COMMISSION STAFF WORKING DOCUMENT Montenegro 2019 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 2019 Communication on EU Enlargement Policy
Date: 2019-05-29
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Montenegro, accession criteria, accession negotiations, pre-accession strategy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 29.5.2019  SWD(2019) 217 final  COMMISSION STAFF WORKING DOCUMENT Montenegro 2019 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 2019 Communication on EU Enlargement Policy {COM(2019) 260 final}  
 
 
Table of Contents 

INTRODUCTION 

Context 

Summary of the Report 

FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW CHAPTERS 

Functioning of democratic institutions and public administration reform 

1. 

1.1.  

1.2.  

2 

2.1 

2.1.1  Democracy 

2.1.2.  Public administration reform 

2.2 

Rule of law and fundamental rights 

2.2.1   Chapter 23: Judiciary and fundamental rights 

2.2.2 

Chapter 24: Justice, freedom and security 

FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT AND COMPETITIVENESS 

The existence of a functioning market economy 

3 

3 

3 

6 

6 

6 

11 

15 

15 

32 

44 

45 

The capacity to cope with competitive pressure and market forces within the Union 49 

GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION 

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

Chapter 1: Free movement of goods 

Chapter 2: Freedom of movement for workers 

Chapter 3: Right of establishment and freedom to provide services 

Chapter 4: Free movement of capital 

Chapter 5: Public procurement 

Chapter 6: Company law 

Chapter 7: Intellectual property law 

Chapter 8: Competition policy 

Chapter 9: Financial services 

Chapter 10: Information society and media 

Chapter 11: Agriculture and rural development 

Chapter 12: Food safety, veterinary and phytosanitary policy 

Chapter 13: Fisheries 

Chapter 14: Transport policy 

Chapter 15: Energy 

Chapter 16: Taxation 

Chapter 17: Economic and monetary policy 

Chapter 18: Statistics 

Chapter 19: Social Policy and employment 

1 

52 

54 

54 

56 

56 

57 

59 

60 

61 

62 

64 

65 

66 

67 

68 

69 

71 

73 

74 

75 

77 

3. 

3.1 

3.2 

4. 

5.  

5.1 

5.2 

5.3 

5.4 

5.5 

5.6 

5.7 

5.8 

5.9 

5.10 

5.11 

5.12 

5.13 

5.14 

5.15 

5.16 

5.17 

5.18 

5.19 

 
 
5.20 

5.21 

5.22 

5.25 

5.26 

5.27 

5.28 

5.29 

5.29 

5.31 

Chapter 20: Enterprise and industrial policy 

Chapter 21: Trans-European networks 

Chapter 22: Regional policy and coordination of structural instruments 

Chapter 25: Science and Research 

Chapter 26: Education and culture 

Chapter 27: Environment and climate change 

Chapter 28: Consumer and health protection 

Chapter 29: Customs union 

Chapter 30: External relations 

Chapter 31: Foreign, security and defence policy 

5.32. 

Chapter 32: Financial control 

5.33 

Chapter 33: Financial and budgetary provisions 

ANNEX I - RELATIONS BETWEEN THE EU AND MONTENEGRO 

ANNEX II – STATISTICAL ANNEX 

79 

80 

82 

83 

84 

85 

88 

90 

91 

92 

93 

95 

97 

98 

2 

 
 
 
 
 
1. 

INTRODUCTION 

1.1.   Context 

Accession negotiations  with  Montenegro were opened in  June 2012. To date 32  negotiating 
chapters  have  been  opened,  of  which  three  have  been  provisionally  closed.  Montenegro 
continued to broadly implement the Stabilisation and Association Agreement (SAA) and the 
meetings of the joint bodies under the agreement took place at regular intervals. 

Two negotiating chapters were opened during the reporting period and no further chapter was 
provisionally  closed.  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 
23 and 24 will be key for further progress in the negotiations overall.  

1.2.  

Summary of the Report1 

Concerning the political criteria the reporting period continued to be marked by the low level 
of  trust  in  the  electoral  framework,  which  needs  to  be  revised  in  a  comprehensive  and 
inclusive  manner.  A  temporary  parliamentary  committee  on  reform  of  electoral  and  other 
legislation was established in autumn 2018 inter alia for this purpose. It however still needs to 
deliver on its ambitious mandate. Presidential and local elections in 11 municipalities and one 
urban municipality took  place during the reporting period. Local elections continued to take 
place  on  a  rolling  basis,  making  their  international  observation  difficult,  and  leaving  ample 
opportunities for claims of irregularities that cannot be independently evaluated.       

The  political  scene  remains  fragmented,  polarised  and  marked  by  lack  of  genuine  political 
dialogue. Limited progress was made in re-establishing the political dialogue in Parliament in 
the course of 2018 with the temporary and partial return of majority of the opposition parties 
to  Parliament  and  the  establishment  of  the  temporary  parliamentary  committee.  However, 
following  the  detention  of  one  opposition  Member  of  Parliament  in  late  2018,  and  the 
allegations  of  corruption  and  illegal  political  party  financing  (the  ‘envelope  affair’)  in  early 
2019,  the  opposition  largely  returned  to  boycotting  Parliament.  These  allegations  also 
triggered  mobilisation  of  citizens  though  regular  street  protests,  attempts  at  extra-
parliamentary political dialogue and the opposition’s demands for the formation of a technical 
government.  

Returning  the  political  debate  to  the  Parliament  is  the  responsibility  of  all  political  actors. 
Active  and  constructive  participation  by  all  parties  is  required  to  enhance  parliamentary 
accountability,  oversight  of  the  executive,  democratic  scrutiny  and  better  quality  of  the 
legislation.  There  were  no  new  developments  in  the  political  and  judicial  follow-up  of  the 
alleged  misuse  of  public  funds  for  party  political  purposes  in  2012.  As  regards  the  recent 
allegations, the prosecution opened investigations with regard to some of the allegations, and 
the  Anti-Corruption  Agency  fined  the  political  party  exposed  for  receiving  illegal  cash 
donation.  These  allegations  require  a  credible,  independent  and  effective  institutional 
response. 

As regards governance, there is a need to strengthen transparency, stakeholders' participation, 
and  the  government's  capacity  to  implement  reforms.  A  new  legal  framework  and 
methodology  on  strategic  planning  should  lead  to  better  quality  strategic  planning,  better 
monitoring  and  execution.  The  legal,  institutional  and  financial  environment,  under  which 

1 This report covers the period from March 2018 to March 2019. 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.  

3 

 
 
                                                 
civil society organisations operate, improved overall. However, the genuine inclusion of civil 
society organisations in the policy-making process remains to be ensured in practice. 

Montenegro  is  moderately  prepared  with  the  reform  of  its  public  administration.  Some 
progress was made overall. There was good progress in particular on the medium-term policy-
planning  framework,  merit-based  recruitment,  and  rationalisation  of  the  organisation  of  the 
state  administration.  However,  strong  political  will  is  still  needed  to  effectively  address  the 
de-politicisation  of  the  public  service  and  the  optimisation  of  the  state  administration, 
inclusive  and  evidence-based  policy  development,  the  delegation  of  decision-making  and 
managerial accountability. 

Montenegro’s judicial system is moderately prepared and some progress has been made. The 
legislative  framework  aimed  at  increasing  the  independence  and  professionalism  of  the 
judiciary has yet to be fully implemented. Institutional capacity has been strengthened.  

Montenegro  has  achieved  some  level  of  preparation  in  the  fight  against corruption.  There 
was  some  limited  progress  during  the  reporting  period.  However,  corruption  is  prevalent  in 
many  areas  and  remains  an  issue  of  concern.  The  operational  capacity  of  institutions  has 
improved; however, all institutions should demonstrate a more proactive attitude. Challenges 
to the credibility, independence and priority-setting of the Anti-Corruption Agency still need 
to be addressed. Financial investigations and seizure and confiscation of assets remain to be 
improved.  An  initial  track  record  of  investigation,  prosecution  and  final  convictions  in 
high-level  corruption  cases  has  been  established,  but  the  criminal  justice  response  against 
high-level  corruption  remains  too  limited.  Further  improvements  in  this  regard  will  only  be 
possible  in  an  environment  where  independent  institutions  are  shielded  from  any  undue 
influence and encouraged to fully use their powers. 

In  the  fight  against  organised  crime,  Montenegro  remains  moderately  prepared.  Some 
progress  was  made  in  judicial  cooperation  and  in  some  areas  of  the  fight  against  organised 
crime.  An  initial  track  record  of  investigations  into  money  laundering,  of  financial 
investigations  and  of  temporary  seizures  of  criminal  assets  was  developed.  The  enhanced 
international police cooperation is bringing results, as illustrated by a number of high-profile 
international  operations,  arrests  and  drug  seizures.  However,  further  results  are  needed  to 
produce  a  convincing  track  record  on  the  more  complex  types  of  organised  crimes,  where 
local vested interests are at stake, including in money laundering, trafficking in human beings 
and tobacco smuggling, as well as in the confiscation of proceeds of crime.  

On  fundamental  rights,  Montenegro  further  aligned  its  legislation  with  EU  standards.  The 
capacity of the Ombudsman office and the National Preventive Mechanism has improved, but 
more  efforts  are  still  needed  in  strengthening  the  institutional  framework  and  effective 
protection  of  human  rights.  Montenegro  needs  to  ensure  that  adequate  institutional 
mechanisms are in place to protect vulnerable groups from discrimination. Implementation of 
the legislation remains weak and institutional capacity on human rights needs to be increased. 
The  Roma  and  Egyptians2  minority  remains  the  most  vulnerable  and  most  discriminated 
community.  Gender-based  violence  and  violence  against  children  remain  issues  of  serious 
concern.  

Montenegro  has  achieved  some  level  of  preparation  on  freedom  of  expression,  but  no 
progress  was  made  in  the  reporting  period.  There  have  been  very  limited  developments 
regarding  investigations  into  cases  of  violence  against  journalists.  Recent  political 
interference in the national public broadcaster Council and the Agency for Electronic Media 

2  In  line  with  the  terminology  of  European  institutions,  the  umbrella  term  ‘Roma’  is  used  here  to  refer  to  a 
number of different groups, without denying the specificities of these groups. 

4 

 
 
                                                 
are a matter of serious concern. The media scene remains highly polarised and challenges in 
understanding the role of free media persists. Self-regulatory mechanisms remain weak.  

As  regards  the  economic  criteria,  Montenegro  has  made  some  progress  and  is  moderately 
prepared in developing a functioning market economy. The economy continued expanding at 
a  robust  pace,  improving  labour  market  outcomes  even  though  the  unemployment  rate 
remained  high.  Despite  positive  export  dynamics,  the  current  account  deficit,  fuelled  by 
strong domestic demand, remained very large and was only partially financed by net inflows 
of  foreign  direct  investment.  Financial  sector  solvency  and  liquidity  ratios  improved,  but 
access  to  finance for small companies remains hampered by tight  lending conditions.  Fiscal 
consolidation efforts continued through 2018, but the budget deficit target was missed while 
public debt reached a new record, partly due to financing needs for a large highway project, 
financed by a Chinese loan. Private sector development remained constrained by weaknesses 
in  the  business  environment,  the  judiciary,  and  a  high  prevalence  of  informality,  reflecting 
poor implementation capacity in key state institutions responsible to  enforce the rule of law 
and market competition.  

Montenegro has made some progress and is moderately prepared in its capacity to cope with 
competitive pressures and market forces within the Union. The development of infrastructure 
in  a  number  of  areas  is  gradually  setting  the  preconditions  for  improved  economic 
competitiveness. However, further efforts are needed to enhance human capital development 
and  to  reduce  the  mismatch  between  education  outcomes  and  labour  market  needs.  Local 
companies need to grow and step up efforts to increase international competitiveness.  

With  regard  to  good  neighbourly  relations  and  regional  cooperation,  Montenegro 
remained constructively committed to bilateral relations with other enlargement countries and 
neighbouring EU Member States and an active participant in regional cooperation.  

