities’ analytical capabilities 
are  gradually  improving,  but  there  is  room  for  further  improvement  of  economic  policy 
formulation and coordination. 

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  publishing  some  GDP  time  series  in  line  with  the  European  System  of 
Accounts (ESA) 2010.  

However, significant efforts are needed, especially to ensure the alignment of macroeconomic 
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.  However,  its 
administrative capacity is still limited due to insufficient resources: only 105 of 200 available 
posts have been filled, providing insufficient means for addressing shortcomings in relation to 
the  closing  benchmarks.  The  2016  budget  was  increased  by  20  %,  but  the  premises  of  the 
office remain inadequate. 

Monstat  has  signed  14  memoranda  of  understanding  with  administrative  data  providers, 
including 2 in the reporting period. Coordination of producers of official statistics continued 
to improve, though it needs to be further strengthened. The main classifications (NACE Rev. 
2,  ISCO-08,  NUTS,  CPA,  GEONOM  and  ISCED  2011)  are  in  compliance  with  the  EU 
acquis.  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. 

Data  transmission  to  Eurostat  continued  and  additional  data  were  transmitted,  but  further 
improvement is still needed. The use of administrative sources should be increased.  

Continued efforts will be needed to align Macro-economic statistics with ESA 2010, though 
progress was achieved in the reporting period. Monstat compiles annual and quarterly gross 
domestic  product  (GDP)  using  the  production  and  expenditure  approach  in  current  and 
constant prices. In this reporting period annual and quarterly GDP time series for 2010-2014 
according  to  the  ESA  2010  methodology  were  submitted  to  Eurostat.  Furthermore,  Monstat 
published  the  GNI  for  2010-2014  in  accordance  with  the  ESA  2010  methodology  on  its 
website. Monstat does not yet compile annual or quarterly sector accounts.  

48 

 
 
 
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 
and these are partially aligned with the EU acquis. Foreign direct investment statistics are also 
partially  in  line  with  the  EU  acquis.  The  harmonised  index  of  consumer  prices  (HICP)  and 
purchasing  power  parities  (PPP)  are  mostly  aligned,  with  the  HICP  inventory  submitted  in 
November  2015.  The  excessive  deficit  procedure  (EDP)  tables  were  submitted  for  the  first 
time in October 2014 and continued to be submitted in the reporting period, but they are only 
partially  aligned  with  ESA  2010.  For  the  purpose  of  implementing  ESA  2010,  a  trilateral 
agreement between Monstat, the Central Bank and the Ministry of Finance was signed in May 
2016. This should help establishing a closer cooperation between the three institutions.  

In  structural  business  statistics  and  short-term  business  statistics  (STS),  further  quality 
improvements,  the  introduction  of  kind-of-activity  units  and  an  increased  coverage  of 
variables  are  necessary.  In  STS  compliance  has  improved  over  the  reporting  period,  but 
further improvement is necessary, in particular for the service sector. 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,  but  no  foreign  affiliates'  statistics  (FATS)  have  been  received  by 
Eurostat.  Tourism  statistics  are  partially  compliant  and  in  April  2016  a  survey  on  tourist 
activity of the Montenegrin population started for the first time; statistics on air transport have 
not  been  received  by  Eurostat,  but  statistics  on  maritime  transport  is  partially  aligned  and 
work on road freight statistics has started. Research and development data are in line with the 
EU acquis. 

In social statistics, the survey of income and living conditions (EU-SILC) is conducted since 
2013,  but  further  compliance  is  needed.  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, work started to produce structure of earnings data but the 
labour  cost  index  still  needs  to  be  compiled.  Crime  statistics  are  partially  in  line  with 
Eurostat's annual data collection requirements. Eurostat receives migration flow data without 
metadata and has not yet received data on asylum and acquisition and loss of nationality.  

Agricultural  statistics  are  partially  aligned  with  the  EU  acquis.  Crop  production  data  of 
improved quality were recalculated for the period 2007-2013 and sent to Eurostat in October 
2015  together  with  the  data  for  2014.  In  addition,  the  data  for  2015  have  been  sent  in  July 
2016. Work started on economic accounts for agriculture, the agricultural price index and the 
agriculture  labour  input.  Energy  statistics  are  fully  compliant  for  annual  data  and  partially 
compliant  for  monthly  data.  Energy  price  statistics  are  fully  compliant.  In  environment 
statistics, waste statistics are partially compliant. Statistics on environmental accounts, which 
include  among  others  protection  expenditure  and  material  flow  accounts,  have  not  yet  been 
received by Eurostat. 

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 non-discrimination. They also promote social dialogue at European level. 

Montenegro has achieved some level of preparation on social policy and employment. Some 
progress was made during the reporting period. The reform momentum needs to continue so 
that changes translate into improved services to citizens. Alignment with the acquis needs to 
be ensured. The critical labour market situation continues to be a key issue. 

In the coming year, Montenegro should in particular: 

 increase the allocations for the active labour market measures targeting youth, women and 

49 

 
 
 
hard to employ people; 

 repeal the legislative measures discouraging woman participation in the labour market. 

In  March,  the  government  reported  for  the  first  time  on  its  action  plan  for  gradual  acquis 
alignment and capacity development on social policy and employment.   

On labour law, the Regulation on subsidies for employing certain categories of unemployed 
people  was  adopted  in  December  2015  to  foster  the  economic  contribution  of  the  most 
difficult-to-employ categories, including the Roma population, the long-term unemployed and 
people over the age of 50. However, the new labour law is planned to be adopted in 2017 and 
the major pieces of EU legislation are still to be transposed. Child labour remains a concern in 
Montenegro, particularly child begging. 

On health and safety at work, the Strategy for improving the quality of health and safety at work 
2016-2020,  the  accompanying  action  plan  and  three  rulebooks  were  adopted.  The  Labour 
Inspectorate continued its operations to improve working environments. Montenegro does not 
have  a  National  Institute  for  Occupational  Health  or  a  population-based  registry  on  work-
related injuries. 

Social dialogue needs to be improved, particularly in the private sector and at the local level. 
A new mandate of the Social Council of Montenegro started and adequate capacity to perform 
its functions should be assured.  

On  employment  policy,  the  government  adopted  in  December  its  new  2016-2020  national 
strategy  for  employment  and  human  resources  development  and  the  accompanying 
2016 action  plan.  The  2016  ERP  prioritised  the  general  improvement  of  human  resources 
capacities  and  increased  access  to  the  labour  market  for  hard-to-employ  people.  The  long-
term unemployed, in particular women and young people, can achieve better inclusion if the 
linkage between activation measures and social protection is strengthened. Accurate primary 
data and reliable statistics remain an obstacle. 

The 2016 action plan for combating the grey economy was adopted in March. The situation is 
critical as every third person is working in informal sector. 

The  amendments  to  the  law  on  social  and  child  protection  ensuring  a  life-long  subsidy  to 
mothers of three or more children diminish the women participation in the labour market and 
act as disincentives to work and early exits from the labour market. 

As  regards  preparations  for  the  European  Social  Fund  (ESF),  Montenegro  is  currently 
implementing its first operational programme for human resources development (2012-2013) 
as  a  precursor  to  the  ESF.  The  multi-annual  Action  Programme  on  Employment,  Education 
and Social Policies for 2015-2017 was adopted by the European Commission in  December. 
(See also chapter 22 — Regional policy and coordination of structural instruments). 

On social inclusion and protection, in April the government reported on the implementation 
of  its  strategy  for  social  and  child  protection.  Local  social  inclusion  plans  have  been 
developed 
their 
implementation need to be ensured. 

in  nearly  all  municipalities,  but  adequate  financial  resources  for 

The  Institute  for  Social  and  Child  Protection  is  operational,  but  its  capacities  need  to  be 
strengthened. The de-institutionalisation process has moved forward, the promotion of foster 
care  continued  and  progress  has  been  made  regarding  the  welfare  system  awareness  of 
children  rights.  The  deinstitutionalisation  process  needs  to  continue  in  parallel  with  the 
increase of foster families and community based services. Nine day-care centres were founded 
and a centre for children with development disorders is operational in Podgorica since April.  

50 

 
 
A  new  2016-2020  strategy  for  the  integration  of  people  with  disabilities  was  adopted  in 
September 2016. The number of employed people with disabilities remains very limited, and 
resources from the professional rehabilitation fund need to be better utilised. The 2016-2020 
strategy for social inclusion of Roma and Egyptian population4 together with its 2016 action 
plan  were  adopted  in  March,  but  more  needs  to  be  done  regarding  the  social  inclusion  of 
Roma. 

The  introduction  of  the  Social  Card-Social  Welfare  Information  System  Phase  II  continued 
successfully.  A  Department  for  Development  of  Social  Services  and  a  Social  Inspectorate 
were established, but the decentralisation of standardised local social services has not yet been 
rolled out and the cooperation with NGOs in this area should be strengthened. 

On non-discrimination in employment and social policy, Montenegro did an analysis on 56 
laws  and  regulations  to  determine  which  legislation  had  been  harmonised  with  the  law  on 
prohibition of discrimination against persons with disabilities. Further alignment with the UN 
Convention on the rights of persons with disabilities is recommended (See also chapter 23 — 
Judiciary and fundamental rights). 

On equality between women and men in employment and social policy, support to single 
parents remains very limited, both in terms of financial aid and service provision. In October, 
the  government’s  report  on  the  implementation  of  the  Convention  for  elimination  of 
discrimination  against  women  showed  that  women  continue  to  be  underrepresented  in  the 
labour market. More measures are also needed to overcome undeclared work, inactivity and 
unemployment  among  women.  Gender-segregated  statistics  and  gender  analysis  should  be 
systematically carried out. 

4.20.  Chapter 20: Enterprise and industrial policy 

industrial  policy  strengthens  competitiveness, 

facilitates  structural  change  and 
EU 
encourages  an  enterprise-friendly  environment  that  encourages  small  and  medium-sized 
enterprises. 

Montenegro is moderately prepared on enterprise and industrial policy. Some progress was 
made  in  this  field  through  the  adoption  of  an  industrial  policy  until  2020,  a  key  2015 
recommendation. There is a need to further build up administrative capacity and ensure strong 
inter-ministerial coordination. 

In the coming year, Montenegro should in particular: 

→  start  implement  the  industrial  policy  in  close  cooperation  with  the  industry  and  other 
relevant stakeholders; 

→  continue  to  strengthen  non-financial  and  financial  public-sector  support  for  SMEs  and 
bolster authorities’ administrative capacity. 

On  enterprise  and  industrial  policy  principles,  in  June  the  government  adopted  its 
industrial policy for up until 2020, accompanied by an action plan. Given the wide range of 
actors involved, strong coordination by the Ministry of Economy is needed for the policy to 
be successfully implemented.  

The  results  of  the  Small  Business  Act  assessment  2016  indicate  that  Montenegro  showed 
some progress in its institutional and regulatory environment for SMEs and good progress in 
lifelong  and  entrepreneurial  learning.  At  the  same  time,  increased  efforts  to  strengthen 

4 All these groups are considered under the wider "Roma" umbrella term under the EU framework for National 
Roma Integration Strategies. 

51 

 
 
 
                                                            
business  support  services  could  assist  SMEs’  integration  into  global  value  chains,  promote 
innovation  and  facilitate  their  access  to  credit.  Further  simplification  of  business-related 
legislation should be a priority. 

The  Decree  on  the  promotion  of  direct  investments  was  updated,  significantly  lowering  the 
qualifying  investment  criteria  for  incentives.  In  spite  of  improvements,  administrative 
procedures for issuing permits and licences remain costly and time consuming. 

On enterprise and industrial policy instruments, the value of financial support provided by 
the  Investment  and  Development  Fund  continues  to  increase,  reaching  EUR  117  million  in 
2015.  Nevertheless,  non-financial  and  financial  public-sector  support  for  SMEs  and  the 
authorities’ administrative capacity need to be further strengthened.  

Montenegro participates in the EU’s COSME competitiveness programme. There is a need to 
create  effective  operational  structures  to  apply  for  EU  funding  under  COSME  so  that 
Montenegrin applicants can produce good quality proposals with a high likelihood of success. 

On sector policies, Montenegro adopted its action plan to implement the 2015-2019 strategy 
for lifelong entrepreneurial learning. 

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  the  Connectivity  reform  measures,  both  in  energy  and  in 
transport. 

On  transport  networks,  Montenegro  continued  to  participate  in  the  South  East  Europe 
Transport Observatory and in the Western Balkans 6 connectivity agenda. Further steps were 
taken  in  constructing  the  priority  Smokovac-Mateševo  section  of  the  Bar-Boljare  highway 
project (the extension of the Orient East-Med core corridor in the Western Balkans), although 
there are delays. Construction permits for one tunnel and one bridge have been issued so far, 
as  well  as  the  environmental  impact  assessment,  the  latter  however  not  compliant  with  EU 
standards.  The  main  design  and  construction  permits  for  the  remaining  major  sections  have 
not yet been issued. 

Montenegro and Albania signed a Memorandum of Understanding with a Chinese contractor 
on  the  construction  of  the  Adriatic-Ionian  motorway  in  2015.  The  National  Investment 
Committee  adopted  in  December  2015  a  single  Project  Pipeline  containing  64  priority 
infrastructure,  including  9  transport  projects  on  the  core  network.  The  list  reflects  national 
strategic priorities  for infrastructure development over the next  10 years. There is a need  to 
continue working on further developing the pipeline with projects that would remove existing 
bottlenecks  on  the  comprehensive  network  towards  neighbouring  countries,  such  as  Bosnia 
and  Herzegovina  and  Albania.  Montenegro  made  some  progress  on  implementing  the 
Connectivity reform measures on transport agreed at the 2015 Vienna summit. 

On  Trans-European  Energy  networks,  the  construction  of  the  undersea  interconnection 
cable  with  Italy  continued.  Montenegro  made  some  progress  on  implementing  the 
Connectivity reform measures on energy agreed at the Vienna summit. In the context of the 
2016  Paris  summit,  a  roadmap  for  the  regional  electricity  market  for  WB6  was  agreed. 
Montenegro, Croatia, Bosnia and Herzegovina and Albania agreed at a ministerial meeting in 
May 2016 to set up an operating body to develop the Ionian-Adriatic Pipeline. The body will 
be based in Montenegro. 

52 

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

Regional  policy  is  the  EU’s  main  investment  policy  for  sustainable  and  inclusive  economic 
growth.  Member  States  bear  responsibility  for  its  implementation,  which  requires  adequate 
administrative capacity and sound financial management of project design and execution. 

Montenegro  is  moderately  prepared  on  regional  policy  and  coordination  of  structural 
instruments.  Some  progress  was  made  in  the  last  year.  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: 

→  continue  implementing  the  action  plan  for  meeting  requirements  deriving  from  the  EU 
cohesion policy. 

On  the  legislative  framework,  work  started  on  preparing  the  methodological  requirements 
for national development planning documents. 

There were no developments on the institutional framework. On administrative capacity, 
the working group for accession negotiations on chapter 22 was established in November. A 
number  of  high  level  staff  changes  took  place,  among  them  a  new  National  Authorising 
Officer  and  a  new  Head  of  the  Operating  Structures  for  Component  III  were  appointed.    A 
considerable staff reduction in the implementing body and a change in the operating structure 
could potentially breach the accreditation decision for IPA, component III. 

On  programming,  the  Operational  Programme  Regional  Development  2016-2020  was 
prepared,  covering  the  transport,  environment  and  competitiveness  and  innovation  sectors. 
The  multi-annual  Action  Programme  for  Education,  Employment  and  Social  Policies  2015-
2017  was  adopted  by  the  European  Commission  in  December  2015.  On  monitoring  and 
evaluation, sectoral monitoring committees for IPA components III and IV were organised in 
December and November 2015 and June 2016. 

On financial management, control and audit, the State Audit Institution started to apply the 
guidelines on audit quality control in 2015. In October 2015, the Senate adopted the code of 
ethics  for  state  auditors  and  other  employees  in  the  State  Audit  Institutions.  Internal  audits 
were conducted to determine how human resources management functions at system level and 
horizontal functioning. 