Concerning Montenegro's ability to assume the obligations of membership, important work 
on  alignment  and  preparation  for  the  implementation  of  the  acquis  has  taken  place  in  most 
areas.  The  country  has  reached  a  good  level  of  preparation  in  areas  such  as  company  law, 
intellectual  property  law,  energy,  and  foreign,  security  and  defence  policy.  It  is  moderately 
prepared in many chapters, such as free movement of goods, competition policy, agriculture 
and rural development, food safety, veterinary and phytosanitary policy, as well as enterprise 
and  industrial  policy.  Montenegro  is  at  some  level  of  preparation  in  the  areas  such  as 
environment and climate change, and social policy and employment. Good progress has been 
made  in  the  areas  of  right  of  establishment  and  freedom  to  provide  services,  intellectual 
property law, agriculture and rural development, and food safety, veterinary and phytosanitary 
policy.  Looking  ahead,  Montenegro  should  focus  in  particular  on  competition  policy, 
environment  and  climate  change,  as  well  as  public  procurement.  Strengthening  the 
administrative  capacity  for  ensuring  the  application  of  the  acquis  remains  an  important 
challenge  for Montenegro. Montenegro has continued to  align with  all EU common foreign 
and security policy positions and declarations.  

In the area of migration, Montenegro was hit by a sharp surge in irregular migration, due to 
the partial shift of regional migration flux towards the so-called "coastal route" along Albania, 
Montenegro  and  Bosnia  and  Herzegovina.  Montenegrin  authorities  apprehended  4  753 
irregular migrants (a 460% increase compared with 2017), which put the country's reception 
and  administrative  capacities  under  strong  pressure.  The  legal  framework  was  further 
strengthened with the entry into force of an important legal package on migration and asylum, 
while  some  measures  were  taken  to  increase  the  reception  and  operational  capacities. 
Important  border  cooperation  agreements  with  neighbouring  countries  were  signed  and  the 
European Border and Coast Guard Status Agreement with the EU was initialled. In the next 

5 

 
 
reporting  period,  Montenegro  should  further  strengthen  the  capacity  to  deal  with  mixed 
migration  flows  and  the  integration  of  refugees;  continue  to  increase  human  and  material 
resources devoted to border management and migrants’ registration system. 

2 

2.1 

FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW CHAPTERS  

Functioning of democratic institutions and public administration reform  

2.1.1  Democracy 

The  political  scene  remains  polarised  and  the  opposition  has  further  fragmented.  The 
reporting period was marked by a continued parliamentary boycott by two opposition parties 
and by a partial and selective return to the parliament by the rest of opposition. Allegations of 
corruption and illegal political party financing (the ‘envelope’ affair) in early 2019 triggered 
mobilisation  of  citizens  though  regular  peaceful  street  protests,  attempts  at  extra-
parliamentary political dialogue and the opposition’s demands for the formation of a technical 
government.  

Elections  

The level of trust in the electoral framework and conduct of elections remains low. Important 
priority  recommendations  from  the  Office  for  Democratic  Institutions  and  Human  Rights 
(ODIHR)  of  the  Organisation  for  Security  and  Cooperation  in  Europe  (OSCE)  remain 
unaddressed.  The  electoral  legal  framework  needs  to  be  reviewed  in  a  comprehensive  and 
inclusive  manner  to  regulate  all  key  aspects  of  the  process.  In  October  2018,  Parliament 
established a temporary  committee on further  reform  of electoral  and other legislation. The 
committee,  which  is  boycotted  by  the  opposition,  has  yet  to  deliver  inter  alia  on  a 
comprehensive  electoral  reform  well  in  advance  of  the  next  parliamentary  elections.  The 
‘envelope’ affair requires a credible, independent and effective institutional response.  

On  the  April  2018  presidential  elections,  the  OSCE/ODIHR  Election  Observation  Mission 
concluded  that  fundamental  freedoms  were  respected,  while  noting  that  the  candidate 
nominated  by  the  ruling  party  held  an  institutional  advantage.  It  recommended  a 
comprehensive  and  inclusive  reform  of  the  electoral  legislation,  and  stressed  the  need  to 
investigate all allegations of electoral violations and to take necessary measures to discourage 
vote  buying  and  prevent  pressure  on  citizens.  The  mission  report  reiterated  the  need  to 
increase  the  transparency  of  the  State  Electoral  Commission  (SEC)’s  work,  professionalism 
and  impartiality.  It  also  stressed  the  need  to  strengthen  the  independence  of  the  public 
broadcaster  and  the  media  regulator.  The  public  prosecution  service  formed  1,100  cases 
related to these elections, most on the alleged falsification of identification documents and/or 
falsification of signatures; all are still in the phase of preliminary investigation.  

Local  elections  continued  to  take  place  on  a  rolling  basis,  making  their  international 
observation difficult, and leaving ample opportunities for claims of irregularities that cannot 
be  independently  evaluated.  Elections  took  place  in  13  municipalities  and  one  urban 
municipality in 2018, and were conducted in a generally peaceful and calm atmosphere. The 
reported irregularities were due to poor organisation and insufficient procedural knowledge of 
the  electoral  administration.  In  March  2019,  local  elections  took  place  in  the  newly 
established municipality of Tuzi. No major irregularities were reported.  

In  May  2019,  the  first-instance  proceedings  related  to  the  2016  election-day  coup  attempt 
ended before the High Court in Podgorica. The court found all 13 defendants, including two 
opposition MPs,  two Russian citizens and  eight  Serbian citizens,  guilty  and sentenced them 
for establishing a criminal  organisation with  the purpose of committing terrorist attacks and 

6 

 
 
other crimes against the constitutional order and security. 

In October 2018, Parliament established a temporary committee on further reform of electoral 
and  other  legislation,  with  the  support  of  the  votes  by  the  ruling  coalition  and  several 
include  delivering 
opposition  parties.  This  cross-party  parliamentary  body’s 
comprehensive electoral reform, addressing the recommendations of the OSCE/ODIHR 2016 
and 2018 election observation missions, and getting agreement on holding local elections on 
the same day nationwide. The committee invited representatives of civil society organisations 
(CSOs) and academia to participate in its work. Since December 2018, the committee lacks 
quorum  due  to  opposition  boycott;  in  the  meantime,  work  continued  without  opposition 
representatives and with uneven participation of CSOs at a technical level only in two of the 
seven  working  groups.  Clear  planning,  increased  transparency  and  genuine  inclusiveness  in 
the work of the committee will be crucial for it to deliver on its ambitious agenda and enhance 
public trust in the electoral process.    

tasks 

In  March  2019,  Parliament  appointed  the  new  chair  of  the  SEC  after  the  mandate  of  the 
previous one expired in October 2018.  

Involvement  of  women  in  politics  remains  low,  including  in  the  electoral  administration. 
Electoral lists complied with the minimum requirements in terms of gender equality.  

There were no new developments in the political and judicial follow-up of the alleged misuse 
of  public  funds  for  party  political  purposes  that  took  place  in  2012  (the  ‘audio  recordings 
affair’).  In  January  2019,  a  video  recording  was  made  public  of  a  high-level  party  official 
receiving  an  envelope  with  money  in  the  run-up  to  the  2016  parliamentary  elections  (the 
‘envelope affair’). A swift, credible, independent, and effective institutional response to this 
affair will be key for restoring public trust in the electoral process and the state institutions. 

Parliament 

Limited  progress  was  made  in  2018  on  re-establishing  the  political  dialogue  in  Parliament 
with the partial and temporary return of a majority of opposition members of the parliament 
(MPs)  and  the  establishment  of  a  temporary  parliamentary  committee  on  further  reform  of 
electoral and other legislation. Active and constructive participation by all parties is required 
to  enhance  parliamentary  accountability,  the  oversight  of  the  executive  and  democratic 
scrutiny, and achieve better quality legislation. 

By  the  second  half  of  2018,  the  majority  of  opposition  MPs,  with  the  exception  of  two 
political parties and their nine MPs, had returned to parliamentary sittings and resumed their 
participation in  the parliament’s committees, after boycotting their  work for almost  2  years. 
However,  following  the  arrest  of  an  opposition  MP  in  December  2018  and  the  subsequent 
‘envelope affair’, the opposition has gradually returned to a selective boycott of Parliament. 

As regards the legislative role of Parliament, the opposition boycott has further weakened the 
quality of the debate, with parliamentary committees providing mostly unanimous support to 
draft  legislation  proposed  by  the  executive.  Although  Parliament  has  increased  its 
administrative  capacity  by  recruiting  additional  staff,  its  capacity  to  scrutinise  proposed 
legislation for compliance with EU acquis remains low. In 2018, 27 legislative acts out of 198 
(13.6 % of the total), were adopted via extraordinary procedures, compared to 22 % in 2017.  

The  boycott  also  had  an  impact  on  decisions  on  appointments  requiring  qualified  majority, 
such  as  the  appointment  of  non-judicial  members  of  the  Judicial  Council.  In  addition, 
Parliament dismissed a civil society member of the Council of the Anti-Corruption Agency, 
while  the  related  legal  proceedings  were  still  ongoing.  In  this  case,  and  two  similar  cases 
concerning  Parliament’s  decision  to  dismiss  two  members  of  the  Council  of  the  national 

7 

 
 
broadcaster RTCG (Radio Televizija  Crne Gore), a first  instance court established that they 
had  all  been  unlawfully  dismissed.  These  cases  illustrate  the  importance  of  a  functioning 
checks and balances system regarding nominations and appointments by the Parliament.  

Parliament  maintained  a  high  level  of  transparency  at  administrative  level.  However, 
inclusiveness  and  public  participation  were  deficient  in  practice,  including  for  legislation 
affecting citizens’ rights, such as the draft amendments to the Laws on expropriation, on state 
symbols and statehood day, and on public peace and order. The practice of MPs submitting 
draft  legislation  prepared  by  the  government,  thereby  circumventing  mandatory  public 
consultation,  needs  to  be  avoided.  Significant  improvements  are  required  to  Parliament’s 
communication and cooperation with citizens, and particular focus is needed on establishing a 
procedure for addressing citizens’ complaints and petitions.  

Parliamentary oversight of the executive has also been negatively affected by the opposition 
boycott  and  needs  to  be  further  improved.  In  2018,  only  four  control  hearings  were  held, 
while the number of consultative hearings decreased  significantly  (30 in  2018, compared to 
43 in 2017). Parliament needs to step up efforts to develop a uniform and effective system to 
monitor  the  implementation  of  conclusions  and  recommendations  adopted  at  oversight 
hearings. The State Audit Institution’s findings continue to be addressed in a limited manner, 
and  there  is  still  no  discussion  or  reporting  on  the  implementation  of  major  policies  and 
legislation.  

No  complaints  from  citizens,  media  or  interested  parties  alleging  breaches  of  the  code  of 
ethics  have  been  submitted  to  the  Human  Rights  Committee  since  October  2016.  No 
additional training on conflict of interests and good conduct took place in 2018. There were 
also  no cases  of MPs’ immunities being waived by Parliament.  However, proceedings were 
initiated against two MPs of the largest opposition alliance in late 2018, without prior lifting 
of their immunity, and compliance detention orders were issued against both of them. One of 
the MPs was detained, while the other avoided arrest by remaining in the Parliament building. 
The detention orders were temporary suspended by the Constitutional Court pending its final 
decision on the constitutionality of the related legal  provision. One opposition MP from  the 
largest  alliance  served  almost  3  months  in  prison  following  the  High  Court’s  final  decision 
confirming  his  prison  sentence  for  an  attack  on  a  police  officer  during  the  October  2015 
opposition  protest.  Three  criminal  proceedings  involving  opposition  MPs  from  the  same 
alliance are currently under way.  

The political scene has further fragmented. Additional rifts within some opposition parties and 
alliances  led  to  the  establishment  of  two  new  MP  clubs  and  an  increase  in  the  number  of 
independent MPs. There are 18 parties represented in Parliament, of which three are parties 
representing ethnic minorities, and there are three independent MPs.  

Of 81 MPs, only 19 (23.5%) are women. Women are also underrepresented in high-ranking 
positions  in  Parliament,  heading  only  three  (out  of  14)  standing  parliamentary  committees. 
The  Women’s  Political  Network,  composed  of  women  MPs  from  16  political  parties,  has 
shown  that  cross-party  political  consensus  on  important  issues  is  possible  and  that  electoral 
legislation  changes  and  economic  empowerment  measures  can  make  the  difference  on 
women’s participation. 

Shortcomings  persist  in  the  legal  framework  regulating  political  parties  and  their  funding, 
including  those  identified  by  OSCE/ODIHR,  such  as  loopholes  and  legal  uncertainties 
regarding the use of loans and party resources to finance the election campaign, insufficient 
women's  participation  and  a  lack  of  transparency  in  the  financing  of  political  parties.  The 
‘envelope affair’ highlighted the need for these shortcomings to be urgently addressed, which 

8 

 
 
would also enhance public trust in the electoral system. In February 2019, Parliament held an 
extraordinary session on the ‘envelope affair’, but failed to adopt any conclusions. 

There are no women among the political party leaders and very few in the parties’ leadership.  

The  level  of  budgetary  political  party  financing  is  still  considerably  above  the  regional 
average.  The  task  of  monitoring  political  party  financing  lies  with  the  Anti-Corruption 
Agency and the State Audit Institution. The results of their monitoring remain limited.  

Governance  

The  legal  and  procedural  framework  for  strategic  planning  capacity  by  central  government 
bodies was significantly strengthened; the new Decree and methodology in this area now need 
to  be  consistently  implemented  by  all  ministries  and  state  bodies.  The  transparency  of  the 
accession  process  and  stakeholders’  participation  remains  to  be  improved.  Local  self-
government legislative framework is in place and needs to be implemented through capacity 
strengthening,  professionalisation  and  harmonisation  of  functions  at  local  level.  A  new 
municipality of Tuzi was established in September 2018. A new Law on the financing of local 
self-government was adopted with the aim of consolidating local public finances. 

Montenegro remains focused on its EU  accession process  as the key foreign policy  goal.  In 
May 2018, the Ministry of European Affairs was dissolved and its work was taken over by the 
Ministry of Foreign Affairs, the General Secretariat of the Government, and a new European 
Integration  Office  in  the  Prime  Minister’s  cabinet,  headed  by  a  newly  appointed  Chief 
Negotiator, following the resignation of his predecessor. As a result, the number of ministers 
decreased to 18. The are four female ministers. 

In addition to streamlining the composition of the working groups for all negotiating chapters, 
in  October  2018  the  government  revised  the  structure  of  the  Commission  for  European 
Integration.  This  Commission  monitors  the  implementation  of  the  SAA  and  the  2018-2020 
national EU accession programme.  

Central government bodies’ strategic planning capacities were strengthened by the adoption 
of a new Decree on the procedure and conduct of drafting, alignment and implementation of 
strategic  documents  and  accompanying  methodology 
for  policy  development  and 
implementation. In line with the decree, the General Secretariat provides guidance on all draft 
strategic documents  and  provides a written opinion on compliance on  each one, which then 
goes  to  the  government  for  adoption.  The  General  Secretariat’s  competences  in  the 
coordination,  alignment  and  monitoring  of  policy  implementation  were  also  enhanced,  and 
procedures introduced for policy alignment with accession process obligations and EU sector 
policies. In February 2018, a network of strategic planning focal points was established across 
the  public  administration.  The  National  Education  Council  accredited  the  programme  for 
professional education of civil servants and state employees in March 2018, while in January 
2019  the  Human  Resources  Management  Authority  finalised  the  first  cycle  of  certified 
training  for  strategic  planning.  However,  coordination  with  stakeholders  for  policy 
development needs to be enhanced. 

On transparency, the new Open Government Partnership operational team was formed in July 
2018  to  draft  an  action  plan  to  implement  the  2018-2020  Open  Government  Partnership 
Initiative,  which  was  adopted  by  the  government  in  November  2018  with  the  aim  of 
enhancing citizen participation and access to information. The government continues to share 
information on the EU accession process with the public.  

A decree on public consultations was adopted in  July 2018.  It  extended the scope of public 
consultations  beyond  draft  laws,  so  that  they  also  cover  national  strategies.  The  decree  also 

9 

 
 
clarified the conditions for participation in public consultations and defined exceptions from 
the obligation to hold them. An online participation platform was created to facilitate public 
consultations.  However,  a  number  of  laws  affecting  citizens’  rights  were  adopted  without 
prior  public  consultations  due  to  wide  interpretation  of  statutory  exceptions  from  the 
obligation  to  hold  public  consultations.  This  was  also  contrary  to  the  Law  on  state 
administration. In general, the legislative and policy making process continues to suffer from 
insufficient transparency and a lack of genuine inclusion of relevant stakeholders.  

On local self-government, the Law on spatial planning was amended in September 2018 to 
extend  the  deadline  for  issuing  municipal  spatial  plans  to  the  end  of  2018.  The  Law  was 
challenged  by  opposition  MPs  before  the  Constitutional  Court,  whose  decision  is  still 
pending.  

The  adoption  and  implementation  of  secondary  legislation  stemming  from  the  Law  on  civil 
servants  and  state  employees  and  Law  on  local  self-government  is  ongoing  at  central 
government  level  and  in  the  municipalities,  under  the  supervision  of  the  Ministry  of  Public 
Administration. Both laws include provisions on enhanced merit-based recruitment; the Law 
on  civil  servants  and  state  employees  foresees  the  delegation  of  decision-making  on 
recruitment  to  the  relevant  level  in  most  cases,  apart  from  those  that  report  directly  to  the 
minister. The new Law on the financing of local-self government was adopted in December 
2018.    The  new  code  of  ethics  for  civil  servants  and  state  employees  was  adopted  in  July 
2018, in line with Law on civil servants and state employees.  Individual codes of ethics were 
adopted by all municipalities, in line with the law. 

Women’s political participation remains low also at the local level. Of the 24 municipalities, 
only one has a female major and women make up only 26% of councillors in municipalities.  

Civil society 

The  legal,  institutional  and  financial  environment  under  which  civil  society  organisations 
operate improved overall. However, the genuine inclusion of civil society organisations in the 
policy-making process is yet to be ensured in practice. Controversial dismissals of prominent 
non-governmental organisations’ (NGO) representatives from key institutions and bodies, and 
the  growing  trend  of  public  institutions  declaring  information  as  classified  are  matters  of 
serious concern. Substantial efforts are needed to ensure meaningful consultations with civil 
society actors as part of an inclusive policy dialogue, both at central and sectoral levels. 

Civil  society  is  a  key  element  of  any  democratic  system  and  its  checks  and  balances.  Civil 
society organisations’ active participation has to be recognised and fostered as an asset by the 
state institutions. 

The legal framework regulating the work of civil society organisations was strengthened with 
the adoption of five pieces of secondary legislation aimed at implementing the Law on NGOs. 
However,  the  legal  framework  for  volunteering  remains  restrictive  and  not  conducive  to 
voluntary work.  

The  dialogue  on  cooperation  between  public  institutions  and  civil  society  has  significantly 
improved since the Council for the Development of NGOs has resumed its work in September 
2018 with a new organisational structure. Chaired by the Minister of Public Administration, 
the Council’s role is to improve cooperation between CSOs and the national authorities. Its 12 
members  (six  state  officials  and  six  CSO  representatives)  are  appointed  for  3  years.  Three 
meetings of the Council took place in 2018. 

10 

 
 
A new NGO strategy and action plan were adopted in January 2018. The implementation of 
the  strategy  is  monitored  by  the  National  Office  for  cooperation  with  NGOs,  which  is  a 
technical body of five staff members under the Ministry of Public Administration. 

There  is  general  acknowledgement  that  civil  society  has  an  important  role  to  play  in  the 
accession  process.  CSOs  participate  in  various  working  groups,  including  on  the  accession 
negotiation  chapters.  However,  their  inclusion  is  deficient  and  uneven  in  practice,  varying 
from  one  working  group  to  another.  Often,  CSOs  are  not  given  sufficient  information  or 
notice to be able to contribute meaningfully to the process, or their contributions are ignored. 
Consultation  practices  require  better  planning,  transparency  and  openness  to  CSOs’ 
suggestions  to  make  them  genuinely  inclusive.  Cooperation  between  civil  society  and  local 
government is yet to be developed.  

The growing trend of public institutions declaring information classified needs to be reversed 
as  a  matter  of  priority  as  it  prevents  effective  oversight  by  civil  society.  Controversial 
dismissals of prominent NGO representatives from key state institutions, and from regulatory 
and watchdog bodies while related legal proceedings were under way, are a matter of serious 
concern.  Likewise,  media  campaigns  aimed  at  discrediting  NGO  representatives  are  not 
conducive to creating a trustful and enabling environment for civil society.  

The rules for public funding of CSOs are in place, with a 0.4% minimum percentage of the 
state  budget  to  be  allocated  to  civil  society  under  the  Law  on  NGOs.  Transparency  and 
standardisation  of  state  funding  mechanisms  were  improved  with  the  adoption  of  related 
secondary legislation, but were hindered by lengthy delays. Under the Law on NGOs, overall 
strategic planning is ensured at central level by the Ministry of Public Administration, while 
the management of funds is under the responsibility of sectoral ministries. Some 30 calls for 
proposals were launched by 11 ministries in 2018, based on clearer procedures and improved 
evaluation rules. More than four million euro were allocated from the state budget to various 
civil society projects as a result of these calls, a 17.5% increase since 2017. This included the 
state’s  co-financing  of  48  EU-funded  projects  for  a  total  amount  of  EUR  852 000.  This 
co-financing is now mandatory and regulated by a decree. 

Some steps have been taken to improve the transparency of the CSO funding process, notably 
with  the  set-up  of  an  online  database  on  all  state  funding  beneficiaries  and  the  forthcoming 
adoption of an annual government report on state funding of CSOs.  

Further efforts are needed to enhance the monitoring and evaluation of such projects, and to 
alleviate CSO concerns that funds are not available for watchdog activities. Cooperation and 
dialogue  with  civil  society  with  regard  to  sector  strategies  should  be  improved  if  the  new 
model of public funding to CSOs is to reach its full potential.  

2.1.2.  Public administration reform 

Montenegro  is  moderately  prepared  on  the  reform  of  its  public  administration.  Some 
progress  was  made  overall,  while  there  was  good  progress  on  the  medium-term  policy-
planning  framework,  merit-based  recruitment  and  rationalising  the  organisation  of  the  state 
administration.  However,  strong  political  will  is  still  needed  to  effectively  address 
de-politicisation of the public service, optimisation of the state administration, and effective 
implementation  of  managerial  accountability,  including  the  delegation  of  decision-making. 
Some  of  the  Commission’s  recommendations  from  2018  remain  valid.  In  the  coming  year, 
Montenegro should in particular:  

  effectively implement the plan to optimise the public administration; 

11 

 
 
  implement the Law on civil servants and state employees for all new recruitments in order 

to ensure the professionalisation and de-politicisation of the public service; 

  improve citizens’ access to public information by further reducing administrative silence 

and reversing the trend of declaring public information as classified.   

Strategic framework for public administration reform 

Montenegro is implementing two umbrella strategies, the  2016-2020 public administration 
reform  (PAR)  strategy  and  the  2016-2020  public  financial  management  reform 
programme,  albeit  with  some  delays.  The  government  ensures  regular  monitoring  and 
reporting on implementation, but an integrated monitoring and reporting framework is yet to 
be  established.  Civil  society  actively  participates  in  monitoring  government  reform  efforts. 
Political support to the reforms is ensured by the PAR Council, chaired by a deputy Prime 
Minister. The Ministry of Finance still needs to become fully involved in the overall reform 
coordination, notably due to the increased need to link policy and fiscal planning and to focus 
on managerial accountability (see Chapter 32). With regard to the financial sustainability of 
the  public  administration  reform,  the  2018-2020  PAR  action  plan  is  fully  costed  and 
budgeted. The reforms are still dependent on external donor funding. 