4.23.  Chapter 23: Judiciary and fundamental rights 

The EU’s founding  values  include the rule of law and respect for  human rights. A properly 
functioning  judicial  system  and  effective  anti-corruption  measures  are  of  paramount 
importance, as is 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  some progress overall. The legislative framework on the judiciary was 
strengthened  to  increase  its  independence  and  professionalism  but  has  not  yet  been  fully 
implemented.  Institutions  have  been  set  up  or  strengthened.  However,  corruption  remains 
prevalent  in  many  areas  and  continues  to  be  a  serious  problem.  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:   

 increase  capacity  to  carry  out  financial  investigations,  and  establish  a  track  record  of 

53 

 
 
 
 
seizure and confiscation of criminal assets; 

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

 ensure  that  the  whole  system  is  able  to  investigate,  prosecute  and  punish  human  rights 
violations as well as effectively protect victims. 

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

As part of the ‘new approach’ to the rule of law, and in line with the negotiating framework, 
this chapter was opened in December 2013 after Montenegro adopted a detailed action plan. 

Judiciary 

Strategic documents 

In  October 2015 and  March 2016, the  government adopted the second and third  half-yearly 
reports on action to implement the 2014-2018 judicial reform strategy. The third report stated 
that 4 % of measures had been partially implemented, and 10 % had not been implemented. 

Management bodies 

The  Judicial  and  the  Prosecutorial  Councils  adapted  their  rules  of  procedure  and  set  up  the 
new bodies required by the law on the Judicial Council and on the rights and duties of judges, 
and the new law on the State Prosecutor’s Office.   

The 2016 budget of the Judicial Council was EUR 750 331, compared with EUR 715 383 in 
2015.  The  2016  budget  of  the  Prosecutorial  Council  was  increased  to  EUR  411 074  from 
EUR 246 970 in 2015. Additional employees have been recruited in both Councils. All judges 
in  the  Judicial  Council  and  one  prosecutor  in  the  Prosecutorial  Council  have  had  their 
workload  reduced  by  50  %.  Even  though  further  strengthening  of  the  administrative  and 
professional  capacity  of  both  Councils  is  needed,  they  should  in  principle  be  able  to 
implement  the  new  systems  for  recruitment,  professional  assessment,  promotion  and 
disciplinary  accountability,  and  they  should  improve  their  strategic  budget  and  human 
resources planning.     

The Prosecutorial Council needs to take further steps to increase the transparency of its work. 

Independence and impartiality 

Following  the  appointment  of  misdemeanour  judges  and  court  presidents,  the  new 
misdemeanour court system became operational in November 2015. As of September 2015, 
several other judges have been appointed. 

The procedure of reappointment of state prosecutors was finalised in December 2015 in line 
with  European  standards.  All  former  deputy  state  prosecutors  have  been  elected  state 
prosecutors. The number of presidential pardons granted further dropped in 2015. Out of 130 
requests,  the  president  granted  a  pardon  in  11  cases  (2014:  23  cases).  Montenegro  needs  to 
take further steps to exclude any perception of political influence on the work of judges and 
prosecutors. 

Accountability 

In 2015, the Commission for monitoring the implementation of the code of ethics for judges 
dealt with 15 cases and in the first half of 2016 with 7 cases (2014: 8 cases). Breaches were 
established in two cases which are currently under appeal. For prosecutors there were 2 cases 

54 

 
 
(no  cases  in  2014);  in  one  of  them,  a  breach  of  the  code  of  ethics  for  prosecutors  was 
established. 

Disciplinary proceedings were started against 3 judges in 2015 and against 1 judge in the first 
half of 2016 (2014: also 3 cases), so far resulting in minor sanctions. All 4 disciplinary cases 
against prosecutors initiated in 2015 (no cases in 2014) were dismissed. Not all cases that give 
grounds for disciplinary action were followed up. 

Mechanisms to detect breaches of integrity rules and to enforce disciplinary penalties are not 
yet  effective.  Montenegro  needs  to  continue  raising  public  awareness  of  existing  complaint 
mechanisms.  The  possibility  of  challenging  the  dismissal  of  complaints  before  the  Judicial 
and  Prosecutorial  Councils  should  be  introduced.  The  adoption  of  integrity  plans  and 
appointment  of  integrity  managers  was  completed  last  year  in  all  courts  and  prosecution 
offices. This April, the Judicial and the Prosecutorial Councils also adopted integrity plans. 

The judicial inspection system does not manage to ensure nor raise accountability standards. 
In  2015,  altogether  50  courts,  state  prosecutor’s  offices  and  misdemeanour  bodies  were 
inspected by the three staff services under the Ministry of Justice. Several irregularities were 
detected  in  courts  (related  to  registers);  only  in  one  basic  prosecutor’s  office  were 
irregularities  detected  (related  to  registers).  Fewer  but  more  thorough  inspections  should  be 
performed, including unannounced checks. 

Following the introduction of the bailiffs system in spring 2014, disciplinary responsibility of 
bailiffs  has  become  a  cause  of  concern.  Disciplinary  proceedings  were  instituted  against 
bailiffs in 2015 in 19 cases, and 4 in the first half of 2016. In 8 cases disciplinary measures 
have been issued, including one measure of temporary prohibition of performing the activity 
of a bailiff. Amendments to the law on bailiffs adopted in July 2016 are aimed to address the 
problems  which  arose  in  practice  in  respect  of  regulating  the  disciplinary  responsibility  of 
bailiffs. Further steps need to be taken to address the problem of bailiffs' non-compliance with 
the professional and ethical standards.  

Professionalism and competence 

The  adoption  of  secondary  legislation  on  the  new  systems  for  countrywide  recruitment, 
regular professional assessment, and promotion of judges and prosecutors was completed in 
December 2015. The law on judicial exams and on trainees in courts and prosecution offices 
was  adopted  in  July  2016.  Specialised  bodies  under  the  Judicial  and  Prosecutorial  Councils 
were also set up.    

The new system for recruitment of judges and prosecutors which should guarantee uniform, 
objective, and transparent assessment of candidates applies from 2016. However, nation-wide 
recruitment of new judges and prosecutors has not yet taken place since there was no need for 
new  recruitment.  The  emerging  vacancies  have  been  filled  through  internal  publications.  In 
2015,  both  the  Judicial  and  the  Prosecutorial  Council  selected  several candidates  other  than 
those  who  had  achieved  the  highest  scores,  without  giving  sufficient  reasons  for  their 
decisions. In September the Prosecutorial Council decided to publish the first public call for 
recruitment of prosecutors under the new system.  

The  new  system  of  regular  professional  assessment  has  started  its  pilot  phase  in  Niksic’s 
Basic Court and in Cetinje’s Basic Prosecution Office.     

Quality of justice 

The Judicial Training Centre is now an independent institution following the adoption of the 
law  on  the  training  centre  for  judges  and  prosecutors  in  September  2015.  The  Centre 
continued  to  provide  training  to  judges,  prosecutors  and  judicial  advisers.  It  also  offered  e-

55 

 
 
learning programmes. For 2016, it was allocated its own budget of EUR 399 724, an increase 
of 135.2 %  (2015: EUR 170 700). However, it still has  to rely  on donor  support for certain 
specialised training. The Centre’s Board was appointed in November 2015, its Programming 
Council in December, and its Director in February. Currently, the Centre has only 5 of the 19 
employees  provided  for  in  the  act  of  systematisation  adopted  in  March.  Its  administrative 
capacity needs to be enhanced, and adequate premises should be provided without delay.    

Instructions  for  collecting  statistical  data  in  compliance  with  European  Commission  for  the 
Efficiency  of  Justice  (CEPEJ)  guidelines  have  not  yet  been  fully  implemented.  Data  on  the 
total length of proceedings is still not available. Statistical information on the performance of 
the  judicial  system  is  not  systematically  analysed,  nor  used  for  management  and  policy-
making purposes. The reliability of judicial statistics continues to raise serious concern. 

A  new  IT  strategy  for  replacing  the  PRIS,  Montenegro's  judicial  information  system  was 
adopted  in  June.  Its  implementation  needs  to  be  backed  by  adequate  financial  and  human 
resources and a clear allocation of responsibilities. 

Analysis of the data collected in the case-weighting study carried out in nine courts in the first 
half  of  2015  was  completed  in  December.  Follow-up  of  the  recommendations  in  the  final 
report should include adopting new, realistic standards for the workload of judges, based on 
case complexity. 

The 2016 budget for the judiciary is EUR 34.6 million (0.89 % of GDP), which is 26 % more 
than the 2015 budget (EUR 27.1 million). In 2016, EUR 26.6 million was allocated to courts 
(2015:  EUR  20.8  million)  and  EUR  7.6  million  to  prosecutors’  offices  (2015:  6.3  million). 
Given  that  the  largest  part  of  the  budget  is  spent  on  salaries,  the  funds  allocated  are 
insufficient, in particular to cover investment needs. 

In 2015, the total number of cases referred to and solved through mediation (excluding labour 
disputes)  fell  significantly  (in  2015,  517  cases  were  resolved  through  mediation,  compared 
with 869 in 2014). The total number of labour disputes referred for mediation to the Agency 
for  Peaceful  Settlement  of  Labour  Disputes  was  3 679,  of  which  2 765  were  resolved.  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 disputes. 

Efficiency 

No consistent data on clearance rate (i.e. ratio of solved cases to new cases filed) and the total 
number  of  pending  cases  at  the  end  of  the  year  is  available  for  2015.  The  reported  figures 
suggest that there has been no significant change in performance of the courts in comparison 
to both 2014 and 2013. 

The total number of cases older than three years pending before all courts has fallen further, to 
2 437  at  the  end  of  2015  (2014:  3 192).  In  2015,  the  disposition  time,  i.e.  the  average  time 
from filing the case to a decision, was 162 days for first-instance proceedings in civil cases 
and  138  days  for  commercial  cases  (2014:  237  days  for  civil  cases  and  203  days  for 
commercial  cases).  Despite  this  improvement,  Montenegro  needs  to  continue  to  work  on 
increasing  the  efficiency  of  the  judiciary,  monitoring  backlogs  and  reducing  the  number  of 
cases pending. 

In  2015,  the  Constitutional  Court  resolved  862  constitutional  appeals  concerning  alleged 
violations of human rights and liberties (2014: 743). The number of incoming constitutional 
appeals  increased  to  1 109  (2014:  772).  The  total  number  of  cases  pending  before  the 
Constitutional  Court  has  further  increased  (1 606  cases  compared  to  1 396  in  2014).  Of  the 
pending  cases,  1 443  are  constitutional  appeals.  The  efficiency  of  the  Constitutional  Court 

56 

 
 
needs to be improved to cope both with the backlog and the increasing influx of constitutional 
appeals and to be able to solve cases within the 18 months’ timeframe prescribed by law. 

The  number  of  incoming  enforcement  cases  to  be  processed  by  the  courts  has  been  further 
reduced,  as  a  consequence  of  the  introduction  of  the  bailiff  system  (2014:  23 452;  2015: 
7 851).  The  backlog  of  old  cases  pending  before  courts  has  also  been  reduced.  However, 
despite a notable decrease, the number of pending enforcement cases is still considerable (end 
of 2015: 119 346; end of 2014: 162 826). The Podgorica Basic Court, the court most affected 
by  this  problem,  started  implementing  specific  measures  to  increase  the  pace  of  backlog 
reduction.  A  system  monitoring  the  recovery  rate,  costs  and  duration  of  enforcement 
proceedings  carried  out  by  bailiffs  at  central  level  is  in  the  process  of  being  set  up. 
Enforcement of civil and administrative decisions remains problematic. 

Work on a proper needs analysis to further rationalise the court network should continue. It 
should  draw  on  the  data  and  conclusions  obtained  through  the  case-weighting  study  and 
assessment  of  human  resources  needs  in  the  medium-term,  together  with  a  cost-benefit 
analysis  of  past  and  planned  reforms.  Better  human  resources  management  is  of  the  utmost 
importance.   

Domestic handling of war crimes cases 

Implementation  of  the  war  crimes  prosecution  strategy  adopted  by  the  Supreme  State 
Prosecutor’s  Office  started  in  September  2015.  The  Special  Prosecutor's  Office  launched 
investigations on 6 cases. It has established cooperation with the prosecution services of the 
neighbouring  countries  with  a  view  of  exchanging  data  and  coordinating  activities.  It  took 
over  prosecution  in  one  case  previously  handled  by  the  Serbian  War  Crimes  Prosecutor's 
Office.  It  has  also  been  assessing  whether  to  take  over  prosecution  in  two  cases  from  the 
Prosecution Office of Bosnia and Herzegovina. The Office has also re-established cooperation 
with  the  International  Criminal  Tribunal  for  the  former  Yugoslavia  (ICTY)  and  reached  an 
agreement on obtaining access to ICTY's databases.  

By  June  2016,  110  court  decisions  on  claims  for  compensation  became  final  and  a  total  of 
EUR 1 097 446 was awarded. In 33 cases, first-instance proceedings are still pending.   

Despite  some  positive  developments  in  the  reporting  period,  Montenegro’s  prosecution 
service  needs  to  demonstrate  a  more  proactive  approach  in  following  up  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 
step up its efforts to fight impunity, and to effectively investigate, prosecute, try and punish 
war  crimes  in  line  with  international  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  equal  access  to  justice  and  compensation,  and  that 
their claims are processed within a reasonable time. 

Anti-corruption policy 

Track record 

Prevention measures 

Montenegro  has  made  some  progress  in  establishing  a  track  record  in  the  prevention  of 
corruption. However, in  all  areas of  prevention of corruption, penalties provided for by law 
have  not  been  applied  effectively.  Misdemeanour  bodies’  practice  of  imposing  very  lenient 
penalties,  in  most  cases  below  the  statutory  minimum,  is  far  from  having  a  deterrent  effect 
and  counteracts  effective  enforcement  of  rules  to  prevent  corruption.  The  Anti-Corruption 
Agency should use its power to directly impose misdemeanour penalties. 

57 

 
 
In  2015,  the  Commission  for  the  Prevention  of  Conflicts  of  Interest  checked  the  asset 
declarations of 2 402 public officials (2014: 2 428). The number of public officials found to 
have  reported  incorrect  data  fell  almost  by  half  in  2015  (2015:  347 2014:  629).  From 
1 January 2016, the Anti-Corruption Agency took over the Commission’s responsibilities. For 
the  submission  period  2015/16,  92.1  %  of  public  officials  submitted  income  and  asset 
declarations within the prescribed time-limit (2014/2015: 97 %). In the first half of 2016, the 
Agency  checked  832  asset  declarations;  irregularities  were  established  in  12  cases.  The 
Agency needs to develop proper risk assessment methods for checking asset declarations.  

In 2015, the Commission’s new powers to enquire into inexplicable wealth were used in 111 
cases. In 67 cases, public officials submitted evidence relating to acquired income and assets. 
Misdemeanour proceedings  were launched in  44 cases. In  the first half of 2016 the Agency 
initiated  13  enquiries  into  inexplicable  wealth.  It  closed  proceedings  in  7  of  these  cases 
establishing no irregularities after having received replies by the officials in question.       

The Commission for the Prevention of Conflicts of Interest followed up 12 cases concerning 
incompatibility  of  functions  in  2015  (2014:  13).  By  cross-checking  relevant  databases,  in 
only  the  first  six  months  of  2016  the  Anti-Corruption  Agency  identified  and  processed  48 
cases  of  such  cases.  There  is  a  good  track  record  of  resignations  resulting  from  Agency 
decisions - by June 2016 54 public officials resigned from office or function.   

Decisions  on  conflicts  of  interest  have  been  limited  to  requests  by  public  officials  for  an 
opinion.  In  2015,  the  Commission  for  Prevention  of  Conflicts  of  Interest  filed  719 
misdemeanour charges against public officials for breaches of the law on conflicts of interest, 
which  is  considerably  more  than  in  the  previous  year  (2014:  337).  The  majority  of  the  488 
misdemeanour proceedings completed in 2015 resulted in a warning or minor fines below the 
statutory minimum. The data for 2016 indicates an increase in the numbers, as well as in the 
amount of fines imposed.  