Policy development and coordination 

The legal framework and institutions are in place to ensure a coherent policy-making system, 
including for European integration. Montenegro’s medium-term policy planning and reporting 
system was enhanced in 2018, following the adoption of the decree on drafting, alignment and 
monitoring  of  strategic  documents,  accompanied  by  methodological  guidance.  The  General 
Secretariat of the Government has started to take an active role in monitoring implementation 
of the decree. It ensures quality control by issuing written opinions on the proposals and draft 
strategies.  However,  the  medium-term  fiscal  plan  is  yet  to  be  linked  to  policy  planning.  In 
2018,  the  General  Secretariat  also  became  responsible  for  procedural  guidance  to  line 
ministries  to  improve  preparation  of  the  government  work  programme  and  ministry  work 
programmes, and to monitor implementation. 

Inclusive  and  evidence-based  policy  and  legislative  development  remain  only  partially 
ensured.  Administrative  data  collection  and  its  systematic  use  for  policy  and  law-making 
needs to improve across the administration. Although regulatory impact assessments are now 
more systematically produced, and more training has been provided to improve the analytical 
capacities,  the  quality  of  impact  assessments  still  need  to  be  improved,  including  for 
budgetary  impact  assessments.  Gender  mainstreaming  and  gender  analysis  in  the  policy-
making  process  in  line  with  the  Gender  Equality  Act  is  yet  to  be  ensured.  Inter-ministerial 
coordination  remains  generally  weak,  apart  from  areas  where  there  are  inter-ministerial 
councils  such  as  the  PAR  Council.  A  decree  on  public  consultations  was  adopted  in  July 
2018. It extends the scope of public consultations to state strategies beside draft laws, clarifies 
the conditions for participation, and clarifies the exceptions to the obligation to conduct public 
consultations,  for  example  in  security-related  matters.  There  is  a  general  acknowledgement 
that  civil  society  has  an  important  role  to  play  in  the  accession  process,  but  consultation 
practices  require  better  planning,  transparency  and  openness  to  civil  society  organisations’ 
(CSO)  suggestions  to  make  them  genuinely  inclusive.  CSOs  should  also  receive  regular 
feedback  on  how  their  input  has  been  taken  on  board.  Legislative  proposals  on  which  the 
European  Commission  is  consulted  are  now  accompanied  by  summaries  of  impact 
assessments and results of public consultation.  

12 

 
 
Public  scrutiny  of  government  work  is  expected  to  further  improve  as  the  decree  on 
drafting, alignment and monitoring of strategic documents requires line institutions to prepare 
annual reports on all strategic documents. 

Public financial management  

The  Ministry  of  Finance,  which  leads  the  public  financial  management  (PFM)  reform, 
further  amended  the  PFM  reform  programme  and  its  action  plan  in  2018.  A  framework  to 
implement  programme  budgeting  is  now  in  place,  but  implementation  remains  behind 
schedule.  The  2018  budget  did  not  achieve  targets  on  presenting  clear  descriptions  of  the 
programmes,  objectives  and  performance  indicators.  Gender  budgeting  is  yet  to  be 
introduced. The law on public sector accounting and its secondary legislation still need to be 
adopted. The decision on preparation of the capital budget  was  amended in  June 2018.  The 
future  PFM  action  plan  should  address  the  financial  management  information  system  and 
human  resource  capacity  needs  in  the  Ministry  of  Finance,  in  the  tax  and  customs 
administrations,  and  in  the  State  Audit  Institution,  and  should  focus  especially  on  capital 
budgeting,  medium-term  budgetary  framework  and  annual  budgeting.  Also,  government’s 
investment planning and management capacity needs to be improved, including its capacity to 
control public assets funded by loans from third countries (See also chapters 5, 16, 29 and 32) 

The  government  continues  to  ensure  some  level  of  budget  transparency  by  publishing  the 
budget proposal, the final budget and the execution reports. However, line institutions are still 
not proactively providing budgetary information. A  mechanism to ensure a quality check of 
published data should be put  in  place. Montenegro does not  participate in the Open  Budget 
Index survey, nor has it developed a citizens’ budget.  

Public service and human resources management 

The Law on civil servants and state employees and the Law on local self-government entered 
into force in July 2018. They aim to ensure merit-based recruitments and dismissals at both 
national  and local  government levels.  Most of the  secondary legislation  was  adopted by the 
end  of  2018.  Training  on  new  procedures  has  been  provided  at  central  and  local  level.  The 
Ministry  of  Public  Administration  will  need  to  actively  monitor  that  all  new  recruitment 
procedures,  including  for  senior  civil  service  positions,  respect  merit  in  line  with  the  new 
legal requirements. 

Human resources management units are in place across the state administration, but require 
further  strengthening.  The  Ministry  of  Public  Administration  should  ensure  central 
coordination  and  quality  control  of  their  work.  The  central  personnel  register  was  updated, 
and  a  project  was  launched  to  link  to  it  the  salary  system.  In  July  2018,  the  government 
adopted the 2018-2020 public administration optimisation plan to further professionalise and 
optimise  number  of  employees  in  the  public  sector  at  both  central  and  local  levels.  On  the 
remuneration system, fiscal-related triggers in the salary law led to reductions in salaries for 
most public servants in early 2018. While public salary scales are transparent, they remain at 
modest level. The current salary law also leaves room for discretionary ‘top-ups’. The Human 
Resource  Management  Authority  ensures  professional  development  by  providing  training, 
and  has  started  to  implement  the  first  nationally  accredited  training  programme  for  human 
resources managers. Accreditation programmes in the field of ethics and  integrity are being 
developed. 

Accountability of the administration 

The  new  Law  on  state  administration  was  adopted  in  November  2018.  It  rationalises  the 
organisation  of  state  administration  and  addresses  the  main  issues  related  to  accountability 
lines  between  institutions.  The  Law  provides  for  a  clear  organisation  and  typology  of 

13 

 
 
authorities  across  the  public  administration,  as  well  as  criteria  on  establishing  and 
reorganising  state  administration  bodies,  state  agencies  and  funds,  with  a  few  exceptions.  It 
also  provides  for  clearer  definitions  of  the  respective  tasks  performed  by  ministers,  state 
secretaries  and  senior  management  within  ministries.  Independence  of  certain  bodies  will 
need  to  be  ensured,  especially  where  this  is  required  under  the  EU  acquis  and  special  laws 
establishing  a  number  of  state  agencies  will  now  need  to  be  revised.  In  January  2019,  the 
government adopted an action plan to align special laws with the Law on state administration. 
The  Law  was  followed  by  a  decree  on  the  organisation  and  working  methods  of  the  state 
administration,  which  came  into  force  on  31 December  2018.  This  led  to  a  very  rapid 
reorganisation of many bodes, and some of these cases were not provided for in other pieces 
of legislation that were under adoption in the same period. In the future Montenegro should 
adequately  prepare  stakeholders  for  such  changes,  and  consider  transition  periods  for  more 
complex organisational changes.  

Citizens’  right  to  good  administration  are  provided  for  by  independent  institutions, 
especially by the Ombudsman and the State Audit Institution. Recommendations provided by 
the Ombudsman to enhance citizens’ right to access public information were addressed and 
the number of appeals regarding administrative silence decreased. An open source data portal 
has  been  created  to  enhance  proactive  disclosure  of  information.  Work  is  under  way  to 
connect it to the European open source data portal. While there has been some improvements, 
administrative silence remains the major cause of citizens’ complaints. The increasing trend 
of  government  to  declare  information  classified,  particularly  on  grounds  of  tax-related  data, 
without  justified  exemptions  or  by  broad  interpretations  of  the  rules,  is  a  matter  of  serious 
concern  as  it  prevents  effective  citizens’  oversight  of  the  work  of  public  administration. 
Citizens’ right to administrative justice is hampered by the capacity of the Administrative 
Court to deal with the increasing number of cases and because decisions it takes on access to 
information  are  not  effectively  enforced.  The  citizens’  right  to  seek  compensation  is  not 
well  understood  by  the  general  public.  While  procedures  for  seeking  compensation  are  in 
place, there is no specific law on liability. The government does not monitor the number of 
compensation requests.  

Service delivery to citizens and businesses 

A  more  user-oriented  administration  is  a  government  priority,  and  in  a  2019  survey  citizen 
satisfaction on central  government administrative services rose to 66% (from 42% in 2017). 
However,  some  burdensome  procedures  continue  to  exist,  such  as  for  vehicle  registration, 
which require multiple contacts with administrative bodies. Secondary legislation for the Law 
on electronic signature and identification was adopted in July 2018. The number of e-services 
to facilitate the implementation of the Law on general administrative procedure increased, and 
Montenegro has joined ISA2, a Commission IT programme for inter-operability solutions for 
public administrations, businesses and citizens. Business satisfaction with  digital  services in 
2019  is  66%,  and  online  submission  income  tax  declarations  reached  98%  (from  23%  in 
2017).  The  implementation  of  a  single  information  system  for  electronic  data  exchange 
between  state  bodies  is  ongoing;  two  pilot  services  connect  registries  of  the  Ministry  of 
Interior,  the  tax  administration,  the  Ministry  of  Justice  and  the  Ministry  of  Education. 
Simplification  of  administrative  procedures  is  ongoing.  Implementation  of  the  Law  on 
general administrative procedures has started, but some secondary legislation still needs to be 
harmonised with it.  

14 

 
 
2.2 

Rule of law and fundamental rights 

2.2.1   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  fight  against  corruption  are  of  paramount 
importance, as is respect for fundamental rights in law and in practice. 

Montenegro  remains  moderately  prepared  to  apply  the  acquis  and  European  standards  in 
this  area  but  has  made  some  progress  overall.  Last  year’s  recommendations  have  been 
partially  met  through  further  strengthening  of  the  professionalism  of  the  judiciary  and  an 
increased  use  of  financial  investigations.  However,  challenges  remain,  in  particular  with 
regard  to  the  efficiency  and  accountability  of  the  judiciary,  and  financial  investigations  are 
still not launched systematically in all corruption cases. Corruption is  prevalent in many areas 
and  remains  an  issue  of  concern.  Challenges  to  the  independence,  credibility  and 
priority-setting  of  the  Anti-Corruption  Agency  are  yet  to  be  convincingly  addressed.  On 
fundamental rights, some progress can be noted, but further efforts are needed to ensure their 
effective  protection  and  application  in  practice.  Concerns  persist  on  freedom  of  expression 
and  the  overall  climate  of  media  freedom,  with  particular  regard  to  the  investigations  into 
attacks against journalists and political pressure on the public broadcaster RTCG.  

Montenegro is implementing a detailed action plan which was adopted prior to the opening of 
the accession negotiations on this chapter in December 2013. 

Functioning of the judiciary  

Montenegro’s  judicial  system  is  moderately  prepared,  and  Montenegro  made  some 
progress  in  further  strengthening  the  professionalism  of  the  judiciary.  Last  year’s 
recommendations  have  been  partially  met  through  an  increased  capacity  of  the  Judicial  and 
Prosecutorial  Councils  to  implement  the  systems  for  recruitment,  professional  assessment, 
promotion and disciplinary accountability. However, the results of the reforms, in particular 
the  track  record  on  enforcement  of  codes  of  ethics  and  disciplinary  accountability  remains 
limited.  Implementation  of the 2016  ICT strategy  continued. Human resources management 
has not improved, and concrete rationalisation measures remain postponed until after 2019.  

In the coming year, Montenegro should in particular:  

  strengthen  the  accountability  of  the  judiciary  by  developing  a  track  record  on 
implementation  of  codes  of  ethics  and  on  the  disciplinary  responsibility  of  judges  and 
prosecutors;  

  ensure the timely implementation of the 2016 ICT strategy for the judiciary;  

  improve the overall human, financial and infrastructure management of the judiciary. 