In  2015,  the  Ministry  of  Interior’s internal  control  unit checked  the  asset  declarations  of  80 
police  officers.  Disciplinary  proceedings  are  currently  under  way  against  one  police  officer 
who failed to report an increase in property of over EUR 3 000. 

The number of irregularities established in connection with the  funding of political parties 
and electoral campaigns increased to 25 in 2015 (2014: 10) but it remains limited. They are 
all  the  result  of  ex  officio  checks  and  relate  to  procedural  issues  such  as  failure  to  submit 
annual reports on revenues and expenditures and failure to submit the decision on the amount 
of  membership  fees.  Of  the  6  misdemeanour  proceedings  launched  by  the  State  Electoral 
Commission,  those  already  finalised  have  resulted  in  two  warnings,  and  one  imposition  of 
fines  in  the  amounts  of  EUR  500  and  100.  In  2015,  the  State  Audit  Institution  audited  the 
annual  financial  reports  of  20  political  organisations  for  2014,  together  with  reports  on  the 
origin,  amount  and  type  of  collected  and  spent  funds  by  46  groups  that  submitted  electoral 
lists  for  the  local  elections  held  in  2014.  The  audit  reports  listed  a  number  of  irregularities 
found  but  these  were  not  followed  up.  The  Anti-Corruption  Agency  adopted  six  pieces  of 
secondary legislation relevant to implementing the law on financing of political organisations 
and  election  campaigns.  In  the  first  half  of  2016  the  Anti-Corruption  Agency  instituted  86 
misdemeanours proceeding concerning failure to comply with the legal obligations arising out 
of the respective legislation. In June, the Agency presented the report on oversight and control 
of the electoral campaign for the local elections in the municipality of Tivat. It found no major 
irregularities. Ahead of October parliamentary elections, the Agency focused its activities on 
control of compliance with the aforementioned legislation. It established numerous failures to 
report on spending by public institutions, and instituted proceedings against several political 
parties and other political subjects. It also carried out a number of administrative inspections. 

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However, the Agency failed to demonstrate capacity for results-oriented strategic planning of 
their  control  activities  which  would  be  based  on  a  clear  risk-assessment  and  which  would 
allow to focus on more in depth controls, instead of overstretching its capacities by attempting 
to  monitor  overall  compliance  of  all  the  entities  with  all  the  obligations  arising  from  the 
legislation.                    

In  2015,  out  of  a  total  of  4  434  initial  requests  for  access  to  information  made  to  public 
bodies, the information requested was not provided in 805 cases (2014: 4 058 requests; 1 007 
not  granted).  The  Agency  for  Personal  Data  Protection  and  Free  Access  to  Information 
received a total of 1 431 complaints in 2015 (2014: 1 753). Of these, it upheld 1083 (2014: 
1 332).  The  majority  were  cases  of  administrative  silence  (869),  hence  cases  where  the 
requests remained unanswered by the public institutions to which they were addressed. Court 
decisions on access to information are not effectively enforced. It is also a matter of concern 
that  in  some  cases  first-instance  authorities  seem  to  abuse  the  possibility  of  declaring 
requested documents confidential in order to restrict access to information. Another point of 
concern  is  a  high  percentage  of  requests  that  remain  unanswered.  Public  institutions  need 
urgently  to  improve  implementation  of  the  law  and  comply  promptly  with  access  to 
information requests, especially in corruption-prone matters.  

Secondary  legislation  on  the  protection  of  whistle-blowers  was  adopted  in  December.  No 
criminal  charges  were  brought  for  dismissing  whistle-blowers  in  2015.  All  previous  cases 
were dismissed following preliminary investigations. In the first six months of 2016, the Anti-
Corruption  Agency  received  40  reports  from  whistle-blowers  and  5  requests  for  whistle-
blower  protection;  so  far  11  reports  have  been  forwarded  to  other  competent  institutions, 
which have a legal obligation to inform the Agency on the outcome of the procedure. Out of 
the  aforementioned  11  cases,  5  have  been  forwarded  to  the  competent  prosecution  offices. 
One case in particular generated significant media coverage. In handling the case, the Agency 
was criticised for failure to show proactivity and its formalistic approach to the interpretation 
of the law. Political elite's reactions to this case demonstrate lack of sensitivity and constitute 
undue pressure on the institutions. 

Apart from the police sector (9 cases initiated) and customs (3 cases) there have hardly been 
any  cases  demonstrating  that  codes  of  ethics  for  members  of  the  legislative  and  executive 
authorities are effectively implemented. Integrity plans have so far been adopted in 643 (out 
of around 700) public bodies. In 648 institutions integrity managers were appointed.  

As  regards  implementation  of  the  law  on  lobbying,  there  were  no  applications  to  register 
lobbyists,  which  suggest  that  lobbying  activities  are  being  carried  out  outside  the  legal 
framework. This needs to be addressed through awareness-raising on the new obligations of 
lobbyists  and  public  officials  under  the  law  on  lobbying,  as  well  as  through  a  proactive 
approach in detecting, following up and imposing penalties for breaches of the law. 

Law enforcement 

As  regards  the  development  of  a  track  record  of  investigation,  prosecution  and  final 
conviction,  the  first  final  and  enforceable  judgment  in  a  higher-level  corruption  case  was 
issued  in  February  against  a  former  mayor  of  Budva  who  was  convicted  to  3  years  and  10 
months of imprisonment. He started serving the sentence in May. In another Budva corruption 
case, appeal proceedings are still ongoing. First-instance judgments were issued in two other 
cases against the former mayor of Nikšić. Charges were also brought against former mayor of 
Bar.   

The  new  Special  Prosecutor’s  Office  for  the  fight  against  corruption,  organised  crime,  war 
crimes,  terrorism  and  money  laundering  demonstrated  a  proactive  attitude  and  focused  its 

59 

 
 
activities  on  high-level  corruption  cases.  It  started  investigations  in  several  cases  involving 
high-level  officials.  These  cases  involve  several  former  mayors,  a  former  president  of  the 
Commercial  Court,  and  a  former  President  of  the  State  Union  of  Serbia  and  Montenegro, 
among others. Eighteen plea bargain agreements have  been concluded so far, including  two 
with the former President of the State Union of Serbia and Montenegro. The prison sentences 
plea agreements so far endorsed by the court range between six months, and three years and 
eight  months.  The  judgements  endorsing  the  pleas  bargains  order  the  defendants  to 
compensate the damaged municipalities either by return of property or payment of financial 
compensation in the total value of over 22 million euros. In two of the cases, a confiscation of 
assets has also been ordered in the total amount of 673 327 euros.      

The vast majority of corruption allegations submitted to the state prosecution service continue 
to come from members of the public, NGOs and private companies. Few cases are submitted 
by the police, and hardly any come from official control or auditing bodies. In cases involving 
low and medium-level corruption, courts still apply sentences below the minimum penalties 
laid  down  in  the  criminal  code.  As  regards  political  influence  on  law  enforcement  and 
judicial officials, members of the executive and the legislative branch should not interfere in 
the independent functioning of the judicial system. 

Financial  investigations  have  started  being  used  in  corruption  cases  but  are  still  not 
systematic.  Seizure  and  confiscation  of  criminal  assets  should  be  systematically  ordered  to 
detect and reduce financing of criminal networks. 

Institutional framework 

Prevention of corruption 
The new Anti-Corruption Agency became operational on 1 January 2016. Its mandate covers 
the main areas of prevention of corruption, including conflicts of interest, asset declarations, 
incompatibility  of  functions,  integrity  plans,  and  protection  of  whistle-blowers.  It  is  also  in 
charge  of  implementing  the  law  on  lobbying.  The  Directorate  for  Anti-Corruption  Initiative 
(DACI),  which  used  to  be  in  charge  of  coordinating  anti-corruption  policy  and  awareness-
raising, and the Commission for Prevention of Conflicts of Interest were merged into the new 
Agency.  The  Agency  also  took  over  responsibilities  for  checks  on  political  party  financing 
from the State Electoral Commission (SEC).  

Secondary legislation on the Agency’s internal organisation, procedures and powers has been 
adopted. Its budget for 2016 is the minimum laid down by law (0.2 % of the budget; i.e. EUR 
1.54 million). The Agency started with 23 employees out of the intended 55. Since then, 26 
more  have  been  recruited  via  internal  and  external  competitions.  Intensive  specialised  staff 
training  is  needed,  in  particular,  on  political  party  financing,  whistle-blower  protection  and 
lobbying. The IT system, including an electronic case management system and a system for 
electronic  submission  of  cases  has  been  in  place  since  March.  The  Agency  is  connected  to 
some, but not yet all, of the databases of relevant institutions.  

The  Agency  needs  to  act  in  a  transparent  and  independent  manner  and  demonstrate  a 
proactive attitude to its work in all areas covered by its mandate.  

The integrity of its management and staff is key. Cases of alleged breaches of the law against 
several  members  of  the  Council,  including  rule  breaches  on  conflicts  of  interest, 
incompatibility  of  functions  and  eligibility  criteria  for  appointment,  need  to  be  resolved  by 
following the relevant procedures. In two cases, court proceedings are ongoing. 

The  2016  budget  of  the  State  Electoral  Commission is  EUR  2.1  million,  considerably  more 
than in 2015. However, Commission's administrative and expert capacity remains limited and 

60 

 
 
needs  to  be  improved.  A  sound  work  plan  and  a  needs  assessment  for  training  should  be 
developed as a matter of priority. There is also an urgent need to improve transparency and 
cooperation with stakeholders. 

Inspection  capacity  for  public  procurement  needs  to  be  further  enhanced  and  full  e-
procurement  introduced  to  help  achieve  more  transparency.  The  number  of  inspections  has 
increased  since  2014,  while  the  number  of  irregularities  detected  has  fallen.  A  risk  analysis 
methodology  for  prevention  and  early  detection  of  corruption  in  public  procurement  was 
adopted in December. Checks on contract implementation remain a cause for concern, in the 
light of the weak internal audit function. Overall, there is a strong and urgent need to improve 
and  further  strengthen  internal  control,  audit  and  inspection  mechanisms  in  the  public 
administration and to improve its cooperation with law enforcement authorities. 

Law enforcement 

The institutional and operational capacity of prosecutors, judges and police to fight corruption 
remains  insufficient  and  needs  to  be  improved,  including  through  specialised  training. 
Capacity to carry out financial investigations in corruption cases needs further improvement. 
While special prosecutors have been appointed, the recruitment of specialised experts is still 
pending. Of the planned 43 support staff positions, only 24 have been filled. The head of the 
Special  Police  Unit  supporting  the  Special  Prosecutor’s  Office  was  appointed  but  the  Unit 
remains understaffed with only 13 out of 20 foreseen posts filled. In view of the number of 
cases  dealt  with  by  the  Special  Prosecutor's  Office  the  capacities  of  this  Unit  should  be 
considerably  enhanced.  There  has  been  improvement  in  establishing  the  IT  infrastructure, 
including  setting  up  protected  electronic  channels  between  all  prosecutors'  offices  and 
ministries, and installation of a case management system for the Special Prosecutor's Office.   

The  Special  Prosecutor’s  Office  needs  to  be  provided  with  all  the  human  and  material 
resources it requires to carry out its mandate. Inter-agency cooperation, in particular between 
the police and the prosecution in pre-trial investigations, needs to be improved. The adoption 
of the amendments to the law on the Special Prosecutor's Office in July which transferred the 
competences for criminal offences related to the October elections from basic to the Special 
Prosecutor bear risk of increasing the already heavy workload of the Office.     

In  December  2015,  a  unit  specialised  in  managing  seized  assets  was  set  up  in  the  Public 
Property Administration. 

Legal framework 

Implementing legislation for the 2014 anti-corruption law has been adopted. 

Amendments to the law on the custom service were  adopted in  December and strengthened 
integrity and internal controls. 

Parts of the law on the Special Prosecutor’s Office, adopted in February 2015, that govern the 
status  of  police  investigators  working  under  the  instructions  of  special  prosecutors  do  not 
seem to sufficiently limit the risk of conflicting instructions and undue interference. 

Montenegro  decided  not  to  follow  the  recommendation  under  Article  20  of  the  United 
Nations’ Convention against Corruption and to criminalise inexplicable wealth. 

Strategic framework 

In July an operational document which includes unimplemented measures in areas sensitive to 
corruption  contained  in  the  expired  2010-2014  national  strategy  for  the  fight  against 
corruption and organised crime was adopted. Their implementation will be monitored through 
the mechanism in place for chapter 23. 

61 

 
 
Fundamental rights 

to  comply  with 

Montenegro  continued 
instruments. 
Montenegro  further  enhanced  cooperation  between  its  relevant  institutions  -and  the  most 
significant bodies and committees of the United Nations and of the Council of Europe. The 
country has drafted the required report on implementation of the United Nations Convention 
on the Elimination of all Forms of Discrimination against Women (CEDAW). 

international  human  rights 

Cooperation  with  the  European  Court  of  Human  Rights  (ECtHR)  remained  good.  All  9 
cases  under  supervision  remained  under  the  standards  monitoring  mechanism.  Since 
September 2015, the Court has found that Montenegro violated the European Convention on 
Human Rights in 2 cases relating to prohibition of torture, right to liberty and security and the 
right  to  a  fair  trial.  The  government  has  concluded  friendly  settlements  in  9  cases  pending 
before the Court, related to length of proceedings. A total of 158 new applications have been 
allocated to a decision-making body, bringing the number of pending applications to 140.To 
increase  capacity  in  this  area,  a  judge  of  the  Podgorica  Basic  Court  was  seconded  to  the 
ECtHR’s  registry.  Efforts  to  ensure  more  consistent  application  of  ECtHR  case-law  to 
national rulings should continue.  

As regards the promotion and enforcement of human rights, the capacity of the Ministry 
for Human and Minority Rights and the Ombudsman was reinforced and its staff continued to 
receive training. The Ombudsman needs to ensure that the gender equality referral mechanism 
is  fully  enforced  and  that  the  overall  distribution  of  staff  reflects  the  workload  of  the 
departments. The institution’s capacity to effectively handle complaints has improved, as has 
the quality of the opinions delivered. Public trust in its independence should be built up. The 
process  of  accreditation  to  the  International  Coordinating  Committee  of  National  Human 
Rights Institutions is ongoing. 

As  regards  prevention  of  torture  and  ill-treatment,  Montenegro  has  continued  to  work 
towards fully implementing recommendations of the European Committee for the Prevention 
of Torture and Inhuman or Degrading Treatment (CPT). The National Preventive Mechanism 
continued to work as a separate department under the Ombudsman. Its capacity has improved; 
however,  its  independence  needs  to  be  strengthened.  The  Ministry  of  Justice  needs  to 
prescribe  precise  rules  on  the  use  of  restraints  as  a  means  of  coercion,  in  line  with 
international standards. Contingency plans need to be developed to better handle emergency 
situations in prisons, such as incidents involving verbal and physical violence. The episodes 
of violence that took place during protests by some of the opposition parties, in autumn 2015, 
and the delays in the progress of related investigations and prosecutions, show the difficulties 
of eradicating ill-treatment and establishing a record of deterrent sanctions. This also applies 
to  cases  of  violence  in  prisons  in  the  course  of  2015.  Small-scale  refurbishment  improved 
detention  conditions;  however,  the  treatment  of  convicts  and  detainees  still  needs  to  be 
brought into line with international standards, as does the screening and reporting capacity of 
prison medical services and their cooperation with judicial authorities. 

Concerning the prison system, secondary legislation was adopted to introduce an alternative 
sanction  system.  Awareness-raising  activities  for  the  judiciary  and  training  for  probation 
officers  continued.  The  capacity  of  the  probation  department  in  the  Ministry  of  Justice  will 
have  to  meet  the  projected  increase  in  the  number  of  community  sanctions.  Additional 
changes to the law on suspended sentences need to be considered, to ensure more flexibility in 
carrying  out  sentences.  The  prison  health  service  remains  understaffed  and  overall  of  poor 
quality; the majority of complaints filed by detainees refer to this area. Bringing this service 
under  the  authority  of  the  Ministry  of  Health  would  help  address  this  issue.  The  prison 
administration continued to run a literacy programme for prisoners and since November 2015 

62 

 
 
has  been  carrying  out  a  programme  to  prevent  juvenile  delinquency  and  to  reintegrate 
prisoners. However, the availability of rehabilitation programmes remains limited. 