Strategic documents  

Implementation and monitoring of the 2014-2018 judicial reform strategy and action plan for 
2017-2018 has continued. Preparations for the adoption of a new judicial reform strategy and 
an  accompanying  action  plan  are  ongoing.  This  process  should  allow  for  genuine  and 
constructive participation of all relevant stakeholders, including civil society organisations.  

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. In June 2018, the Law on the Judicial 
Council  was  amended  in  line  with  the  Venice  Commission’s  opinion,  providing  for  a 

15 

 
 
temporary  anti-deadlock  mechanism  to  ensure  the  continuous  functioning  of  the  Judicial 
Council in light of the lack of the parliamentary qualified majority required to elect its new 
non-judicial members.  

The 2019 budget of the Judicial Council continued to follow a slight upward trend with EUR 
1.37 million allocated, compared to EUR 1.35 million in 2018 and EUR 865,000 in 2017. The 
2019 budget of the Prosecutorial Council is EUR 561,000 (2018: EUR 541,000). Training of 
staff  contributed  to  improvement  of  the  operational  capacity  of  the  secretariats  of  the  two 
Councils.  The  Councils’  operational  capacity  is  in  principle  adequate  to  implement  the 
systems  for recruitment, professional  assessment, promotion  and disciplinary  accountability. 
Further strengthening of their administrative capacities is still needed. The two Councils are 
not yet performing their functions of budgetary and financial management, neither at central 
nor  at  court  level.  The  transparency  of  the  two  Councils’  work  needs  to  improve  tangibly, 
especially  by  publishing  fully  reasoned  decisions  on  promotions  and  appointments,  and  on 
disciplinary  proceedings.  Members  of  both  Councils  need  to  improve  their  professional 
capacities, dedicate more time and show full commitment to performing their functions.  

Independence and impartiality  

Constitutional  and  legal  guarantees  ensuring  judicial  independence  are  in  place,  but  the 
judiciary  is  still  perceived  as  vulnerable  to  political  interference.  A  firmer  political 
commitment  is  needed  to  ensure  the  full  independence  of  Montenegro’s  justice  system.  In 
March 2018, the government adopted an analysis of the legislative framework and its impact 
on  the  independence  of  the  judiciary,  with  a  number  of  recommendations  that  should  be 
addressed in the new judicial reform strategy.  

The Law on courts guarantees the principle of random allocation of cases. In practice, random 
allocation  of  cases  is  implemented  automatically  through  PRIS,  the  judicial  information 
system,  although  for  very  small  courts  there  are  certain  limits  in  this  regard.  PRIS  has  not 
been  introduced  in  misdemeanour  courts.  In  the  absence  of  clear  criteria,  the  practice  of 
reallocating  large  numbers  of  cases  between  courts  to  reduce  backlogs  puts  at  risk  the 
principle of random allocation of cases.  

One presidential pardon was granted in 2018 (there was one in 2017 and 6 in 2016). 

Accountability  

Track  records  on  the  enforcement  of  the  codes  of  ethics  and  disciplinary  accountability  for 
judges and prosecutors remain very limited. In 2018, one new disciplinary proceeding was 
launched  against  a  judge  (2017:  1),  while  4  new  disciplinary  proceedings  were  launched 
against  heads  of  prosecution  (2017:  1).  The  Disciplinary  Commission  of  the  Prosecutorial 
Council established disciplinary liability in 3 cases. In the same period, all 15 cases reported 
against  judges  alleging  violation  of  the  code  of  ethics  were  closed,  and  a  violation  was 
established in one case (2017: 18, no violations established). Four cases were initiated against 
prosecutors  on  suspicion  of  violating  the  code  of  ethics,  with  one  case  still  pending  and  no 
violation established in three cases (2017: 3, no violations established). A state prosecutor in 
the High Prosecutor’s Office in Podgorica was indicted for loan sharking, which resulted in 
his temporary suspension until the end of court proceedings.  

Mechanisms to detect breaches of integrity rules need to become more effective, and all cases 
that give grounds for disciplinary liability need to be properly followed up. Both disciplinary 
Commissions  monitoring  implementation  of  the  Codes  of  Ethics  have  an  inconsistent 
approach to handling cases, and a legal remedy against their decisions remains to be provided 
for by the law. Relevant decisions by the two Councils are insufficiently motivated and case-
law remains to be developed. Additional and sustained efforts are needed in promoting ethics 

16 

 
 
and  professional  conduct  in  the  judiciary  as  well  as  in  raising  public  awareness  on  existing 
complaints mechanisms.  

A scheduled judicial inspection carried out by the Ministry of Justice found irregularities in 
the  courts’  register  keeping,  while  no  irregularities  were  found  in  the  prosecutors’  offices. 
Further improvement  and effective enforcement  of the judicial inspection system is  needed, 
including more thorough and unannounced inspections.  

The disciplinary responsibility and adherence to  professional  standards of bailiffs remains  a 
cause for concern. The Ministry of Justice developed a plan for control of bailiffs in March 
2018.  Some  62  complaints  were  received  on  the  work  of  bailiffs  and  25  ex  officio  controls 
were conducted by the Ministry, establishing irregularities in the work of 8 bailiffs. Out of 2 
disciplinary proceedings initiated against bailiffs in 2018, one resulted in a fine. Courts do not 
regularly  report  data  on  challenges  to  the  legality  of  bailiffs’  decisions  to  the  Ministry.  8 
bailiffs were banned from performing their activity due to not fulfilling the eligibility criteria 
revised  in  2017.  Additional  steps  are  needed  with  regard  to  promotion  and  adoption  of 
professional and ethical standards among bailiffs, including appropriate training and effective 
monitoring of their work.  

Professionalism and competence  

Montenegro continued organising single nationwide competitions for judges and prosecutors. 
Initial  training  for  the  first  group  of  judges  and  prosecutors  recruited  under  the  nationwide 
system  was  completed  in  the  reporting  period.  This  was  followed  by  the  appointments  of  2 
judges  and  4  prosecutors  to  first  instance  courts  and  prosecutors’  offices.  3  judges  and  one 
prosecutor  were  elected  to  a  second  instance  court  and  prosecutors’  office  as  a  result  of 
promotion  procedures.  Despite  the  efforts  of  the  Judicial  and  Prosecutorial  Councils  to 
organise transparent and merit-based selections, challenges remain regarding the planning of 
recruitment and the transparency of selection procedures.  

Both  Councils  now  conduct  regular  assessment  of  judges  and  prosecutors  under  the  new 
system of regular professional assessment. In 2018, 41 judges and 32 prosecutors have been 
evaluated.  However,  assessment  needs  to  be  more  thorough,  in  line  with  the  assessment 
criteria revised in 2017.  

Quality of justice  

The  2019-22  strategy  of  the  Judicial  Training  Centre  was  adopted  in  October  2018,  but 
measures for its implementation remain to be incorporated in the action plan for the 2019-22 
judicial reform strategy. In 2019, the budget of the Judicial Training Centre slightly decreased 
to  EUR  619  000,  compared  to  EUR  624  240  in  2018.  Meanwhile,  14  of  the  20  envisaged 
positions are filled. The autonomous and self-sustainable functioning of the Centre is yet to be 
guaranteed,  and  its  administrative  and  expert  capacity  further  improved.  Measures  are 
ongoing  to  improve  its  capacity  to  identify  training  needs  and  promote  training,  but  further 
efforts  are  needed.  The  Centre  should  become  more  proactive  in  this  regard,  and  should 
strengthen  cooperation  with  the  Judicial  and  Prosecutorial  Councils  and  other  relevant 
stakeholders.  

Activities continued to harmonise jurisprudence, including with the case-law of the European 
Court of Human Rights, through training of judges, prosecutors and lawyers. In addition, the 
capacity of the Judicial Training Centre to provide human rights training was strengthened.  

Instructions  for  collecting  statistical  data  in  compliance  with  the  European  Commission  for 
the Efficiency of Justice (CEPEJ) guidelines are yet to be fully implemented, and no progress 
was  made  in  this  regard.  Data  on  the  total  length  of  proceedings  is  still  not  available. 

17 

 
 
Statistical  information  on  the  performance  of  the  judicial  system  is  not  systematically 
analysed,  nor  used  for  management  and  policy-making  purposes.  Montenegro  requested 
assistance from CEPEJ to improve the quality of its judicial statistics.  

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,  while  the  information 
system of the prosecution remains insufficiently advanced. PRIS also allows for collection of 
comprehensive  statistics,  but  serious  concerns  remain  about  reliability  and  availability  of 
statistical data. Implementation of the 2016-20 ICT strategy for the judiciary is ongoing, and 
envisages the replacement of PRIS with a new IT system. Procurement of a new IT system for 
courts  was  launched  in  December  2018.  However,  implementation  of  the  corresponding 
action plan has been limited and continues to face delays, and stable and sufficient funding for 
planned  reforms  beyond  2019  is  still  lacking.  With  a  view  to  improve  coordination  and 
address delays in implementation, a separate Directorate-General for ICT and Data Security 
was established within the Ministry of Justice. Alternative solutions are needed until the new 
IT system and all its features are operational. These transitional measures should provide for 
effective  allocation  of  human  resources  and  more  realistic  workload  standards  for  judges, 
based on the results and recommendations of the case-weighting study completed in 2015.  

The  2019  budget  for  the  judiciary  increased  to  EUR  39.1  million,  compared  to  EUR  37.8 
million in 2018. Funds are not efficiently allocated and the largest part of the budget is spent 
on salaries, while the remainder is insufficient to cover investment needs and improve overall 
poor  judicial  infrastructure.  Montenegro  has  51  judges  and  17  prosecutors  per  100,000 
inhabitants, far above the European average of 21 judges and 11 prosecutors.  

A positive trend can be observed in alternative dispute resolution, for which a programme 
and accompanying action plan for 2019-21 were adopted at the end of 2018. 629 cases were 
referred for mediation in  2018 (2017:  437), and 107 cases were resolved through mediation 
(2017: 161). During the same period, 3 450 cases (2017: 2,055) were submitted to the Agency 
for  Peaceful  Settlement  of  Labour  Disputes,  and  3  041  cases  were  resolved  (2017:  1 775). 
However, this method is still not systematically used and its overall impact remains low. The 
Ministry  and  the  Centre  for  Mediation  need  to  adopt  a  more  proactive  approach  to  further 
promote the use of mediation among judges and parties to the disputes.  

Efficiency 

In 2018, the case backlog decreased by 4.5% to  38,970 cases pending, while the number of 
cases pending for more than 3 years fell by 4% to 3,081. The disposition time, i.e. the average 
time from filing to decision, was 178 days for first-instance proceedings in civil cases and 131 
days for commercial cases (2017: 295 days for civil cases and 97 days for commercial cases). 
Montenegro  needs  to  step  up  efforts  to  improve  the  efficiency  of  the  judiciary,  enhance 
backlog monitoring and reduce the number of cases pending.  

Following introduction of the bailiff system, the total number of enforcement cases before the 
courts has continued steadily to decrease, and the backlog has been significantly reduced. In 
2018, 1 643 enforcement cases were filed before the courts (2017: 1,688), while the number 
of  pending  enforcement  cases  fell  to  6  004  (end  of  2017:  10  521).  The  number  of  appeals 
lodged  against  the  decisions  issued  by  bailiffs  decreased  to  6  997  (2017:  8  224),  and  the 
number  of  pending  appeals  decreased  to  468  by  the  end  of  2018  (688  a  year  earlier).  A 
centralised  case  management  system  for  bailiffs  is  operational,  providing  for  central 
monitoring  of  the  recovery  rate,  costs  and  duration  of  proceedings.  However,  it  is  not 
systematically  used,  resulting  in  unreliable  data.  Enforcement  of  court  decisions  remains 
problematic. 

18 

 
 
In 2018, the number of cases submitted to the Constitutional Court increased to 2 291 (2017: 
1 039)  while  the  court  in  the  same  year  resolved  1  203  cases  (2017:  1  066).  2  492  cases 
remained pending at the end of the year.   