Implementation of the legal framework on personal data protection remains weak. To date, 
no  data  protection  cases  have  been  brought  to  court,  apart  from  a  relevant  Constitutional 
Court  opinion.  Awareness-raising  campaigns  should  continue,  as  should  training  for  the 
judiciary, to increase its capacity to deal with such cases and to implement Eurojust standards 
in exchanging information. 

Freedom of thought, conscience and religion continued to be guaranteed and upheld by law. 
Tensions between  the Serbian and Montenegrin Orthodox  Churches  continued, and affected 
the drafting of a new law establishing the relationship between religious communities and the 
state.  This  law  remains  to  be  adopted,  including  to  improve  transparency  and  control  of 
procedures for allocating state funds to religious communities. 

As  regards  freedom  of  expression,  several  attacks  against  journalists  and  media  property 
took  place  during  the  anti-government  protests  in  September  and  October  2015.  Two 
journalists were detained by the police and subsequently released. Some journalists received 
threats  via  social  media.  The  competent  authorities  have  taken  some  follow-up  action  to 
process these cases. Investigation and prosecution of past cases of violence against the media 
continued. Older cases, including the 2004 murder of an editor-in-chief, need to be solved and 
not  only  the  perpetrators  but  those  behind  the  attacks  need  to  be  identified.  There  has  been 
limited progress, in particular as regards some of the cases involving investigative journalists. 

The  mandate  of  the  ad  hoc  commission  monitoring  violence  against  the  media  expired  in 
December 2015 without it having fulfilled its tasks. This failure can be explained by various 
factors,  including  strong  polarisation  between  the  government  and  parts  of  civil  society, 
which  made  it  difficult  even  to  adopt  joint  recommendations.  The  police  acted  to  prevent 
violence  against  the  media  by  carrying  out  risk  analyses  and  protecting  journalists  and 
premises  possibly  at  risk.  The  government  has  implemented  some  of  the  commission’s 
recommendations,  particularly  as  regards  reintroducing  a  reward  for  information  about  the 
2004  murder  case.  The  Commission  was  re-established  in  June  2016,  with  a  larger 
representation  of  members  from  the  media  sphere.  The  Parliament  formed  an  ad-hoc 
committee with a similar mandate. 

The  still  high  number  of  defamation  cases  points  to  weak  self-regulation  mechanisms  and 
challenges  in  understanding  the  role  of  the  media.  There  is  still  no  uniform  approach  to 
penalties, suggesting that ECtHR case-law is not yet sufficiently known.  

Campaigns targeting civil society activists have continued in certain media outlets, indicating 
that self-regulation remains ineffective, and that the lack of professional and ethical standards 
continues to be an issue of concern. The media community remains strongly polarised: there 
is not yet a recognised or trusted single forum for discussion although some steps have been 
taken in this direction. The OSCE-facilitated dialogue on improving ethical and professional 
standards  in  the  media  resulted  in  the  adoption  of  a  revised  code  of  ethics  for  journalists; 
effective  and  uniform  application  of  the  code  remains  to  be  achieved.  Dialogue  between 
various  self-regulatory  mechanisms  should  continue  with  a  view  to  further  improving 
professional standards in media reporting. 

After the adoption of amendments to the law on public broadcasting services, steps have been 
taken  to  ensure  sustainable  funding  of  the  public  broadcaster  RTCG.  Strengthening  the 
editorial independence of the public broadcaster RTCG remains a priority. Its senior editorial 
management team resigned and was replaced in April 2016 in the framework of the political 

63 

 
 
dialogue between the government and the opposition. It is essential that RTCG ensures that all 
management changes are in line with the law. 

A new law on public assemblies and public events was adopted in July. The law substantially 
improves  the  quality  of  regulation  of  freedom  of  assembly  and  association,  in  particular 
regarding  state  obligations,  in  line  with  European  standards.  Further  improvements  will  be 
required  at  a  later  stage.    Incidents  between  the  police  and  the  public  during  the  2015 
opposition protests highlighted the challenges that law enforcement officers face in managing 
gatherings. The practical implementation of standards in this area needs to be strengthened. 

The process of restitution of properties expropriated in the past is the main challenge affecting 
property  rights.  Procedures  remain  cumbersome,  decision-making  is  slow  and  no  progress 
has  been  made  in  the  use  of  ECtHR  case-law.  Displaced  persons  permanently  resident  in 
Montenegro  continued  to  face  discrimination  over  access  to  land.  The  draft  law  on  spatial 
planning and construction has raised concerns about repercussions on their property rights. 

On  non-discrimination,  the  law  requires  further  alignment  with  the  EU  acquis;  a  working 
group has been set up to address shortcomings. The number of court cases remains very low, 
and  the  lack  of  proportionate  and  deterrent  sentencing  needs  to  be  addressed.  The 
Ombudsman’s capacity to handle complaints has improved; however, further improvement is 
needed to ensure timely and quality follow-up on reported cases of discrimination. 

As  regards  equality  between  women  and  men,  concerns  remain  regarding  the  effective 
functioning of the gender equality referral mechanism established by the new law on gender 
equality,  and  to  the  overall  economic  empowerment  of  women.  The  Ombudsman’s  Office 
needs to increase its capacity in this field, partly by hiring staff experienced in gender issues. 
The implementation of the 2013-2017 action plan on gender equality has continued, focusing 
mainly on closing the gender gap in political life, and on awareness-raising.  At local level, all 
municipalities  have  concluded  memoranda  of  cooperation  with  the  central  Gender  Equality 
Office. Activities at local level to promote gender equality should continue. In December, the 
government adopted guidelines for strengthening inter-institutional cooperation between non-
governmental organisations and local communities in this area.  

Gender-based  violence  continues  to  be  a  concern.  Montenegro  has  taken  initial  steps  to 
implement  the  Convention  on  preventing  and  combating  violence  against  women  and 
domestic  violence.  An  inter-institutional  body  has  been  established  by  the  Deputy  Prime 
Minister, which includes representatives of the government, parliament and the Ombudsman. 
A  unified  database  of  cases  of  violence  was  set  up  in  December  to  address  the  problem  of 
statistical  reliability  and  ensure  better  and  more  coordinated  official  help  for  victims.  The 
helpline  for  victims  of  violence,  in  its  first  year  of  operation,  has  received  a  considerable 
number  of  calls,  pointing  to  an  overall  lack  of  trust  in  state  institutions  among  victims. 
Sustainability of the helpline needs to  be ensured. A new 2016-2020 strategy on combating 
family  violence  was  adopted  in  December.  Multidisciplinary  teams  set  up  to  respond  to 
domestic  violence  have  had  clear  protocols  in  place  since  September  2015.  Further  efforts 
need to be put into ensuring these teams are efficient. The capacity of existing institutions in 
this  area,  including  the  police  and  judiciary,  will  need  to  be  strengthened  to  better  protect 
victims and deter perpetrators. 

Some progress was achieved in regard to rights of the child. The 2013-2017 action plan on 
children  is  being  implemented.  Amendments  to  the  family  law  and  to  the  criminal  code 
remain  to  be  adopted,  tackling  shortcomings  related  to  the  legal  definition  of  the  child. 
Montenegro has ratified the Third Optional Protocol (on a communication procedure) to the 
UN  Convention  on  the  Rights  of  the  Child,  but  there  is  little  record  of  its  implementation. 
Challenges remain in coordinating policies concerning children; currently no single ministry 

64 

 
 
has  overall  responsibility.  The  last  meeting  of  the  Council  on  Child  Rights  was  held  in 
October 2015 and its capacity remains limited. Violence against children remains a concern, 
including  for  the  low  number  of  cases  reported  compared  to  the  average  in  European 
countries.  These  children  are  exposed  to  exploitation  and  human  trafficking;  forced  child 
marriages  continue  to  be  reported  to  NGOs,  while  only  a  limited  number  of  cases  are 
prosecuted.  

Some  progress  was  made  on  the  rights  of  persons  with  disabilities.  Following  the  2015 
adoption of a new law prohibiting discrimination against persons with disabilities, a thorough 
analysis  of  the  legislation  was  carried  out,  and  adjustments  to  the  national  framework  were 
considered,  to  ensure  consistency  with  the  law,  plus  further  alignment  with  international 
standards. One issue with the law is that it only allows complaints to be made by persons with 
disabilities,  while  the  resulting  court  proceedings  are  lengthy  and  sentences  non-deterrent. 
Some  progress  was  made  on  accessibility  of  public  buildings  for  people  with  reduced 
mobility. Beyond the initial 2013 planning, there is no overall vision of how to adapt public 
buildings still lacking the necessary facilities, including the country’s main hospital. The lack 
of  access  to  several  public  university  faculties  is  an  obstacle  to  freedom  of  choice  in 
education. 

The authorities continued to show overall openness towards promoting the rights of lesbian, 
gay, bisexual, transgender and intersex (LGBTI) persons. The Ministry of Human Rights 
and  Minorities  has  taken  over  the  supervision  and  monitoring  of  the  relevant  strategic 
framework, but lacks sufficiently experienced staff in this field. A new 2016 action plan has 
been adopted but it does not include a budget allocation. The initial phase of preparations for 
the law on civil partnerships has started and showed good cooperation between the relevant 
authorities  and  civil  society.  Cooperation  between  CSOs  and  the  Ombudsman  has  also 
improved.  The  Third  Pride  Parade  was  held  in  December  2015,  without  any  incidents  and 
with a smaller police presence than in previous years. The situation remains difficult at local 
level,  and  within  society  itself,  where  acceptance  of  sexual  diversity  is  slower.  Targeted 
measures with a regional dimension should be inserted in the national action plan. Systematic 
anti-discrimination campaigns in schools and universities are still not in place. Attacks against 
LGBTI  community  members  and  activists  continue.  However,  the  improvement  in  the 
relations between the LGBTI community and the police is also reflected in more progress in 
investigations and in criminal convictions for attacks. 

Issues of Labour and trade union rights are covered in chapter 19.  

Montenegro has continued the analysis of the legal framework to align with the EU acquis in 
the field of procedural rights. Substantial efforts remain to be made to ensure full alignment 
with  the  European  standards,  notably  on  the  rights  of  the  accused  persons  and  of  victims' 
rights. Concerns remain as to the alignment of decisions regarding procedural guarantees with 
the ECtHR case-law, for instance in cases of prolonged pre-trial detentions. Montenegro will 
also need to ensure sufficient budgetary allocation to enforce such rights. 

Shortcomings  remain  in  the  field  of  minorities.  A  new  law  on  minorities  has  reduced  the 
potential  for  conflicts  of  interest  in  procedures  allocating  and  controlling  state  funds  for 
minorities. It has also started to address concerns about the lack of  transparency and overall 
institutional capacity in allocating and auditing such funds. Broader reform is awaited to put 
in  place  the  necessary  safeguards  and  solid  controls  and  address  the  weaknesses  of  state 
bodies  in  this  field  so  as  to  prevent  abuses.  Irregularities  are  continually  detected  in  the 
reporting cycles related to the funds.  

Some progress was made as regards Roma living in Montenegro. In March, the government 
adopted  a  new  strategy  and  action  plan  on  social  inclusion  of  Roma  and  Egyptians  in 

65 

 
 
Montenegro 2016-2020. The lack of an appropriate budget to implement it remains a concern. 
A third Roma seminar with the European Commission was held in July, bringing together all 
relevant stakeholders to discuss sectors in which progress is required to improve the life of the 
community.  Recommendations  from  the  seminar  require  thorough  follow-up  by  all  state 
institutions,  and  better  coordination  including  with  local  authorities  and  civil  society. 
Participation by Roma  students  in  education  at  all levels  continued to  improve, but  remains 
low  overall,  including  in  primary  compulsory  education;  the  drop-out  rate  remains  high.  In 
September  2015,  the  first  Montenegrin-Roma  and  Roma-Montenegrin  dictionary  was 
published. Roma remain the most vulnerable and discriminated-against community in various 
areas of life, with Roma women being subject to double discrimination. Roma continue to be 
underrepresented  in  politics  and  have  difficulty  accessing  the  labour  market  and  healthcare 
services,  while  Roma  children  are  still  exposed  to  child  labour.  The  housing  needs  of 
domiciled Roma need to be addressed; in some municipalities the situation remains critical. It 
requires  continuous  monitoring  to  prevent  evictions  not  in  conformity  with  international 
standards. 

Some  progress  was  made  in  resolving  the  issues  of  formerly  displaced  and  internally 
displaced persons (IDPs). The 2016-2017 strategy for finding durable solutions for IDPs in 
Montenegro, especially in the Konik area, was adopted in April. Following the expiry of the 
2014  deadline  for  applications  to  be  recognised  as  a  ‘foreigner  with  permanent  status’,  the 
authorities  are  now  gradually  dealing  with  the  backlog.  11 201  refugees  from  the  former 
Yugoslavia legally reside in Montenegro, while the number of pending applications is 1352. It 
is still a matter of concern that there are more than 250 minors who are not yet registered, and 
therefore do not have any right of residence.   

Montenegro has not yet introduced a separate procedure for determining statelessness, despite 
ratifying  the  relevant  Convention  in  2013.  This  denies  access  to  rights  for  potential 
beneficiaries.  According  to  estimates,  486  people  in  Montenegro  consider  themselves 
stateless — most of them from the former Yugoslavia. Following the adoption of amendments 
to the law on non-contentious proceedings, the basic courts started to issue positive decisions 
on  the  date  and  place  of  birth  of  persons  born  outside  Montenegro’s  health  system. 
Construction  of  social  housing  is  in  progress  in  the  Konik  camp  and  in  some  other 
settlements. Social activities continued for stateless persons residing in the Konik area to help 
them integrate, as well as in Tivat, in line with the local action plan on Roma integration. 

In  the  field  of  citizenship  rights,  Montenegro  has  started  preparations  to  develop  and 
implement an investors' citizenship scheme. Special attention should be given to making sure 
there  is  a  genuine  connection  between  the  country  and  the  investor,  prior  to  awarding 
citizenship. 

4.24. Chapter 24: Justice, freedom and security 

The EU has common rules for border control, visas, external migration and asylum. Schengen 
cooperation  entails  lifting  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  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  appear  to  be  coping  with  the  inflow  of 
migrants  passing  through  Montenegro.  The  centres  represent  a  major  step  forward  in  the 

66 

 
 
 
establishment of a sound migration and asylum management system. 

In the coming year, Montenegro should in particular: 

  establish  a  track  record  of  investigations,  prosecutions,  final  convictions,  seizures  and 
confiscations  in  organised  crime  cases,  with  strong  focus  on  those  crimes  where  results  are 
still lacking, such as money-laundering and trafficking in human beings; 

→  continue  to  improve  its  capacity  to  deal  with  mixed  migration  flows,  paying  particular  
attention to vulnerable groups and minors and the integration of migrants/refugees; 

 work on enhancing cooperation with neighbouring countries on border management issues; 
increase the human and material resources devoted to modernising border infrastructure and 
to surveillance of the green border. 

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

As part of the ‘new approach’ to the rule of law, and in line with the negotiating framework, 
this chapter was opened in December 2013 after Montenegro adopted a detailed action plan. 

Legal and irregular migration 

Institutional set-up and legal alignment 

In  December  2015,  the  government  adopted  a  decision  determining  the  annual  number  of 
temporary  residence  and  work  permits  for  foreigners  for  2016;  amendments  to  the  law  on 
foreigners  were  adopted  in  February  2016  to  fine-tune  the  current  provisions  on  temporary 
residence  and  work  permits  for  foreigners.  Further  amendments  are  needed  to  complete  the 
alignment  of  the  legal  framework  with  the  EU  acquis,  especially  on  legal  migration.  The 
legislation  also  needs  to  be  further  aligned  with  the  Protocol  to  the  UNTOC  Convention 
concerning  the  Smuggling  of  Migrants,  including  in  relation  to  the  criminal  liability  and 
aggravating circumstances. 

A November 2015 contingency plan for responding to a large influx of migrants has not been 
triggered so far; the country is not on the main migration route to Western Europe. In April, 
Montenegro adopted a strategy for 2016-2020 and a 2016 action plan for reintegrating people 
returned  under  readmission  agreements.  It  includes  a  set  of  reintegration  measures  and 
indicators for monitoring the process.  

The  Ministry  of  Interior  has  overall  responsibility  for  coordinating  the  country’s  migration 
policy and has local branches to issue temporary residence permits. The border police are in 
charge of foreigners residing in Montenegro for up to 90 days and of detecting illegal border-
crossing.  A  specialised  unit  of  the  criminal  police  deals  with  the  fight  against  irregular 
migration.  The  Ministry  of  Labour  is  responsible  for  matters  relating  to  the  integration  of 
migrants  and  ensuring  their  rights,  and  for  inspections  aimed  at  uncovering  illegal 
employment.  The  overall  division  of  responsibilities  poses  challenges  for  the  development 
and coordination of an integrated approach to migration. 

Implementation and enforcement capacity 

The  implementation  of  the  new  law  on  foreigners  resulted,  at  the  end  of  2015,  in  the 
establishment  of  a  migration  application  centre  as  part  of  the  migration  department  of  the 
Ministry of Interior, in charge of issuing residence permits. Electronic records on foreigners 
with a right to permanent or temporary residence, or to residence of up to 90 days, have been 
established. The staff received training in line with the new legal framework. 

In 2015, the Montenegrin border police prevented 280 attempts to cross the border illegally, 
mostly by nationals of neighbouring countries (280 in 2014). 130 people were accepted under 

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readmission  agreements.  Two  new  police  actions  were  conducted  to  dismantle  smuggling 
networks.  Two  main  cases  of  migrant-smuggling  (route  I  and  II,  including  a  total  of  27 
facilitators) are being tried by the High Court in Podgorica. 

The  centre  for  irregular  migrants  accommodated  112  people  in  2015,  compared  with  42  in 
2014. 

The  readmission  agreement  with  the  EU  is  being  implemented  in  a  satisfactory  manner. 
Montenegro  is  negotiating  readmission  agreements  with  the  Russian  Federation,  Ukraine, 
Georgia, and Azerbaijan, Iceland and Turkey.   

Asylum 

Institutional set-up and legal alignment 

Montenegro  is  party  to  the  Geneva  Convention.  The  law  on  asylum  needs  to  be  further 
aligned with the EU acquis.     

The overall capacities of the country in this area are sufficient for the current flow of asylum 
seekers  entering  the  country.  The  main  institutions  responsible  for  asylum  are  the  Asylum 
Office  of  the  Ministry  of  Interior,  the  State  Asylum  Appeals  Commission  and  the  Refugee 
Care  and  Support  Office.  The  Asylum  Office  is  the  first-instance  body  in  charge  of 
determining  international  protection,  and  is  also  currently  responsible  for  overall  policy 
coordination.  In  2015,  it  moved  to  new  premises,  with  more  staff  and  specialised  facilities 
such  as  rooms  for  interviews,  for  families  and  a  waiting  room.  The  State  Asylum  Appeals 
Commission is the second-instance body. The members of the Commission are administrative 
court  judges (a president  and four members). The Commission is  an administrative body;  it 
needs to be further trained on asylum and international human rights law. 

Implementation and enforcement capacity 

The  Asylum  Office  has  12  posts  for  civil  servants,  of  which  8  have  been  filled  so  far.  It 
increased  its  operational  capacity  by  training  case  handlers,  particularly  to  better  process 
applications  on  their  merits.  An  IT  system  for  case  management  was  created.  The  lack  of 
interpreters continues to be a problem. Policy on the integration of refugees needs to receive 
sufficient financial resources from the national budget and political support. There have been 
no reported cases of refoulement at the borders but awareness-raising among officers should 
continue. 

In 2015, 1611 asylum applications were submitted (compared to 2 312 in 2014), most of them 
(1 526) in the first part of the year, before the northern Balkans route was opened. The vast 
majority of asylum applicants leave the country at an early stage in the procedure; however, 
an increasing number of decisions on protection were granted and currently 8 refugees and 8 
persons granted subsidiary protection live in the country. The main challenges in the next few 
years  will  be  to  offer  concrete  prospects  of  integration  into  society,  including  local 
integration. 

The reception centre for asylum seekers is, for the time being, accountable to the Ministry of 
Labour  and  Social  Welfare.  It  has  specialised  staff  such  as  social  workers,  psychologists, 
nurses.  The  ministry  is  also  in  charge  of  integrating  people  who  receive  international 
protection.  Overall,  the  capacity  of  the  reception  centres  for  irregular  migrants  and  asylum 
seekers is sufficient to respond to current needs. Concrete solutions have been found to ensure 
separate  premises  for  unaccompanied  minor  migrants  and  handle  increases  in  arrivals  of 
vulnerable  groups.  Arrangements  have  also  been  made  to  accommodate  unaccompanied 
minors  in  the  existing  centre  for  children  in  Podgorica,  and  to  temporarily  rent  a  centre, 
currently  not  in  use,  to  accommodate  additional  families.  Flows  through  Montenegro  have 

68 

 
 
decreased,  partly  due  to  migrants’  use  of  the  northern  Balkan  route.  The  country  needs  to 
remain  alert  to  shifts  in  the  routes  crossing  its  borders,  and  adjust  national  capacity 
accordingly. 

Montenegro  participates  in  awareness-raising  events  organised  by  the  European  Asylum 
Support Office (EASO). 

Visa policy 

Montenegro finalised a detailed needs analysis for the Schengen action plan which includes 
the  requirements  and  resources  needed  for  the  implementation  of  EU  policy  in  this  area. 
Amendments to the decree on the visa regime were adopted in March 2016, suspending short-
stay  visa  requirements  for  nationals  of  Qatar,  Kuwait,  and  Taiwan.  Holders  of  travel 
documents of other countries with a residence permit in the United Arab Emirates may enter 
and stay, i.e. cross the territory of Montenegro for up to 10 days without a visa, with a tourist 
certificate. A new decree on the visa regime was adopted in May to waive requirements for 
passport  holders  from  various  countries.  Citizens  of  Kazakhstan  and  Armenia  have  been 
exempted  from  short-term  visas  for  the  summer  season  (May-October  2016).  Arrangements 
for a national electronic visa system have continued; the visa centre was set up in the Ministry 
of  Foreign  Affairs  and  European  Integration  as  a  central  authority  for  visa  issuance.  Since 
July 2016 the new visa stickers are being tested at the Embassy of Montenegro in Belgrade. 
The number of visas issued at the borders remained low, and the reasons given for exceptions 
are in line with acquis requirements. 

To prevent abuse of the visa-free regime with the European Union, Montenegro has continued 
to  implement  measures  as  recommended  in  the  Commission’s  reports  on  post-visa-
liberalisation monitoring, including in terms of better integration of the Roma community.   

Schengen and external borders 

Institutional set-up and legal alignment 

Overall, the legislative framework in this area requires further changes to bring it into line 
with the external border of the EU and with the Schengen acquis, notably on border control 
and local border traffic arrangements. 

The border police, as a sector within the state police under the Ministry of the Interior, is the 
main  agency  in  charge  of  performing  border  control  and  surveillance  and  has  some 
responsibilities for migration. It has 3 regional offices and 12 local units, plus a mobile unit.  
The country still needs to set up a National Coordination Centre. The border police concluded 
cooperation  agreements  with  the  customs,  veterinary  and  phytosanitary  administrations  and 
with the administration for the prevention of money laundering and terrorist financing. 

Since  2009,  the  country  has  been  implementing  an  integrated  border  management  (IBM) 
strategy,  which  was  reviewed  in  2014  to  bring  it  into  line  with  the  EU’s  concept  of  IBM. 
Further adjustments in 2015 aimed at increasing the focus on the objectives and establishing 
an efficient monitoring framework for the coming years. Implementation of the IBM strategy 
continued  smoothly.  Following  a  thorough  needs  analysis  covering  staffing,  training, 
equipment and infrastructure, Montenegro needs to adopt a Schengen action plan. Among the 
challenges  raised  by  the  analysis,  there  is  a  shortage  of  border  police  staff  and  investment 
worth  approximately  EUR 200-250  million  is  still  needed  in  the  run-up  to  Schengen 
accession. 

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Implementation and enforcement capacity  

As part of the overall reorganisation of the Ministry of Interior, the number of regional border 
police  centres  was  reduced  from  eight  to  three.  However,  the  expected  increase  in  staff 
available in the field has not taken place. Out of the total 1 428 posts foreseen in the border 
police,  around  200  posts  remain  vacant,  with  an  overall  serious  imbalance  in  gender. 
Shortcomings  in  the transparency  and professionalism of the police  recruitment system also 
affect  the  border  police,  which  is  in  need  of  more  specialised  resources.  This  is  to  be 
addressed  through  the  future  police  human  resources  reform  and  wider  use  of  the  train-the-
trainers concept. 

Implementation  of  the  integrated  border  management  strategy  and  action  plan  continued 
smoothly, with a focus on reorganising the border police to use resources more efficiently, to 
implement  European  and  international  obligations  and  to  increase  training  skills  and 
analytical capacity. More resources need  to  be devoted to modernising border infrastructure 
and to surveillance of the green border. 

Reconstruction of some border-crossing points, to align them with European standards, has 
continued.  The  detailed  analysis  produced  to  prepare  the  Schengen  action  plan  provides  a 
good basis for planning future investments in this area. 

Montenegro’s  track  record  of  detected  forged  documents  has  improved  since  last  year, 
primarily thanks to hits on the relevant national and international databases. 

Inter-agency cooperation between the border police, the customs authorities and the Ministry 
of Interior/Police Directorate improved, including through mutual access to databases.  

Cooperation with neighbouring countries continued to be good, particularly at technical level. 
Border demarcation agreements remain to be concluded with Serbia and Croatia. Montenegro 
is conducting joint patrols with neighbouring countries. A protocol on the establishment and 
functioning of the joint centre for police cooperation in Plav has yet to be adopted. The border 
demarcation agreement with Bosnia and Herzegovina entered into force in April 2016. All 44 
unauthorised  roads  crossing  the  Montenegro  and  Bosnia  and  Herzegovina  border  are  now 
blocked and an agreement on local border traffic is being negotiated. The border demarcation 
agreement with Kosovo has been ratified by Montenegro. So far 16 unauthorised roads have 
been identified along the border. A joint analysis has also been carried out with Serbia and 87 
unauthorised  roads  identified;  discussions  whether  to  close  all  of  them  need  to  proceed  in 
parallel  with  the  negotiation  of  the  local  border  traffic  agreement  with  Serbia.  The  working 
arrangement  with  Frontex  is  being  implemented  smoothly;  practical  cooperation  on  risk 
analysis has continued, as well as on air border activities. Montenegrin officers participated in 
training  organised  by  Frontex;  their  involvement  in  the  Agency’s  activities  and  joint 
operations should increase. 

A plan to fight corruption at the borders has been in place since 2014, but a track record of 
detection, investigation and prosecution remains to be established. 

Judicial cooperation in civil and criminal matters 

The  new  electronic  system  for  monitoring  cases  of  judicial  cooperation  (LURIS)  has  been 
fully  operational  since  January  2016.  It  can  produce  detailed  statistics  on  incoming  and 
outgoing  requests  dealt  with.  A  training  plan  is  being  implemented.  In  September  2015, 
Montenegro  ratified  the  2007  Hague  Convention  on  the  International  Recovery  of  Child 
Support  and  Other  Forms  of  Family  Maintenance.  An  agreement  on  cooperation  between 
Montenegro and Eurojust was signed in May. A first set of training sessions on compliance 

70 

 
 
with data protection standards was delivered to officials from the Ministry of Justice and from 
the Data Protection Agency. 

Fight against organised crime 

Institutional set-up and legal alignment 

In  the  field  of  police  cooperation,  alignment  with  the  EU  acquis  has  continued,  including 
ensuring  that  new  institutional  arrangements  are  in  place,  and  that  national  databases  are 
gradually integrated with those from Europol and Interpol. With EU assistance, the basis for 
the Schengen Information System is gradually being incorporated into the national database 
and  work  on  setting  up  the  SIRENE  office  has  continued.  The  2015  operational  agreement 
with  Europol  is  being  implemented,  and  since  November  2015  a  liaison  officer  has  been 
posted to Europol headquarters. Cooperation with Europol has continued through exchanging 
information  and  integrating  databases.  Montenegro  has  also  participated  in  joint  operations 
against the smuggling of weapons and of narcotics and in training and analytical activities. 

Montenegro is monitoring the implementation of 2015 amendments to the criminal procedure 
code.  Over  the  reporting  period,  the  implementation  of  the  new  law  on  seizure  and 
confiscation  of  proceeds  of  crime  continued,  including  though  the  adoption  of  the  relevant 
implementing  legislation.  In  December  2015,  the  State  Property  Administration  became  an 
independent body; it includes a department in charge of confiscated assets. 

A police reform strategy for 2016-2020 was adopted in December 2015. A specific office was 
set  up  to  monitor  training  and  career  processes.  Shortcomings  in  the  current  police 
recruitment process remain, and need to be addressed, including by increasing transparent and 
merit-based entry to the police, and its overall professionalism. 

The chief of the Special Police Unit attached to the Special Prosecutor’s Office was appointed 
in April 2016 and recruitment is continuing; considering the number of cases dealt with by the 
team, the remaining vacancies need to be filled as a matter of urgency. 

The concept of intelligence-led policing started to be implemented. The national serious and 
organised crime threat assessment (SOCTA) was reviewed at the end of 2015; nevertheless, 
there  is  still  insufficient  prioritisation  of  activities  to  dismantle  criminal  networks  and  seize 
and confiscate their assets. The Witness Protection Unit has mainly worked on cases of war 
crimes.   

Implementation and enforcement capacity 

Montenegro’s initial track record of enforcement further developed with regard to drug cases, 
smuggling of migrants, cigarettes, weapons and cybercrime. There have been no new cases on 
money laundering, or trafficking in human beings. For both areas, the overall capacity of the 
police and of judiciary remains extremely limited, partly for the lack of consolidated case-law. 
A  major  case  of  money  laundering  recently  concluded  with  the  acquittal  of  all  defendants. 
Financial  investigations  are  still  not  systematically  launched  in  tandem  with  regular 
investigations. There is no secure link yet between prosecution and enforcement agencies. To 
increase  results  in  this  area,  the  new  Special  Prosecutor’s  Office  requires  more  human  and 
material resources. 

In  the  field  of  anti-money  laundering,  the  government  adopted  the  national  risk  assessment 
for  money  laundering  and  terrorist  financing,  and  an  action  plan  for  government  bodies,  in 
December 2015. The IT system of the financial intelligence unit is being upgraded. Both the 
administration for prevention of money laundering and terrorist financing and the central bank 
have  continued  to  train  and  supervise  reporting  entities.  In  September  2015,  the 
administration for prevention of money laundering and terrorism financing adopted guidelines 

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for  assessing  the  risks  of  money  laundering  and  terrorism  financing  for  companies,  legal 
persons,  entrepreneurs  and  individuals  engaged  in  an  activity  or  business.  Despite  these 
improvements,  no  new  cases  were  brought,  which  shows  that  gaps  extend  beyond  the 
institutional and legislative framework.  

While  the  legal  and  institutional  framework  to  fight  trafficking  in  human  beings  is  in  place 
overall and the national strategy against human trafficking is being implemented, the limited 
results  in  term  of  identifying  victims,  prosecuting  the  perpetrators  and  providing  protection 
make this type of crime a persistent concern in the country. The lack of understanding of the 
international  human  rights  standards  and  case-law  in  this  area  continues  to  affect  the 
performance not only of the judiciary but of social workers in the government-funded shelter. 
A police unit specialised in smuggling and trafficking in human beings has been established; 
similar specialisation needs to be ensured in the Judiciary. In the last year, the police launched 
four investigations, supported by special investigative measures. None resulted in the charges 
for this crime. Cooperation with civil society in this area continues to take place exclusively at 
central level. Montenegro needs to increase state authorities' awareness on this form of crime. 