Concrete  rationalisation  measures  included  in  the  2017-19  mid-term  strategy  for  the 
rationalisation  of  the  courts  network  have  been  postponed  until  after  2019.  Amendments  to 
the  Law  on  courts,  which  would  lay  down  the  minimum  number  of  judges  per  court  in 
accordance with the Judicial Council Decision of 2017, have not yet been prepared. Reform in 
this area should draw on data and conclusions of proper need and cost-benefit analyses of the 
past  and  planned  reforms.  Better  human  resources  and  judicial  infrastructure  management 
need to be ensured. 

Domestic handling of war crimes cases  

Implementation  of  the  war  crime  prosecution  strategy  is  ongoing.  However,  no  new  cases 
have  been  opened  since  2016,  while  four  cases  remained  in  the  preliminary  phase  of 
investigation by the Special Prosecutor's Office (SPO). One court case is ongoing against one 
person, who is charged with crimes against civilian population. In all cases under preliminary 
investigation,  the  SPO  had  to  rely  on  letters  rogatory  to  the  UN  International  Residual 
Mechanism  for  International  Criminal  Tribunals  (MICT)  and  on  requests  for  international 
legal assistance by the prosecution services of the neighbouring countries. In February 2019, a 
memorandum  of  understanding  was  signed  with  MICT,  allowing  MICT  to  provide  direct 
expert assistance to the SPO on concrete war crimes cases. 

All previous cases of compensation have resulted in final and enforceable judgements, while 
no  new  claims  for  compensation  were  received  in  2018.  A  total  of  EUR  5  714  656  was 
awarded  to  claimants.  Montenegro  needs  to  ensure  that  victims  of  war  crimes  have  equal 
access to justice, in line with European and international standards, and that compensation is 
in line with Montenegro’s commitments.  

Montenegro needs to further increase its efforts to fight impunity for war crimes by applying a 
proactive approach to effectively investigate, prosecute, try and punish war crimes in line with 
international standards, and also to prioritise such cases. These efforts should be accompanied 
by  adequate  funding.  The  judicial  decisions  reached  in  the  past  contain  legal  mistakes  and 
shortcomings  in  the  application  of  international  humanitarian  law.  Charges  of  command 
responsibility, co-perpetration and aiding and abetting have so far not been brought.  

Fight against corruption  

Montenegro  has  some  level  of  preparation  in  the  fight  against  corruption  and  limited 
progress has been made, with last year’s recommendations partially met. The Special Police 
Unit  has  been  allocated  10  additional  staff,  a  50%  increase  in  total.  The  Anti-Corruption 
Agency (ACA) has started issuing misdemeanour orders and measures of seizure of material 
gain, and has also developed a risk assessment methodology and new software for in-depth, 
result-oriented checks of political party financing. However, the need for a proactive attitude 
and  sustained  efforts  remain  both  in  prevention  and  repression  of  corruption.  Challenges 
related  to  the  independence,  credibility  and  priority-setting  of  the  ACA  are  yet  to  be 
addressed. Despite some progress, financial investigations, seizure and confiscation of assets 
are areas that are  yet to be improved. Independent institutions need to be shielded from any 
undue influence and encouraged to fully use their powers in order to further develop a track 
record  of  effective  investigations,  followed  by  successful  and  enforceable  convictions  and 
dissuasive sanctions.   

Overall,  corruption  is  prevalent  in  many  areas  and  remains  an  issue  of  concern.  There  is  a 
need  for  strong  political  will  to  effectively  address  corruption  issues,  as  well  as  a  robust 

19 

 
 
criminal justice response to high-level corruption. 

In the coming year Montenegro should in particular:  

  ensure  the  independence  of  the  ACA  and  remedy  the  shortcomings  in  its  work,  as 

established by domestic courts;  

  step up efforts to systematically conduct financial investigations in parallel with criminal 
investigations, establish track records on seizure and confiscation of criminal assets, and 
ensure that management and staff of the asset recovery office are recruited on the basis of 
transparent and objective criteria with a focus on merit and professional skills;  

  improve track records on repression and prevention of corruption, including by imposing 

effective sanctions. 

Track record  

An initial track record of investigation, prosecution and final convictions in corruption cases 
has  been  established,  but  sustained  efforts  are  needed  to  consolidate  results.  In  2018,  four 
final  and  enforceable  judgements  were  issued  for  high-level  corruption,  resulting  in  one 
conviction reached through a plea bargain agreement. The former President of the State Union 
of Serbia and Montenegro has not yet started serving his prison sentence even though he was 
convicted  in  2016.  In  April  2019,  Montenegro  sent  an  official  request  for  his  extradition  to 
Serbia,  where  he  is  currently  staying.  Trials  are  ongoing  in  24  other  cases  of  high-level 
corruption against 61 individuals and 3 legal entities. The high number of cases ending with 
plea  bargains  further  raises  concerns  about  transparency  and  consistency  of  the  courts’ 
sanctioning policy.  

In  2018,  indictments  for  corruption-related  offences  were  lodged  in  12  cases  of  high-level 
corruption  (2017:  10)  against  31  individuals,  including  mayors  and  public  officials,  and  2 
legal  entities.  New  investigations  were  launched  in  six  cases  (2017:  16)  of  high-level 
corruption.  

The  track  record  on  confiscation  of  assets  still  needs  considerable  improvement. 
Precautionary  freezing  of  assets  was  requested  in  only  one  high-level  corruption  case 
involving  six  individuals  and  one  legal  entity.  Permanent  confiscation  was  requested  in  2 
cases concerning 3 individuals, and resulted in the confiscation of immovable property. The 
Appellate Court reached a final decision on the permanent confiscation of immovable assets 
of  the  former  President  of  the  State  Union  of  Serbia  and  Montenegro.  New  financial 
investigations  were  launched  in  relation  to  two  cases  of  high-level  corruption  against  15 
individuals.  

Montenegro  has  made  some  progress  in  establishing  a  track  record  on  the  prevention  of 
corruption. The Anti-Corruption Agency has started issuing misdemeanour orders directly (21 
orders, EUR 3,000 in fines) and launched protective measures of seizure of material gain (3), 
but  a  solid  track  record  remains  to  be  established.  The  amount  of  fines  imposed  by 
misdemeanour  bodies  is  increasing.  However,  the  continued  practice  of  issuing  sanctions 
below  the  statutory  minimum  is  not  having  a  deterrent  effect  and  counteracts  the  effective 
enforcement of rules on prevention of corruption. Results remain extremely limited, with no 
cases  related  to  abuse  of  public  resources  for  parties  and  electoral  campaigns  and  illicit 
lobbying, and only a few initiated cases of inexplicable wealth.  

Based on the Agency’s 185 opinions and 71 decisions on incompatibility of functions and 
conflict of interests (2017: 127 opinions and 64 decisions), 77 public officials resigned from 
their office or function (2017: 37) and 5 were dismissed. Despite this increase, further efforts 
are needed to strengthen the track record and address the shortcomings in the application of 

20 

 
 
the  law,  the  establishment  of  facts  and  the  quality  of  reasoning,  as  well  as  with  regard  to 
procedural  safeguards  for  individuals  affected  by  the  ACA’s  decisions.  These  shortcomings 
were confirmed by the national courts in several  sensitive cases, including those concerning 
members  of  the  Council  of  the  national  broadcaster  RTCG,  and  the  CSO  member  of  the 
ACA’s Council.  

For  the  period  2017/2018,  95%  of  public  officials  and  93%  of  public  servants  submitted 
income  and  asset  declarations  within  the  prescribed  time  limit  (2016/2017:  96%  public 
officials and public servants). The ACA verified 854 reports on income and assets, fulfilling 
its  annual  plan  of  836  verifications.  The  Agency  has  consistently  followed  up  and  initiated 
misdemeanour proceedings in cases concerning failure to submit income or asset declarations. 
The number of public officials who gave optional  consent  to  the Agency  for access  to  their 
bank  account  for  the  purpose  of  verifying  the  data  submitted  in  the  income  and  asset 
declarations decreased in 2018 from 71% to 60% of public officials and from 75% to 69% of 
civil  servants.  The  number  of  members  of  the  government  who  gave  such  optional  consent 
remains limited to 10.  

Of the 30 cases of inexplicable wealth the Agency opened in 2018 (2017: 24, 2016: 49), it has 
so far closed 28 inquiries. However, it does not appear that these efforts have contributed to 
the  detection  and  prevention  of  corruption,  since  no  irregularities  were  found.  The  ACA 
carried  out  planned  control  and  verification  of  78  public  officials,  20  of  which  were  high-
ranking  officials.  Misdemeanour  proceedings  are  ongoing  in  nine  of  the  latter  cases.  As  in 
previous years, no irregularities that would be forwarded to the prosecution were found. The 
Agency is encouraged to conduct more in-depth checks of officials on random samples and of 
high-ranking public officials, including searching for illicit enrichment, changes and transfers 
of  assets,  and  identifying  origins  of  assets.  No  such  checks  were  carried  out  in  relation  to 
recent public allegations concerning high-ranking state officials.  

The ACA continued to monitor the overall compliance of relevant entities in meeting the legal 
obligations  on  the  funding  of  political  parties  and  electoral  campaigns.  The  Agency 
performed  routine  control  checks  of  party  financing  along  with  oversight  of  election 
campaigns.  It  initiated  19  misdemeanour  proceedings  for  non-compliance  with  the  legal 
obligations in relation to the 2018 presidential and municipal elections, imposing EUR 11,390 
in  fines.  However,  it  has  not  detected  any  abuse  of  public  resources  for  parties  and 
electoral  campaigns  purposes.  Furthermore,  there  were  no  temporary  suspensions  of  the 
payment of budgetary funds to political entities. The Agency should considerably reinforce its 
work in this regard and act proactively on public reports of alleged misuse of state resources. 
The  Agency’s  handling  of  the  ‘envelope  affair’  and  its  refusal  to  make  public  the  decision 
against  the  ruling  party,  in  which  it  found  a  violation  and  imposed  a  fine,  has  given  rise  to 
allegations  of  the  ACA’s  selective  application  of  the  relevant  legal  provisions,  which  is  a 
cause for concern.  

The State Audit Institution published positive audit reports on annual financial statements for 
2017  of  17  political  parties  and  7  conditional  reports,  while  regularity  audits  yielded  10 
negative, 9 positive and 5 conditional reports with recommendations for improvement.  

In  2018,  6,080  initial  requests  for  access  to  information  were  made  to  public  bodies.  The 
Agency  for  Data  Protection  and  Free  Access  to  Information  received  3,284  complaints,  of 
which  it  upheld  33%  (2017:  1,086  complaints, 33%  upheld).  Most  cases  related  to  requests 
that had remained unanswered by the public institutions, and this continues to be a matter of 
concern. The Administrative Court ruled in 94 cases against decisions by public bodies not to 
grant  access  to  information.  However,  court  decisions  are  not  effectively  enforced.  The 
increasing practice of declaring requested documents  classified in  order to  restrict access to 

21 

 
 
information is a serious matter of concern (2018: 104, 2017: 50, 2016: 30). Public institutions 
need to ensure greater transparency and accountability, especially in areas prone to corruption 
and in sectors dealing with the allocation of large portions of state budget or property.  

Results  on  the  protection  of  whistle-blowers  remain  limited,  with  a  continued  decrease  in 
requests for protection of individuals reporting threats to the public interest. One request for 
whistle-blower protection was submitted to the ACA in 2018 and is pending a decision, along 
with  a  case  from  the  previous  year  (2017:  2  requests,  protection  granted  in  1  case;  2016:  8 
requests, protection granted in 3 cases). The ACA received 110 reports on threats to the public 
interest (2017: 69, 2016: 56) and initiated 13 new proceedings on its own initiative (2017: 27), 
establishing such a threat in 18 cases. So far, 19 misdemeanour procedures were initiated and 
10 cases were sent to the prosecution.  

Integrity  plans  are  being  continuously  implemented  by  the  vast  majority  of  public  bodies, 
but their practical impact remains to be assessed.  