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

Fight against terrorism 

Institutional set-up and legal alignment 

Montenegro’s  legal  framework  is  largely  aligned  with  the  acquis  and  international 
instruments  on  anti-terrorism.  In  December  2015,  Montenegro  adopted  a  new  strategy  to 
combat violent extremism for 2016-2018, complementing the national strategy for preventing 
and combating terrorism, money laundering and the financing of terrorism. The strategy is a 
response to the threat of violence-motivated radicalisation, including the problem of foreign 
fighters. In April 2016, the government adopted an action plan for the strategy. Cooperation 
with  Interpol  has  continued,  on  maintaining  database  integration  especially  for  the  fight 
against  terrorism  and  preventing  travel  by  foreign  fighters  across  the  border.  An  inter-
ministerial group has been set up to monitor the situation and take action to prevent potential 
terrorist  threats.  In  October  2016  Montenegro  has  signed  the  Additional  Protocol  to  the 
Council of Europe’s Convention on the Prevention of Terrorism. 

The  main  institutions  involved  in  combating  terrorism  are  the  Ministry  of  the  Interior,  the 
intelligence services, the Ministry of Justice, the Ministry of Foreign Affairs and the Ministry 
of Defence. 

Implementation and enforcement capacity 

In November 2015, the National Terrorism Risk Assessment was completed with the support 
of  EU  and  OSCE  experts.  It  outlines  the  need  for  increasing  the  administrative  capacity  of 
staff,  including  IT  capability  and  provision  of  accurate  statistics,  with  a  view  to  developing 
Montenegro’s track record further. The number of completed investigations and prosecutions 
for money laundering remains low. 

Since  March  2015,  the  new  Special  Prosecutor’s  Office  has  had  exclusive  competence  for 
money laundering and terrorism-related crimes. There are four deputy prosecutors in charge 
of  anti-money  laundering  cases.  The  Office  still  lacks  sufficient  specialised  experts  on 
banking and financial issues. 

Montenegro has been marginally affected by the phenomenon of foreign terrorist fighters and 
radicalisation.  It  has  so  far  identified  a  number  of  nationals  who  are  currently  members  or 

72 

 
 
followers of such groups. Some of these are reported to have died in Syria or are still active 
fighters. 

Cooperation in the field of drugs 

Montenegro  continued  to  implement  the  national  drug  strategy  and  action  plan  for  2013-2020, 
which  resulted  in  greater  operational  capacity  through  training  and  procurement  of  specialised 
police  equipment  and  supplies.  The  Forensics  Centre  has  continued  to  detect  psychoactive 
substances  and  worked  on  improving  its  capacity  to  detect  cocaine.  Cooperation  with  the 
European  Monitoring  Centre  for  Drugs  and  Drug  Addiction  continued,  including  through 
seminars  on  the  reporting  methodology  for  new  drugs  and  on  building  the  national  drug 
observatory. 

On  enforcement,  joint  controls  by  police  and  customs,  mainly  in  the  port  of  Bar,  led  to  the 
seizure of 33 kg of cocaine. Regional and international cooperation continued to be good, as 
illustrated by several joint police operations. There is still no solid track record of seizure and 
confiscation of the proceeds of drug-related crimes, neither on financial investigations related 
to this area, and further efforts are needed in this regard. 

The  lack  of  secure  storage  for  seized  drugs  and  precursors  prior  to  destruction  remains  an 
issue of concern. An appropriate process for destroying precursors has yet to be set up.  

Customs cooperation 

Capacity  for  implementing  the  Naples  II  convention  has  been  enhanced.  The  customs 
administration  has  actively  participated  in  the  CEFTA  risk  management  working  group. 
Customs authorities participated in regional operations to prevent distribution and smuggling 
of  counterfeit  goods  and  piracy.  Montenegro  continued  its  cooperation  with  European  and 
international partners in a number of joint operations aimed at combating money laundering 
and  terrorism  financing,  and  at  detecting  drugs  and  drug  precursors,  counterfeit  goods, 
cigarettes etc. However, the customs administration faces significant challenges in combating 
the trade in illicit tobacco. 

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,  especially  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: 
→ focus efforts on increasing participation in the EU’s Horizon 2020 Programme; 
→  continue  to  streamline  efforts  to  increase  investment  in  research,  in  particular  through 
stimulating investment by the private sector. 

Montenegro  participates  in  the  EU’s  Horizon  2020  Research  and  Innovation  programme 
(H2020)  as  an  associated  country  and  took  part  in  the  first  meeting  of  the  H2020 Joint 
Committee  in  September.  Workshops,  information  days  and  regular  ‘Open  Door  Days’  on 
specific H2020 topics were held. Successful participation, however, remains weak and should 
be addressed as a priority, including through focusing efforts on areas of strategic interest to 
the country.  

Montenegro research teams participated in 26 COST (European Cooperation in Science and 
Technology) actions and three national projects were awarded to Montenegro for the 2016/17 
cycle  under  the  2014-2020 Framework  Programme  for  Cooperation  with  the  International 

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Atomic  Energy  Agency.  Participation  in  EUREKA  remains  limited.  In  March,  Parliament 
ratified the contract on establishing the Western Balkans Research and Innovation Centre. 

Although  the  2016  budget  for  scientific  research  activities  was  increased,  the  latest  official 
MONSTAT figures indicate  total  national  spending  on research and development (R&D)  in 
2014  at  0.36 %  of  GDP.  Work  to  improve  the  quality  of  data  for  R&D  and  innovation 
statistics  is  ongoing.  Also,  the  newly  adopted  strategy  on  innovative  activity  (2016-2020) 
includes  more  realistic  targets  for  an  increase  in  national  and  private  expenditure  by  2020 
(0.6 % of GDP in overall national R&D spending and 0.3 % of GDP for private investment). 
The level of investment in research, particularly from the private sector, needs to be increased.   

Construction of the ‘Technopolis’ innovation and entrepreneurship centre was completed and 
the selection of entrepreneur tenants is finalised; the centre was formally opened in September 
2016.  The  capacity  of  the  BIO-ICT  Centre  of  Excellence  was  further  increased  through 
the purchase  of  scientific  equipment.  Under  the  Higher  Education  and  Research  for 
Innovation  and  Competitiveness  (HERIC)  project,  a  national  excellence  scholarship 
programme is being implemented for awarding PhD and postdoctoral studies abroad.  

The Montenegrin  Council for Scientific  Research Activities adopted a national roadmap for 
the European Research Area in April 2016. 

On  innovation  union,  the  law  on  innovation  activities  was  adopted  in  June,  governing  the 
organisation, conditions and manner of financing innovation activities. 

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 the education of children of EU migrant workers. 

There is a good level of preparation in this chapter. Some progress was made in education 
with  the  start  of  the  revision  of  curricula  based  on  learning  outcomes.  In  the  coming  year, 
Montenegro should in particular: 
 → step up efforts on curricular reform in primary and secondary education to teach basic and 
transversal skills and focus on learning outcomes; 
→ revise enrolment policies for vocational and higher education. 

On education and training, the 2016-2020 strategy for early and pre-school education was 
adopted  in  November.  Curricula  for  secondary  schools  were  revised  based  on  learning 
outcomes.  The  challenge  now  is  to  improve  the  capacity  of  existing  and  future  teachers  to 
implement  the  new  curricula  and  to  revise  teacher  training  programmes.  A  Strategy  and 
Action  Plan  for  the  development  of  higher  education  2016-2020  were  adopted  in  July, 
covering,  inter  alia,  a  sustainable  model  of  financing,  and  the  harmonisation  of  education 
output  with  labour  market  needs.  Regarding  the  modernised  programme  for  vocational 
education and training (VET), priority areas for teacher training for 2016/17 were set, and are 
being addressed. Rationalising entry from vocational to higher education requires continuous 
effort, and consideration should be given to reducing the enrolment rates in VET. The 2016-
2020 Strategy for lifelong career orientation and its 2016 action plan were adopted in June. 

Unemployment among young people with tertiary education decreased in  2015, but remains 
high  at  26.3 %.  The  annual  budget  for  education  is  4.2  %  of  GDP.  Participation  rates  for 
lifelong  learning  programmes  and  early  school  leavers  remain  around  3 %  and  5.7 % 
respectively.  The  government's  professional  development  training  programme  for  9-month 
graduate traineeships is now in  its fourth year of implementation;  a deeper evaluation of its 
moderate success rate (for continued employment) is required. Measures should be taken to 

74 

 
 
 
address  the  high  dropout  rate  of  Roma  children  at  national  level  education.  Increasing  pre-
school participation, especially from Roma and other vulnerable groups, would significantly 
improve  their  success  and  continued  participation  in  later  schooling.  Participation  in  early 
childhood education and care is well below the EU target of 95 % by 2020.  Efforts to provide 
adequate  support  services  for  children  with  special  education  needs  should  continue. 
Education remains a high risk sector for corruption, especially in higher education. 

Montenegro continues to actively participate in the Erasmus+ programme.  

Montenegro's  first  law  on  youth  was  adopted  in  June,  and  the  government  adopted  the 
national Youth Strategy 2017-2021 in September 2016. The National Youth Office within the 
Ministry of Education needs to be strengthened and its role enhanced.  

On  culture,  in  March,  the  government  adopted  the  2016-2020  national  programme  for  the 
development  of  culture  and  the  2016  action  plan.  Montenegro  participates  in  the  Creative 
Europe Programme (Culture and MEDIA sub-programmes). 

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. 

Montenegro  is  at  some  level  of  preparation  in  this  area.  Good  progress  was  achieved  in 
further  aligning  policies  and  legislation  with  the  acquis.  However,  significant  efforts  are 
needed  on  implementation  and  enforcement,  in  particular  in  water,  nature  protection  and 
waste  management  sectors.  In  the  coming  year,  Montenegro  should  pay  particular  attention 
to: 

→ implement the national strategy for transposition, implementation and enforcement of the 
EU acquis on environment and climate change and its action plan; 

→  implement  the  national  waste  management  strategy  and  the  national  waste  management 
plans; 

→ ratify the Paris Agreement and start implementing its contribution to it, in line with the EU 
2030 framework for climate and energy policies. 

Environment 

In  the  area  of  horizontal  legislation,  the  new  law  on  the  environment  was  adopted  in  July 
2016 as well as the national strategy for transposition, implementation and enforcement of the 
EU  acquis  on  the  environment  and  climate  change  and  its  2016-2020  action  plan. 
Administrative  capacities  at  national  and  local  level  have  to  be  considerably  strengthened 
throughout  all  sectors,  particularly  in  the  field  of  environmental  inspections.  Legislative 
alignment  with  the  acquis  on  environmental  impact  assessment  and  strategic  environmental 
assessment  is  at  an  advanced  stage.  However,  implementation  needs  to  be  considerably 
strengthened,  especially  for  infrastructure  development,  thermal  and  hydropower  plants  and 
offshore hydrocarbons operations. Montenegro has taken some steps to improve cooperation 
with civil society, but considerable efforts are needed to achieve effective public participation 
and  consultation  in  decision-making.  In  that  perspective,  a  coalition  of  15  civil  society 
organisations was established in April 2016. On prevention and remediation of environmental 
damage, Montenegro has partially transposed the INSPIRE Directive and it aligned with the 
Environmental Liability Directive. On access to environmental information, the four Aarhus 
Centres functioned well. 

75 

 
 
 
 
On air quality, the level of legislative alignment with the acquis is relatively advanced. The 
national strategy for air quality and its 2013-2016 action plan are in place. In March 2016, the 
government adopted information, conclusions and an action plan on air pollution in Pljevlja. 
Resolute  efforts  are  needed  to  implement  the  conclusions  and  the  action  plan.  Air  quality 
plans  were  adopted  for  Pljevlja,  Nikšić  and  Podgorica  municipalities,  where  the  levels  of 
pollutants  exceed  limit  values.  Montenegro  is  advanced  regarding  the  alignment  with  the 
Directive on reduction in the sulphur content of certain liquid fuels. 

The legal framework on waste management is partially aligned. In order to further align with 
the  acquis,  amendments  to  the  law  on  waste  management  were  adopted  in  2015  and  2016. 
Considerable  efforts  are  needed  to  ensure  implementation  of  the  national  strategy  for  waste 
management  until  2030  and  the  2015-2020  national  waste  management  plans.  Special 
attention needs to be given to the implementation of local waste management plans, to waste 
separate  collection  and  recycling  as  well  as  to  the  strengthening  of  financial  and 
administrative  capacities  at  local/municipal  level.  Implementation  of  the  waste  law  must  be 
strengthened, in particular in the area of illegal waste disposal and temporary disposal sites. 

The level of alignment on water quality is limited. The national strategy and action plan on 
water protection have yet to be adopted. Preparatory work on river basin management plans is 
in  its  initial  phase.  The  river  management  authorities  are  not  yet  operational.  A  system  for 
monitoring  water  quantity  and  quality  is  needed.  Identification  of  agglomerations  and 
definition  of  sensitive  areas  is  required,  as  laid  down  in  the  Urban  Waste  Water  Treatment 
Directive. 

In the field of nature protection, Montenegro is partially aligned with the acquis. The law on 
nature  protection  was  adopted.  The  institutional  framework  for  designating  and  managing 
future  Natura  2000  sites  needs  to  be  streamlined  and  adequately  resourced.  Potential 
investments  in  hydropower  need  to  ensure  that  nature  protection  obligations  are  met, 
especially  for  national  protected areas  and  areas  of  high  natural  value that  could  potentially 
become  protected  Natura  2000  sites.  There  is  a  significant  delay  in  establishing  protection 
over  the  potential  Natura  2000  site  of  Ulcinj  Salina.  Resolute  efforts  and  urgent  action  are 
needed to ensure protection of this site. 

As regards industrial pollution and risk management, alignment with the acquis is partial. 
Five integrated permits have been issued so far. 

On chemicals, Montenegro is partially aligned with the acquis and a new law on chemicals to 
further align has still not been adopted. For the CLP and REACH regulations, implementation 
is partial and additional effort is required. In April 2016 the government adopted the report on 
the implementation of the 2015-2018 national strategy for the management of chemicals for 
2015 which identifies the implementation measures between 2015 and 2018. Montenegro is a 
Party  to  the  Rotterdam  and  the  Stockholm  Conventions  but  full  implementation  is  still 
pending. 

On noise, work on the preparation of strategic noise maps and action plans has not yet started. 

In the area of civil protection, Montenegro has become a member of the EU Civil Protection 
Mechanism in  April 2015.  However, it has  still not  connected with  the EU Civil Protection 
Mechanism’s Common Emergency Communication and Information System. The strategy for 
disaster risk reduction is still to be adopted. 

Climate change 

The level of alignment is limited. The national strategy in the field of climate change by 2030 
was adopted in September 2015. Montenegro needs to ensure that the strategy is implemented 

76 

 
 
in a way that is consistent with the EU 2030 framework on climate and energy policies and 
well  integrated  into  all  relevant  sectors.  As  for  the  UN  Framework  Convention  on  Climate 
Change (UNFCCC), Montenegro submitted its intended nationally defined contribution to the 
2015 Paris Climate Agreement, committing itself to reducing greenhouse gases emissions by 
30 % by 2030 against the baseline year of 1990. In April 2016, Montenegro signed the Paris 
Agreement in the area of climate change. The preparatory work for its ratification is ongoing. 
In January 2016, Montenegro submitted its first biennial update report on greenhouse gases to 
the  UNFCCC.  Regarding  transparency  of  climate  action,  the  EU  Monitoring  Mechanism 
Regulation  has  been  partially  implemented;  Montenegro  should  strongly  pursue  its  full 
implementation. On emissions trading, some very limited provisions of the EU ETS Directive 
have been transposed. Further efforts are required to align with the climate  acquis including 
the  Fuel  Quality  Directive,  EU  legislation  on  ozone  depleting  substances,  fluorinated  gases, 
the  Carbon  Capture  and  Storage  Directive  and  other  relevant  legislation.  Despite  internal 
reorganisation  of  the  line  ministry,  administrative  capacity  remains  quite  weak  and  poorly 
equipped to deal with the emerging challenges. 

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, specifically on quality and safety in both consumer protection and public 
health. 

In the coming year, Montenegro should in particular: 

→ improve and ensure the cost-effectiveness of health promotion and prevention and achieve 
sustainable  improvement  in  patient  safety  and  healthcare  quality,  including  in  inter-sectoral 
collaboration - notably in the field of communicable diseases; 

→  undertake  substantial  further  alignment  and  implementation  of  legislation  to  meet  EU 
standards on consumer protection and improve public awareness. 

In  September  2015  the  government  adopted  the  July  2015-June  2018  national  consumer 
protection programme and its July 2015-June 2016 action plan. Higher public awareness of 
the banking ombudsman and the possibility to seek out-of-court settlements are needed, as is 
additional support for civil society organisations.  

The  number  of  inspections  (safety  and  non-safety  related)  performed  by  the  Administration 
for  Inspection  Affairs  increased  again,  as  did  the  number  of  irregularities  found,  with  275 
types of dangerous products identified. 

On  safety-related  issues,  further  amendments  are  necessary  to  the  law  on  general  product 
safety  and  the  law  on  consumer  protection  to  ensure  full  alignment  with  the  acquis. 
Administrative and enforcement capacity needs improving to ensure correct implementation.  

On  non-safety  related  issues,  more  work  is  needed  on  raising  consumer  awareness  and 
improving access to information on consumers’ rights. 

With regard to public health, the 2015-2020 master plan for health development and the law 
on healthcare, which is partly aligned with the EU acquis, were adopted in late 2015. Fiscal 
austerity  and  sustainability  continued  to  detract  from  the  work  of  public  health  bodies,  and 
programmes  and  interventions  and  were  further  impacted  by  overuse  of  medicines. 

77 

 
 
 
Amendments  to  the  maximum  sale  prices  criteria  for  medicines  were  adopted  regarding  the 
alignment of prices, once the maximum price is determined. The Ministry of Health issued a 
guidebook for regular analyses in monitoring the prescription of drugs.  

The  tobacco control law was amended to  ensure  compliance with  the EU  acquis  on health 
warning labels on packaging. However, the law on the use of tobacco in public places is still 
not aligned with EU recommendations. 

The  2016  programme  for  mandatory  immunisation  against  certain  communicable  diseases 
was  adopted.  The  European  Regional  Verification  Commission  for  measles  and  rubella 
elimination  found  that  endemic  transmission  of  those  diseases  has  been  interrupted  in 
Montenegro.  The  country  still  does  not  have  a  formal  surveillance  system  for  antimicrobial 
resistance.  Efforts  were  made  to  implement  the  National  HIV  Strategic  Response  but 
sustainable funding is still not ensured.  

On  drug  abuse  prevention,  efforts  are  needed  to  develop  and  expand  prevention, 
rehabilitation  and  social  reintegration  programmes  for  addicts.  In  May  the  Commission  for 
drugs was officially created. It is composed of four psychiatrists, one representative of CSOs 
and two representatives from the Ministry of Health. 

With  regard  to  non-communicable  diseases,  health  promotion  remains  underutilised.  The 
2016-2017 action  plan  to  implement  the  strategy  for  the  prevention  and  control  of  chronic 
non-communicable diseases was adopted in March.  

A  national  cancer  screening  programme  on  early  detection  and  treatment  of  breast  cancer 
was launched. The WHO European Childhood Obesity Surveillance Initiative was carried out 
in May and June, though no official results are available yet. 

On blood, tissues, cells and organs, the law on removal and transplantation of human tissues 
and cells for therapeutic purpose was adopted in June, aligned with the EU acquis. Training 
sessions were held for healthcare workers in the Blood Transfusion Institute.  

With regard to patients’ rights in cross-border healthcare, the law on health insurance was 
adopted designed to ensure further alignment with the EU acquis.  

On  health  inequalities,  access  to  health  protection  must  be  improved  for  people  with 
disabilities, people living with HIV, children and adults who use drugs, prisoners, women in 
prostitution, LGBTI people, internally displaced persons and Roma. 

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,  adequate  implementing  and  enforcement 
capacity, and access to the common computerised customs systems. 

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

  further  advance  preparations  for  accession  to  the  Convention  on  a  common  transit 
procedure; 

  implement the necessary capacity-building measures, in particular in the IT department. 

On customs legislation, amendments to the law on the Customs Service entered into force in 
January,  making  a  clearer  delineation  of  responsibilities  and  strengthening  integrity  and 
internal  controls.  The  customs  tariff  was  updated  in  line  with  the  2016  version  of  the  EU’s 
combined nomenclature.  

78 

 
 
 
Amendments  to  the  Decree  on  implementation  of  the  Customs  Code  entered  into  force  in 
February.  These  further  align  non-preferential  rules  of  origin  and  classification  of  goods, 
summary declaration, simplified procedures and management of tariff quotas with the Union 
Customs Code.  

A revised law on free zones was adopted in July. The government also adopted amendments 
to  the  Decree  on  conditions  for  representation  before  the  customs  authorities  as  well  as  a 
Decree on customs enforcement of intellectual property rights, aligned with Regulation (EU) 
No 608/2013.  

Areas  which  require  further  harmonisation  include  transit,  drug  precursors  and  security 
aspects. Preparations for implementing the New Computerised Transit System advanced and a 
national plan was prepared.  

As  regards  administrative  and  operational  capacity,  a  new  2016-2018  customs  business 
strategy  was  adopted  in  March,  which  incorporates  updates  to  the  IT  strategy.  A  human 
resources  management  strategy  for  2016-2018  was  adopted  and  a  new  rulebook  on  internal 
organisation and systematisation prepared, envisaging the establishment of a separate transit 
group and a customer helpdesk. Appropriate staffing levels of the customs administration, in 
particular in the IT unit, need to be ensured.  

Risk  management  has  been  further strengthened  with  the adoption  of  a strategic  framework 
for  risk  management  and  a  risk  register.  The  authorised  economic  operators  programme  is 
operational, but  so far no economic  operators have requested a licence. Preparations for the 
accreditation  of  the  customs  laboratory  advanced.  In  2015,  the  customs  administration  took 
over  the  responsibility  for  domestic  excise  duties,  which  resulted  in  a  rather  substantial 
increase of the collected amounts. The customs administration faces significant challenges in 
controlling the illicit tobacco trade, in particular as regards the transit through the Port of Bar 
free  zone.  It  should  step  up  efforts  in  this  area,  including  strengthening  international 
cooperation. 

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. 

Montenegro  has  reached  a  good  level  of  preparation.  Good  progress  was  made: 
Montenegro adopted an action plan to bring its international agreements and legislation into 
line  with  the  acquis,  and  also  ratified  the  WTO  Trade  Facilitation  Agreement.  Preparations 
on development and humanitarian aid are at an early stage.  

In the coming year, Montenegro should, in particular: 
→  complete  the  alignment  of  its  legislation  with  the  acquis  on  export  controls  of  dual-use 
goods; 
→  follow  up  on  activities  laid  down  in  the  action  plan  on  legislative  alignment,  bringing 
international  agreements  into  line  with  the  acquis,  and  follow  up  on  the  enhancement  of 
administrative and control capacity. 

On common commercial policy, Montenegro ratified the WTO Trade Facilitation Agreement 
in  March  and  deposited  its  ratification  instrument  in  May.  After  joining  the  Information 
Technology  Agreement  (ITA 2)  negotiations,  Montenegro’s  ITA 2  implementation  scheme 
was ratified by the WTO Secretariat in November 2015. Montenegro applied for membership 
in  the  Wassenaar  Arrangement  in  September  2015.  Alignment  with  the  acquis  on  export 

79 

 
 
 
controls of dual-use goods needs to be completed. 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 remain stalled after Montenegro aligned with the EU sanctions in the context of 
Russia’s  illegal  annexation  of  Crimea  and  events  in  eastern  Ukraine.  During  the  reporting 
period, Montenegro signed an economic cooperation agreement with Albania, an Agreement 
on  economic  and  trade  cooperation  with  the  Republic  of  Argentina,  and  a  Protocol  on 
cooperation with the Czech Republic in the area of energy and infrastructure. 

There were no developments on the negotiation of bilateral investment treaties. Montenegro 
continues to play an active role in CEFTA and is chairing it in 2016. 

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.  

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 through the adoption 
of legislation, as well as a strategy for the non-proliferation of weapons of mass destruction. 
Montenegro continued to participate in civil and military crisis management missions and to 
align with EU positions. 

The  regular  political  dialogue  between  the  EU  and  Montenegro  on  foreign  and  security 
policy  issues  continued.  (For  more  information  on  developments  in  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,  Montenegro  aligned,  when  invited,  with  all 
relevant EU declarations and Council decisions (100 % alignment). (For more information on 
developments concerning 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 on non-proliferation.  

The law on foreign trade in arms and military equipment was adopted in June. March saw the 
adoption  of  the  law  on  ratification  of  the  amendments  to  the  Convention  on  the  physical 
protection of nuclear material, the law on ratification of the protocol on explosive remnants of 
war,  and  the  Convention  on  prohibitions  or  restrictions  on  the  use  of  certain  conventional 
weapons which may be deemed to be excessively injurious or to have indiscriminate effects.  

In May, the government adopted the 2016-2020 national plan for protection against chemical, 
biological, radiological and nuclear threats and risks. Montenegro's first strategy for the non-
proliferation  of  weapons  of  mass  destruction  was  adopted  in  September  2016.  Montenegro 
continued  to  comply  with  international  commitments  on  small  arms  and  light  weapons, 
including the aims of the EU strategy. 
Regarding  cooperation  with  international  organisations,  in  December  NATO  invited 
Montenegro  to  become  a  member  of  the  alliance.  The  Protocol  on  the  Accession  of 

80 

 
 
 
Montenegro  to  NATO  was  signed  in  May  and  Montenegro  participated  in  the  Warsaw 
Summit in July as a future member of the Alliance. 

On security measures, the EU-Montenegro security agreement continued 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 foreign and defence policy (CSDP), in particular EU NAVFOR Atalanta and 
EUTM  Mali.  Montenegro  took  part  in  UN  operations,  in  particular  UNFICYP.  Parliament 
adopted  a  decision  on  the  deployment  of  Montenegro  armed  forces  to  the  United  Nations 
Mission for the Referendum in Western Sahara (MINURSO). Montenegro also participated in 
the  International  Security  Assistance  Force  (ISAF)  mission  in  Afghanistan.  Since  the 
expiration of ISAF’s mandate in 2014, officers deployed by Montenegro continued to serve in 
the NATO-led Resolute Support mission. A proposal for Montenegro to contribute to KFOR 
forces in Kosovo has also been launched. 

4.32.  Chapter 32: Financial control 

Based  on  international  standards,  the  EU  promotes  the  reform  of  national  governance 
systems  to  enhance  managerial  accountability  and  sound  financial  management  of  income 
and  expenditure.  The  financial  control  rules  further  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 several areas, including external audit and in the development of procedures 
for monitoring and assessing the quality of internal control reforms. However the principle of 
managerial  accountability  is  still  not  fully  embedded  in  the  administrative  culture  and 
decision-making and budgetary powers are rarely delegated to operational managers 

In the coming year, Montenegro should in particular: 

→  ensure  an  agreement  at  government  level  on  the  definition  of  managerial  accountability, 
including  how  it  applies  to  resource  allocation,  reporting  on  the  achievement  of  objectives, 
and financial management, and start implementation throughout the public administration;  

→  continue  to  increase  the  number  of  auditors  in  the  State  Audit  Institution,  up  to  the 
intended level; 

→ significantly strengthen the coordination capacity of the National Anti-fraud Coordination 
Service and continue to ensure the implementation of the national anti-fraud strategy. 

Public internal financial control 

Montenegro is implementing its 2013-2017 PIFC strategy and action plan and a 2016-2020 
public  finance  management  reform  programme.  Internal  control,  particularly  managerial 
accountability and the delegation of responsibility is also, addressed in the new 2016-20 PAR 
strategy. The Central Harmonisation Unit continues to report annually on implementation of 
the strategy to the government, which then adopts conclusions. Systematic implementation of 
the government’s conclusions following the annual PIFC review is improving: over 50 % of 
the total conclusions in the 2014 report have been fully implemented compared with 13 % of 
those in the 2013 report. 

The  Central  Harmonisation  Unit  (CHU)  is  responsible  for  methodological  guidance, 
training and monitoring of implementation of the PIFC legislation. It is increasingly focusing 
on guidance and monitoring, particularly in line ministries and local government units, where 
it has identified the most serious challenges. More attention is also being given to state-owned 

81 

 
 
 
enterprises.  The  CHU  has  adopted  a  training  programme  on  public-sector  internal  financial 
controls, in cooperation with the Human Resources Management Authority. 

The PIFC law regulates financial management and control (FMC) in line with the internal 
control  framework  of  the  Committee  of  Sponsoring  Organisations  and  the  guidelines  of  the 
International Organisation of Supreme Audit Institutions. Managers responsible for FMC are 
high-level officials, but they do not appear to be systematically involved in implementation. 
Further efforts are needed to finalise FMC action plans and rulebooks and to implement risk 
management procedures. A mapping of the internal control processes by the CHU is ongoing. 

The  law  on budget  and  fiscal  responsibility  provides  for  a  centralised financial  inspection 
function to act on reports or suspicions of fraud and corruption in financial management, but 
the relevant implementing legislation still has to be adopted. 

Internal  audit  is  governed  by  the  PIFC  law,  in  line  with  international  standards.  More 
budgetary  funds  were  allocated  to  internal  audit  and  most  public-sector  entities  have 
established  an  internal  audit  unit.  The  availability  of  qualified  staff  is  gradually  improving. 
Out of 28 internal audit units, 22 adopted strategic audit plans and 19 adopted annual plans. 
Audit engagements include activities financed by EU funds. 

External audit 

Montenegro’s  constitutional  and  legal  framework  ensures  the  independence  of  the  State 
Audit  Institution  (SAI),  in  line  with  the  standards  of  the  International  Organisation  of 
Supreme Audit Institutions. The president and four members of the 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. As in 2015, the SAI has 
around 40 auditors,  which is  half the number of  auditors the institution is  intended to  have. 
This number is deemed insufficient to fulfil the SAI’s responsibilities. An exam to become a 
state  auditor,  held  in  early  2016,  is  expected  to  partially  address  this  issue.  The  SAI  is 
implementing its 2012-2017 strategic development plan. It is drafting guidelines on auditing 
the  state  budget  final  statement  of  accounts  and  on  how  to  assess  the  application  of  fiscal 
responsibility criteria. It has a structured training policy, including a certification programme: 
70 % of its auditors are certified. The SAI also has its own internal audit department with one 
internal auditor. 

On  quality  of  audit  work,  the  SAI  has  adopted  methodologies  for  financial  and  regularity 
audits  and  for  performance  audits  as  well  as  a  code  of  ethics,  in  line  with  the  ISSAI 
(international standards of the Supreme Audit Institutions) and the guidelines on audit quality 
control.  The  SAI  assesses  the  internal  control  systems  of  audited  bodies  and  provides 
recommendations. Its capacity to conduct performance audits is improving and it is gradually 
increasing  the  number  of  performance  audits  that  it  undertakes.  Of  the  four  performance 
audits  planned  for  2015,  three  were  performed  in  2015  and  the  forth  was  finished  in  2016.  
Four other performance audits are foreseen to take place in 2016 

On  the  impact  of  audit  work,  SAI  reports  are  public  and  its  cooperation  with  media  and 
NGOs  continues  to  improve.  Implementation  of  SAI  recommendations  needs  to  further 
improve,  though  the  government  is  implementing  a  formal  mechanism  to  follow  up  on 
external  audit  recommendations.  Regarding  the  lack  of  transparency  and  absence  of  time 
limits  on  addressing  weaknesses  identified  in  the  2015  report,  SAI  provides  information  on 
implementation in the final statement of accounts of the state budget. Entities must submit a 
report on the implementation of audit recommendations in a specified timeframe, usually six 
months. SAI checks these reports and can perform a follow-up audit if the audited entity did 

82 

 
 
not implement any of the recommendations. Parliament’s capacity to ensure effective scrutiny 
over  the  whole  budgetary  process,  including  SAI  audit  reports  and  recommendations,  still 
needs to be improved. 