As regards the implementation of the Law on lobbying, 14 lobbying certificates were issued 
in total (2017: 7), and 6 lobbyists registered with the Agency in 2018 (2017: one). Despite this 
increase, these low numbers suggest that lobbying activities are being carried out outside the 
legal framework.  

Cases demonstrating the implementation of codes of ethics for members of the legislative and 
executive  authorities  are  scarce,  whereas  a  few  such  cases  were  reported  by  the  police  and 
customs administration.  

Institutional framework  

Prevention of corruption 

The new rulebook on the internal organisation of the Anti-Corruption Agency was adopted 
in  October  2018,  providing  for  increased  administrative  capacity  of  the  Department  for 
Prevention  of  Conflict  of  Interest  and  Control  of  Political  Party  Financing.  The  number  of 
ACA staff decreased to 54 (2017: 56) out of 60 planned. Following the dismissal of the CSO 
member  of  the  Agency's  Council,  one  position  in  the  Council  remains  vacant.  In  January 
2018,  the  Constitutional  Court  annulled  the  Agency's  Rulebook  on  procedures;  a  new 
Rulebook was adopted in December 2018. Capacity-building activities continued, but further 
training  is  needed,  in  particular  on  election  campaigns  and  protection  of  whistle-blowers. 
Further  improvements  were  made  to  the  ACA’s  IT  system  –  including  the  algorithm  for 
random selection of public officials for verifying incomes and assets of public officials. The 
Agency  established  a  connection  to  the  Central  Population  Registry  and  Securities 
Commission  for  the  purpose  of  controlling  income  and  asset  declarations.  The  newly 
established access  to  the registry of fines  and misdemeanour records  enables the  Agency  to 
record  misdemeanour  orders.  The  Agency  also  launched  a  new  application,  providing  for 
electronic  submission  of  integrity  plans  and  reports  of  authorities,  facilitating  their  easier 
processing  and  analysis.  A  new  risk  assessment  methodology  and  software  for  in-depth, 
result-oriented control of funding of political parties and electoral campaigns is in use since 
January  2019.  The  ACA  needs  to  use  these  tools  to  ensure  effective  exercise  of  its 
investigative powers. More in-depth  checks to  verify the credibility of data are needed, and 
the development of adequate methodology in this regard would be beneficial.  

The ACA continued addressing the limited impact of the Law on lobbying through awareness 
raising  and  outreach  to  public  administration,  local  self-government  and  Parliament.  It  also 
published  on  its  website  a  form  to  report  illicit  lobbying,  but  no  such  reports  have  been 
submitted  yet.  A  proactive  approach  is  needed  in  order  to  detect,  follow-up  and  sanction 
breaches of the law. 

22 

 
 
Despite  measures  taken,  including  on  communication  and  outreach,  the  Agency  is  still  not 
perceived as sufficiently independent and proactive by the general public. Due to personal ties 
between  its  management  and  the  political  elite,  allegations  of  it  being  instrumentalised  for 
political  purposes  persist.  To  strengthen  public  confidence,  the  Agency  and  its  staff  must 
ensure maximum transparency, integrity, impartiality, independence, an unselective approach, 
and uniform and full application of relevant laws.  

Montenegro  still  needs  to  demonstrate  by  concrete  and  visible  results  the  impact  of  anti-
corruption  measures  in  particularly  vulnerable  areas  such  as  infrastructure  projects, 
healthcare,  education,  construction  and  spatial  planning,  and  privatisation  of  public 
enterprises.  Transparency  in  these  areas  needs  to  be  significantly  improved.  There  is  still  a 
strong and urgent need to improve and strengthen internal inspection mechanisms within the 
public administration and to improve their cooperation with law-enforcement authorities. The 
introduction  of  full  e-procurement  is  still  ongoing  and  a  new  Law  on  public  procurement 
planned for adoption in 2019. E-procurement is expected to help achieve more transparency 
and  reduce  opportunities  for  abuses  in  public  procurement  procedures.  However,  checks  on 
the overall public procurement cycle remain a cause for concern.  

Law enforcement  

The number of prosecutors allocated to the Special Prosecutor’s Office increased from 10 to 
12;  their  appointment  is  under  way.  In  addition,  two  additional  prosecutors  are  temporarily 
seconded to the SPO. Of the planned 37 positions, 35 have been filled (2017: 35). The SPO is 
supported  by  a  Special  Police  Unit  (SPU)  with  29  positions  filled,  including  10  positions 
added in 2018. 

The  overall  institutional  and  operational  capacity  of  prosecutors,  judges  and  police  to  fight 
corruption remains insufficient and needs improvement, particularly through specialised and 
long-term  training.  Financial  investigations  are  now  being  launched  in  the  earlier  stages  of 
criminal  investigations,  but  are  still  not  launched  systematically  in  corruption  cases.  The 
concept needs further alignment with the Financial Action Task Force (FATF) standards.  

Following  the  trend  of  previous  years,  the  police  and  other  state  institutions  continue  to 
submit  only  a  small  number  of  cases  to  the  prosecution  service,  while  hardly  any  originate 
from official inspections or auditing bodies. Political influence should not be exerted on law 
enforcement and judicial officials by members of the executive and the legislative branch with 
the aim of interfering in their independent functioning.    

A decision on the premises of the Special Prosecutor's Office remains pending, but no concrete 
progress  has  been  made;  this  needs  to  be  addressed  without  delay.  It  is  also  of  utmost 
importance that the SPO is able to recruit the most suitable experts. 

Legal framework  

Montenegro  is  a  party  to  all  international  anti-corruption  conventions,  including  the  United 
Nations Convention Against Corruption. The legal framework and secondary legislation on 
anti-corruption  are  in  place.  Passive  and  active  corruption  are  both  punishable  under  the 
Criminal Code. Montenegro is encouraged to make illicit enrichment a criminal offence. The 
Council  of  Europe  Group  of  States  against  Corruption  (GRECO)  concluded  that  out  of  11 
recommendations on the ethics and integrity of MPs, prosecutors and judges, 6 are considered 
to be fully implemented, and 2 partially implemented, while 3 recommendations have not yet 
been implemented. 

Shortcomings  in  the  existing  legal  framework  on  political  parties'  financing,  including 
those identified by ODIHR, need to be addressed. Conflicting interpretations of the  Law on 

23 

 
 
financing  of  political  entities  and  electoral  campaigns  by  the  ACA  and  the  State  Audit 
Institution cause legal uncertainty among the subjects of control. A consistent application of 
legislation  is  needed  to  ensure  uniform  requirements  for  all  political  entities  and  state 
institutions subjected to control during electoral campaigns. 

The Law on free access to information was amended in April 2017. Its implementation has 
not  contributed  to  ensuring  more  transparency  and  accountability  in  public  service,  as  the 
authorities continue declaring requested information as classified, excluding it from the scope 
of  application  of  this  law.  This  piece  of  legislation  is  a  cause  for  concern  and  needs  to  be 
reviewed  thoroughly  in  line  with  international  standards.  The  legal  framework  on  whistle-
blower protection will need to be aligned with the new EU acquis on this issue. 

Obstacles to establishing a more convincing track record in successfully addressing high-level 
corruption also remain in the legal framework regulating pre-trial and financial investigations. 
Some excessive formalities will need to be filtered out of the legal framework.  

Strategic framework  

The  action  plan  for  Chapter  23  outlines  comprehensive  reforms  to  prevent  and  repress 
corruption. A complementing ‘operational document’ sets out additional measures to prevent 
corruption  in  areas  particularly  vulnerable  to  corruption.  Tangible  results  remain  to  be 
achieved in these areas, and Montenegro should develop more impact-oriented sector-specific 
plans for the prevention of corruption. 

Fundamental rights 

The capacity of the Ombudsman and the National Preventive Mechanism (NPM) has further 
increased, as has the overall awareness of international human rights standards, in particular 
of European Court of Human Rights (ECtHR) case law. Further progress remains to be made 
in aligning the legislation with EU and international human rights standards, including in the 
area  of  prevention  of  discrimination  of  persons  with  disabilities.  Implementation  of  the 
legislation  remains  challenging,  and  institutional  capacity  on  human  rights  still  needs  to  be 
strengthened substantially. Montenegro is yet to ensure adequate institutional mechanisms to 
protect vulnerable groups from discrimination. The Roma and Egyptian minority remains the 
most  vulnerable  and  most  discriminated  community.  Gender-based  violence  and  violence 
against children remain issues of serious concern.  

To address these shortcomings, Montenegro should in particular:  

  further  strengthen  human  rights  institutions  and  the  Ministry  of  Human  and  Minority 
Rights,  and  increase  their  knowledge  of  international  and  European  human  rights 
standards; 

  strengthen the application and protection of human rights, and ensure effective protection 
of victims of human rights violations, including by providing for effective investigations 
into  ill-treatment  by  law  enforcement,  and  cases  of  deaths  and  physical  attacks  on 
individuals, in accordance with ECtHR case-law; 

  ensure  effective  implementation  of  fundamental  rights  policies  on  gender  equality, 
children  and  Roma  rights,  and  rights  of  persons  with  disabilities,  by  securing  sufficient 
budget  allocation  for  implementation,  improving  the  capacity  of  relevant  institutions  as 
well as inter-institutional coordination.  

As  regards  international  human  rights  instruments,  no  new  ratifications  took  place. 
Montenegro is yet to ratify the International Convention on the Protection of the Rights of All 
Migrant Workers and Members of Their Families (ICRMW), signed in 2006.  

24 

 
 
Montenegro  continued  its  dialogue  and  cooperation  with  international  human  rights 
organisations and monitoring bodies, in particular with the United Nations and the Council of 
Europe. The Universal Periodic Review report for Montenegro (Third Cycle) was adopted by 
the  UN  Human  Rights  Council  in  June  2018.  Out  of  169  recommendations  Montenegro 
accepted  7,  noted  3  and  considered  144  as  already  implemented  or  in  the  process  of 
implementation,  while  the  rest  are  pending.  The  UN  Committee  on  the  Rights  of  the  Child 
adopted  concluding  observations  on  Montenegro  in  June  2018.  In  September  2018,  the  UN 
Committee on the Elimination of Racial Discrimination also adopted concluding observations 
on Montenegro. In October 2018, the Council of Europe Group of Experts on Action against 
Violence  against  Women  and  Domestic  Violence  (GREVIO)  published  its  first  evaluation 
report  on  Montenegro.  In  February  2019,  the  European  Committee  for  the  Prevention  of 
Torture and Inhuman or Degrading Treatment (CPT) published its fourth periodic report on 
Montenegro. 

Montenegro  continued  to  ensure  a  good  level  of  cooperation  with  the  European  Court  of 
Human  Rights  and  none  of  the  judgements  are  subject  to  the  enhanced  supervisory 
procedure. The government continues to conclude friendly settlements in cases concerning the 
length  of  proceedings  and  non-enforcement  of  domestic  decisions.  Montenegro  is  not  yet 
observer to the Fundamental Rights Agency, but  has expressed interest to become observer. 
In 2018, 13 judgements against Montenegro were issued by the ECtHR. Most cases concerned 
Article 6 ECHR (right to a fair trial), two concerned Article 8 (right to respect for private and 
family life), two Article 1 Protocol No. 1 (right to property), while one related to Article 13 
(effective remedy).  Violations were  found in  11  of these cases.  In 2018,  a total  of 318 new 
applications were allocated to a Council of Europe decision-making body, and there were 119 
applications  pending  before  the  Court  by  the  end  of  the  year.  Overall  awareness  of  the 
institutions  and  rights  protected  by  the  European  Convention  on  Human  Rights  (ECHR)  is 
increasing. Improvements are still needed regarding the application of ECtHR standards and 
the quality of reasoning of decisions referring thereto.   