Protection of the EU’s financial interests 

Acquis  alignment  is  high  in  this  area,  and  Montenegro’s  national  anti-fraud  coordination 
service  (AFCOS)  has  been  functioning  since  2013.  However,  the  AFCOS’  capacity  to 
coordinate the institutions in the AFCOS network still needs to be significantly strengthened. 
A  national  anti-fraud  strategy  is  being  implemented.  Cooperation  with  the  European 
Commission  is  ongoing  and Montenegro has  access to  the Irregularity Management System 
since  April  2016.  Montenegro  reports  regularly  to  the  Commission  on  irregularities  and 
suspected  fraud  cases.  A  solid  track  record  on  investigations  and  reporting  still  needs  to  be 
established. 

Protection of the euro against counterfeiting 

There  is  a  high  level  of  acquis  alignment  in  this  area,  and  in  October  2015  Parliament 
enacted  the  law  on  ratification  of  the  International  Convention  for  the  Suppression  of 
Counterfeiting Currency.  

Technical analysis of suspicious euro banknotes and coins is performed by the Central Bank. 
Training  has  been  systematically  organised  for  cash  handlers,  who  are  obliged  to  check  the 
authenticity and withdraw all suspicious money from circulation.  

The Central Bank implements the  cooperation agreements with the European Commission 
and the European Central Bank. Montenegro also participates in the Pericles 2020 programme 
and the regional Balkan Network for Euro Protection initiative. 

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  thanks  to  the 
adoption  of  an  action  plan,  including  indicative  timetables  to  complete  the  preparation 
regarding own resources, and the concept of traditional own resources accounting is now well 
understood. A solid institutional set-up for the own resources system, coordination structures, 
administrative capacity and implementing rules will need to be developed in due course.   

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  (GNI),  are  not  yet  aligned  with  the  acquis.  The  country  will  need  to  make 
considerable efforts to ensure the exhaustiveness of its national accounts and GNI calculations 
by taking into account also the informal economy. The concept of traditional own resources 
accounting is now well understood, as demonstrated in the simulation exercise on the A and B 
accounts that took place in early 2016. 

Montenegro  will  need  to  take  sound  measures  for  combating  fraud  in  VAT  and  customs 
duties  in  order  to  ensure  appropriate  contribution  to  the  EU  own  resources  system  upon 
membership. (For developments in the underlying policy areas, see chapters 16 — Taxation; 
18 — Statistics; 29 — Customs, 32 — Financial control). 

In March 2016, the government adopted its 2016-2020 action plan for the implementation of 
the EU’s own resources system. However the annex to the action plan should be modified to 

83 

 
 
 
clearly indicate the tasks and responsibilities of the various institutions and services involved 
in the own resources system. 

On  administrative  infrastructure,  sufficient  staff  need  to  be  allocated  to  ensure  the 
administrative  preparations  for  own  resources,  and  the  coordination  capacity  of  the 
coordination  department  should  be  increased  in  order  to  ensure  the  smooth  cooperation 
between all the participants in the own resources system, and inter-institutional cooperation. 

Montenegro  will  need  to  have  a  fully  operational  coordination  structure,  administrative 
capacity  and  implementing  rules  to  ensure  that  it  will  be  able,  from  accession,  to  correctly 
calculate, forecast, account for, collect, pay, control and report to the EU on own resources in 
line  with  the  acquis.  It  is  therefore  necessary  to  continue  the  administrative  preparations 
regarding own resources. 

84 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX I - RELATIONS BETWEEN THE EU AND MONTENEGRO 

Within  the  framework  of  the  accession  negotiations,  by  September  2016,  24  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).  

Regular  political  and  economic  dialogue  between  the  EU  and  Montenegro  has  continued 
through the SAA structures. The Stabilisation and Association Council met in June 2016 and 
the  Stabilisation  and  Association  Committee  in  December  2015.  Various  subcommittee 
meetings  have  been  held  since  November  2015,  plus  two  meetings  of  the  Stabilisation  and 
Association Parliamentary Committee, in December 2015 and May 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 25 May 2016, 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.  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 
EUR 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.  

Montenegro  benefits  from  pre-accession  assistance  with  an  indicative  allocation  of  € 270.5 
million for the period 2014-2020, based the priorities set out in the Indicative Strategy Paper. 
The 2015 action programme for Montenegro provides EUR 25.14 million for reforms in the 
area of integrated border management and support for Roma and other vulnerable groups, and 
to address key requirements of the accession negotiations. In addition, a multi-annual action 
programme 2015-2017, totalling EUR 15.3 million, will tackle active labour market reforms, 
improvements in the education system and support to social inclusion policies.  

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. 

Montenegro  continues  to  participate  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). 

85 

 
 
 
ANNEX II – STATISTICAL ANNEX 

STATISTICAL DATA (as of 5.10.2016) 
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 (%) 
Employment growth (national accounts data), relative 
to the previous year (%) 
Labour productivity growth: growth in GDP (constant 
prices) per person employed, relative to the previous 
year (%) 
Unit labour cost growth, relative to the previous year 
(%) 
**3 year change (T/T-3) in the nominal unit labour 
cost growth index (2005 = 100) 
Labour productivity per person employed: GDP (in 
PPS) per person employed relative to EU average 
(EU-27 = 100) 
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 (%) 
Gross fixed capital formation by the general 
government sector, as a percentage of 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 and house prices 
Consumer price index (CPI), change relative to the 
previous year (%) 
**Annual change in the deflated house price index 
(2010 = 100) 

Note 

Note 

2003 
611 
13 812 

2003 
: 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 
: 
: 
: 
: 

: 
: 
: 
: 
: 

Note 

2003 
113.5 
: 
: 

: 

: 

: 

: 

2011 
620b 
13 812 

2011 
3 264.8 
5 300 
10 700 

41 

: 

: 

: 

: 

: 

: 

9.6 
12.1 
5.9 
72.4 
102.6 

19.5 
-0.2 
42.3 
64.3 
: 

2011 
89.8 
: 
: 

: 

: 

: 

: 

2012 
620 
13 812 

2012 
3 181.5 
5 100 
10 400 

39 

-2.7 

2013 
621 
13 812 

2013 
3 362.5 
5 400 
10 800 

40 

3.5 

2014 
622 
13 812 

2014 
3 457.9 
5 600 
11 200 

41 

1.8 

2015 
622 
13 812 

2015 
3 624.7 
5 800 
11 800 

41 

3.4 

: 

: 

: 

: 

: 

8.9 
12.2 
5.5 
73.4 
103.8 

19.8 
0.8 
43.7 
68.1 
: 

2012 
83.5 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 

9.8 
14.3 
4.5 
71.4 
100.5 

20.2 
-0.6 
41.3 
61.4 
: 

2013 
92.3 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 

10.0 
13.5 
4.2 
72.3 
99.6 

19.0 
1.2 
40.1 
60.0 
: 

2014 
81.8 
: 
: 

: 

: 

: 

1 133 

1 271 

1 308 

: 

: 

: 

: 

: 

9.8 
12.9 
4.6 
72.7 
98.6 

20.3 
-0.3 
42.5 
61.1 
: 

2015 
88.3 
: 
: 

: 

: 

: 

: 

Note 

2003 
7.8 

2011 
3.5 

: 

: 

2012 
4.1 

: 

2013 
2.2 

: 

2014 
-0.7 

: 

2015 
1.5 

: 

86 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 (%) 
**Five year change in share of world exports of 
goods and services (%) 
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 (%) 

1) 

1) 

1) 

1) 

1) 
1) 

1) 

1) 
1) 

1) 

1) 

1) 

Note 
1) 

2003 
-102 

2011 
-573 

2012 
-588 

2013 
-487 

2014 
-526 

2015 
-483 

-359 

-1 306 

-1 389 

-1 329 

-1 376 

-1 464 

112 

88 

58 

: 
: 

: 

589 

26 

117 

6 
-22.7 

: 

612 

54 

135 

18 
-19.6 

: 

653 

66 

123 

22 
-16.8 

: 

690 

46 

114 

24 
-16.1 

789 

93 

99 

4 
-14.4 

: 

: 

38.7 

389.1 

461.6 

323.9 

353.9 

619.3 

12.3 
-9.4 

20.8 
20.6 

13.0 
11.1 

20.7 
14.7 

11.1 
8.8 

401.4 

482.4 

336.9 

374.6 

630.3 

204.9 

219.7 

79.8 

118.2 

411.8 

5.1 
0.4 

43.8 

32.0 

: 

: 

: 

: 

: 

: 

2012 
-5.9 

50.9 

: 

: 

: 

: 

2013 
-2.3 

58.0 

: 

: 

: 

1.9 

2014 
-3.1 

56.7 

39.5 

42.5 

2014 
: 

: 

: 

: 

: 

: 

: 

2015 
- 7.7 

63.3 

36.9 

45.0 

2015 
: 

: 

: 

: 

: 

Note 

2003 
: 

2011 
: 

2012 
: 

2013 
: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

1 945 

1 842 

1 985 

1 929 

1 956 

: 
: 

: 
: 
9.73 
3.02 
1 

: 

: 

: 
: 

: 
: 
9.47 
3.23 
1 

: 

: 

: 
: 

: 
: 
9.36 
2.54 
1 

: 

: 

: 
: 

: 
: 
9.22 
1.86 
1 

: 

: 

: 
: 

: 
: 
8.53 
1.23 
1 

: 

: 

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 (%) 

Note 

2003 
-2.4u 

2011 
-5.2 

47.0 

46.0 

: 

: 

: 

: 

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) 
**Annual change in financial sector liabilities (%) 
**Private credit flow, consolidated, relative to GDP 
(%) 
**Private debt, consolidated, relative to GDP (%) 
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 (2010 
= 100) 
**3 year change (T/T-3) in the trade-weighted 
effective exchange rate index, 42 countries (2005 = 
100) 

2) 

3) 

4) 

5) 

6) 
6) 

: 

285 

403 

494 

199 

: 
: 

: 
: 
: 
: 
1 

: 

: 

87 

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

50 

303 

348 

424 

545 

674 

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) (%) 

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 
Poverty gap (%) 

Note 

Note 

Note 

7) 

8) 

2003 
: 
: 
: 
: 

: 

: 

2003 
4.3 

11.0 

: 
: 

2003 
: 

: 

: 
: 

: 

: 
: 
: 
: 
: 

: 

2011 
1 823 
454 
-1 369 
102 

60.2 

44.3 

2011 
2.2b 

4.4 

73.3 
78.8 

2011 
: 

: 

: 
: 

: 

5.6 
13.0 
6.0 
75.5 
: 

: 

22.7 

19.7b 

: 
: 
: 

: 

: 

: 

19.5 
20.0 
: 

15.7 

: 

: 

2012 
1 821 
367 
-1 454 
96 

51.5 

44.5 

2012 
2.5 

4.4 

74.2 
78.3 

2012 
: 

: 

: 
: 

: 

5.7 
11.7 
5.7 
76.9 
: 

: 

19.7 

19.3 
20.3 
43.7 

15.6 

: 

: 

2013 
1 773 
376 
-1 398 
102 

41.5 

44.2 

2013 
2.5 

4.4 

74.1 
79.0 

2013 
65.1 

2014 
1 784 
333 
-1 451 
101 

35.8 

45.8 

2014 
2.4 

4.9 

74.1 
78.9 

2014 
67.6 

2015 
1 842 
317 
-1 524 
100 

35.7 

41.3 

2015 
1.7 

: 

: 
: 

2015 
68.5 

52.6 

55.6 

56.7 

57.8 
47.5 

38.7 

4.5 
11.9 
5.9 
77.7 
: 

: 

19.5 

20.1 
18.8 
41.6 

16.0 

: 

: 

61.4 
49.4 

38.7 

5.7 
11.1 
6.5 
76.7 
32.8 

48.2 

18.0 

17.8 
18.2 
35.8 

14.0 

61.9 
51.5 

40.0 

7.7 
10.8 
6.6 
74.8 
32.4 

46.8 

17.5 

17.7 
17.3 
37.6 

13.6 

32.8 

28.7 

9.0 

9.4 

Note 

2003 
149 

2011 
479 

2012 
484 

2013 
487 

2014 
479 

2015 
: 

109.7 

226.1 

221.6 

214.3 

206.1 

9) 
9) 

: 
: 

25.9 
2.0 

26.5 
2.8 

26.2 
2.4 

: 
: 

: 

: 
: 

88 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
: 

6.7 

6.6 

5.1 

5.1 

5.7 

Note 

2003 
174.2 

2011 
277.4 

2012 
280.3 

2013 
288.3 

2014 
280.1 

2015 
282.8 

674 

1 875b 

1 595 

1 605 

1 630 

1 620 

: 
: 

Note 

2003 
18.1 

10 
13 

2011 
18.1 

0 

0 

10 
14 

2012 
18.1 

0 

2012 
: 
: 

: 

13 
15 

2013 
18.1 

0 

2013 
: 
0.38 

: 

10 
17 

2014 
18.1 

0 

2014 
: 
0.36 

: 

9 
18 

2015 
18.1 

0 

2015 
: 
: 

: 

51.4e 

55.0e 

55.8e 

63.6e 

67.5e 

Note 

2003 
95.0 

2011 
76.7 

2012 
68.2 

2013 
60.7 

2014 
: 

2015 
: 

351.9 

342.4 

319.0 

294.6 

: 

63.3 

54.1 

: 

: 

*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) 
Mobile broadband penetration (per 100 inhabitants) 
Fixed broadband penetration (per 100 inhabitants) 

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 (%) 
Government budget appropriations or outlays on 
R&D (GBAORD), as a percentage of GDP (%) 
Percentage of households who have internet access 
at home (%) 

Note 

2003 
: 
0.80 

: 

: 

2011 
: 
0.32 

: 

Environment 
*Index of greenhouse gas emissions,  CO2 
equivalent (1990 = 100) 
Energy intensity of the economy (kg of oil equivalent 
per 1 000 euro GDP at 2010 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) 

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 

11) 
12) 

12) 

12) 

13) 

11) 

11) 

11) 

89 

56.1 

43.1 

Note 

2003 
: 

: 

: 

: 
: 

: 
: 
: 
2.7 

2003 
101 

518p 
175e 

24e 

252e 

203e 

4p 

: 

: 

55.5 

51.0 

2012 
684 

0 
393 

0 
373 
1 057 
2.8 

2012 
: 

223 
85 

18 

230 

163 

5 

0 

34 

2011 
700 

0 
434 

0 
443 
1 143 
2.7 

2011 
: 

223b 
87 

21 

232 

202 

6b 

0 

36b 

100.0 

100.0 

100.0 

2013 
761 

0 
372 

0 
239 
1 000 
3.9 

2013 
: 

223 
89 

21 

220 

186 

8 

0 

42 

2014 
687 

0 
379 

0 
288 
975 
3.2 

2014 
: 

230 
94 

22 

237 

192 

8 

0 

44 

2015 
: 

: 
: 

: 
: 
: 
: 

2015 
: 

231 
93p 

25p 

224p 

183p 

7 

0 

51 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
: = not available 
b = break in series 
e = estimate 
p = provisional 
u = low reliability 
* = 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)  2013–2015: based on balance of payments manual edition 6 (BPM6). 
2)  National definition of M0, comprised of bank deposits with the CBM (settlement account and reserve requirement account) 

and the estimated amount of cash in circulation. 

3)  National definition of M11, comprised of M0 plus demand deposits by the non-banking sector held with banks and the CBM, 

in EUR and other currencies, plus the Central Government’s demand deposits in EUR and other currencies. 

4)  National definition of M21, comprised of M11 plus the non-banking sector’s time deposits with banks, in EUR and other 

currencies, plus the Central Government’s time deposits in EUR and other currencies. 

5)  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. 

6)  Weighted average effective interest rate, outstanding amounts. 
7)  Data of NGOs are excluded. 
8)  Comprises data of private companies or enterprises, entrepreneurs and private households. 
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 GDP at 2010 constant prices. 
11)  2003: based on the reports of agricultural organisations (agricultural enterprises and cooperatives) engaged in crop 

production and estimates for private agricultural holdings. 

12) 
13) 

Including livestock held by enterprises, cooperatives and households. 
In million litres. Net quantity, from enterprises, cooperatives and households. 

90