As  regards  promotion  and  enforcement  of  human  rights,  Montenegro  has  a  Ministry  for 
Human Rights  (MHRM) and an Ombudsman, the latter being  accredited  with  a B-status  by 
the  Global  Alliance  for  National  Human  Rights  Institutions  (GANHRI).  Both  received 
assistance  aimed  at  strengthening  their  respective  capacity.  The  capacity  of  the  MHRM 
remains  limited  and  needs  further  strengthening.  The  Ombudsman  Office’s  visibility, 
outreach and productivity have further improved, along with its capacity to handle complaints 
and  the  quality  of  its  opinions  and  reports.  Cases  initiated  by  the  Ombudsman,  including 
misdemeanours  and  criminal  complaints,  require  a  more  proactive  approach,  along  with  a 
more  effective  follow-up.  Four  additional  staff  were  recruited  in  2018.  The  number  of 
reported cases continued to grow, which could be an indication of increasing public trust in 
this  institution.  Cooperation  with  CSOs  remains  positive,  especially  in  the  area  of  anti-
discrimination;  however,  a  more  systematic  and  structured  outreach  approach  needs  to  be 
adopted.  Financial  resources  provided  to  MHRM  and  the  Ombudsman’s  Office  are  not 
sufficient to enable them to carry out their tasks efficiently.  

As regards prevention of torture and ill-treatment, Montenegro has continued to implement 
the recommendations of the European Committee for the Prevention of Torture and Inhuman 
or Degrading Treatment (CPT). The capacity of the National Preventive Mechanism (NPM) 
has been strengthened, as evidenced by the results of its work. The NPM should demonstrate 
a  more  proactive  approach  by  more  regular  visits  to  prisons  and  other  detention  facilities, 
including unannounced visits. Shortcomings and delays in investigating and prosecuting cases 
of alleged violence by law-enforcement officers, including in the context of protests, as well 
as  mild  sanctions  for  established  offences,  are  signs  of  the  difficulties  of  eradicating  ill-

25 

 
 
training  and 

through  stricter  recruitment,  better 

treatment and establishing a record of deterrent sanctions. Ill treatment by the police needs to 
be  addressed 
improved  oversight; 
shortcomings persist in relation to internal control and disciplinary procedures of police. The 
above difficulties apply also to reported cases of alleged ill treatment in prisons, including the 
use of prolonged restraint and fixation, which needs to be addressed. Sufficient safeguards for 
persons deprived of their liberty are not in place. In the Dubrota psychiatric hospital, urgent 
measures are needed to tackle overcrowding. Montenegro needs to demonstrate willingness to 
effectively prevent and repress excessive use of force by law-enforcement officers, including 
by  ensuring  that  they  are  always  identifiable  by  ID  numbers.  In  relation  to  the  2015  prison 
violence, the criminal case against 13 prison guards is still pending in first instance.  

Concerning the prison system, material conditions of detention continue to improve through 
small-scale refurbishments of facilities, but overall they remain poor. Challenges also remain 
on the provision of healthcare to inmates. 32 additional staff were recruited to the Spuž prison 
in  2018;  however,  their  working  conditions  need  further  improvement.  Despite  support 
provided  and  additional  recruitments,  there  has  been  limited  progress  on  rehabilitation  and 
resocialisation.  Training,  awareness  raising  and  capacity  building  continued  among  prison 
guards and other staff on fundamental rights standards in prisons.  Amendments to the Laws 
on  probation  and  community  service  sentences,  and  on  enforcement  of  prison  sentences, 
penalties and security measures were adopted in March 2019. There has been some progress 
with regard to the alternative sanction system, but implementation is delayed. While numbers 
of probation staff increased, resources remain insufficient in general and the overall capacity 
of  the  probation  system  needs  to  be  further  increased.  Further  efforts  are  needed  on 
implementing probation alternatives to home detention.  

Implementation  of  the  legal  framework  on  personal  data  protection  remains  weak.  A 
working group has been formed to align the Law on personal data protection with the General 
Data Protection Regulation 2016/679 and Directive 2016/680. Capacity-building activities to 
strengthen  the  Agency  for  Personal  Data  Protection  and  Free  Access  to  Information  have 
continued, and one more staff member has been employed, but the Agency’s capacity needs 
further  strengthening  to  perform  its  tasks  efficiently.  The  number  of  data  protection  cases 
brought to court remains limited, while the number of complaints lodged with the Agency has 
increased. The protection of personal data in relation to the electronic database of voters has 
been  ensured,  in  line  with  the  OSCE/ODIHR  recommendation  from  October  2016.  The 
country  has  not  signed  or  ratified  the  2018  Protocol  amending  the  Convention  for  the 
Protection of Individuals with regard to Automatic Processing of Personal Data.    

On  freedom  of  thought,  conscience  and  religion,  and  equal  treatment  of  all  religious 
communities,  a  new  Law  on  freedom  of  religious  belief  is  under  preparation.  Montenegro 
needs  to  ensure  that  this  new  legislation  is  prepared  in  a  genuine  dialogue  with  concerned 
stakeholders, and that it is in line with relevant international standards and conventions, while 
respecting the principles of transparency and inclusiveness. Tensions between the Serbian and 
Montenegrin Orthodox Churches continued.  

----------------------------------------------------------------------------------------------------------------- 

Freedom of expression 

Montenegro has achieved some level of preparation on freedom of expression. No progress 
was  made  in  the  reporting  period  and  previous  recommendations  are  yet  to  be  addressed. 
There have been some developments on the investigation into the May 2018 shooting of an 
investigative  journalist,  while  important  old  cases  of  attacks  against  journalists  remain 
unresolved.  Continued  political  interference  in  the  national  public  broadcaster  (RTCG)  and 
the  Agency  for  Electronic  Media  (AEM)  remains  a  matter  of  serious  concern.  The  media 

26 

 
 
scene continues to be highly polarised and challenges persist in understanding the role of free 
media.  Self-regulatory  mechanisms  remain  weak.  Training  of  the  judiciary  on  ECtHR  case 
law on freedom of expression needs to continue.  

In addressing the shortcomings, Montenegro should in particular: 

  significantly  step  up  and  prioritise  efforts  to  investigate  cases  of  attacks  against 

journalists; 

  ensure  the  financial  and  editorial  independence  of  RTCG  and  AEM,  as  well  as  of  their 

governing bodies and of all other media outlets;  

  support the establishment of effective self-regulatory mechanisms. 

Intimidation of journalists 

Progress  in  addressing  violence  against  journalists  and  media  is  still  very  limited,  with  old 
cases remaining unsolved. Four attacks were registered by the authorities in 2018; in three of 
these, convicting judgements were issued against four individuals for endangering the safety 
of  the  journalists  concerned.  In  addition,  cyber-attacks  against  media  outlets  were  reported. 
The most serious attack, qualified as an attempted murder, took place in May 2018 against the 
investigative  journalist  Olivera  Lakić.  The  government  has  issued  strong  statements  in 
support  of  investigating  cases  of  violence  against  journalists.  However,  while  the 
investigation into the May 2018 attack has shown initial results, the authorities have failed to 
show  intensified  efforts  to  solve  old  cases,  including  the  2004  murder  of  an  editor-in-chief. 
Protection  has  been  offered  to  two  journalists.  The  first-instance  verdict  against  a  crime 
journalist  on  charges  of  creating  a  criminal  organisation  and  trafficking  of  narcotics  raises 
concerns  as  to  journalists’  ability  to  perform  their  duties  professionally  and  without  fear  of 
legal  repercussions.  There  are  still  reports  of  undue  pressure  on 
journalists  by 
law-enforcement officials to disclose their sources.  

The  ad  hoc  commission  for  monitoring  violence  against  media  has  since  September  2016 
produced  five  reports  focusing  on  both  recent  and  old  cases,  identifying  a  number  of 
shortcomings  including  delays  in  investigations.  The  commission  has  been  given  access  to 
documents  with  un-redacted  names,  but  difficulties  in  obtaining  timely  and  complete 
information  from  the  authorities  persist.  The  commission’s  recommendations  are  yet  to  be 
fully  implemented  by  state  authorities  and  its  2019  budget  is  yet  to  be  approved  by  the 
government. Further efforts are needed to prosecute the cases effectively and without delay, 
also in order to avoid the application of the statute of limitations. Authorities are expected to 
demonstrate  zero  tolerance  for  threats  or  attacks  against  the  media,  and  should  refrain  from 
making statements that may create an environment not conducive to freedom of expression.  

Legislative environment 

Plans to amend the Law on state symbols, prepared in the absence of public consultations, and 
to introduce fines for not standing when the national anthem is played triggered a discussion 
on conditions conducive to the effective exercise of freedom of expression. While regulating 
these  issues  is  a  prerogative  for  the  State,  it  is  important  that  the  legal  framework  does  not 
infringe upon the right to freedom of expression.  

Laws  on  media,  the  public  broadcaster  RTCG  and  on  electronic  media  are  scheduled  for 
adoption in 2019. These laws need to address the recommendations set out in the media sector 
inquiry  and  be  complemented  by  a  comprehensive  media  strategy.  All  laws  governing  or 
affecting  the  media  sector  should  be  prepared  in  an  inclusive,  coherent  and  coordinated 
manner, and alignment with the EU acquis and international standards ensured. Montenegro 
needs to ensure that its legislative framework provides an enabling environment for freedom 

27 

 
 
of  expression,  based  on  transparency  of  media  funding  and  ownership,  integrity  and 
pluralism. 

Implementation of legislation/Institutions 

Self-regulatory  bodies  continued  to  reflect  the  overall  polarisation  of  the  media  scene  in 
Montenegro and one of them suspended its activities in August 2018. As a result, some media 
outlets no longer have a complaint mechanism in place. There is still no uniform approach to 
sanctions, suggesting that ECtHR case-law and other standards are not yet sufficiently known. 
Efforts need to be stepped up to establish effective self-regulatory mechanisms, with a view to 
improving professional standards in media reporting and creating a climate where freedom of 
expression cannot be abused. Effective and even application of the revised code of ethics of 
journalists is yet to be achieved.  

Public service broadcaster 

The replacement of the public broadcaster RTCG’s Council members, and subsequently of its 
management, has fuelled further concerns about undue political interference and pressure on 
the  RTCG.  So  far,  in  four  of  these  cases  domestic  courts  found  that  dismissals  were  not  in 
accordance with the law. The editorial independence and professional standards of the RTCG 
need  to  be  restored,  and  the  RTCG  Council  shielded  from  undue  influence  and  political 
pressure, including during the selection of its members. The contract on provision of public 
services between the government and RTCG was signed in March 2018, according to which 
the  government  is  required  monitor  the  implementation  of  the  financial  commitments.  The 
issue  of  funding  should  remain  separate  from  that  of  service  provision,  and  oversight  of 
programming  output  should  be  entrusted  to  an  independent  body,  in  line  with  European 
standards.  The  collective  agreement  regulating  the  work  of  RTCG  employees  has  still  not 
been signed, adding to uncertainty among its employees. 

Economic factors 

Concerns about transparency and non-discrimination in state advertising persist. The fact that 
many  media  outlets  are  not  financially  sustainable  has  a  negative  impact  on  the  quality  of 
reporting and professionalism. Montenegro should ensure that informal pressure on editorial 
policy  is  not  exerted  through  the  distribution  of  advertising  funds,  including  from  public 
companies,  as  well  as  through  project  co-funding  from  local  budgets.  The  sustainability  of 
media should be addressed in the forthcoming media law. 

Professional organisations and working conditions 

Journalists  are  jointly  represented  in  Montenegro’s  media  trade  union.  Two  associations 
aimed  at  fostering  and  promoting  professional  journalism  across  the  polarised  media  scene 
also  exist,  but  still  need  to  reach  their  full  potential.  The  economic  situation  of  journalists 
remains precarious, particularly due to job insecurity and low salaries, putting them at risk of 
editorial  interference  and  possible  self-censorship.  There  is  still  no  structured  dialogue 
between the government and the media community on the working conditions of journalists.  

(See also Chapter 10 - Information society and media) 

----------------------------------------------------------------------------------------------------------------- 

Freedom  of  assembly  and  association  is  guaranteed  by  the  Constitution  and  the  legal 
framework is in place. In October 2018, the Constitutional Court found that by upholding the 
ban of the 2015  gay pride march in  Nikšić, the  Supreme Court had violated the organisers’ 
freedom  of  peaceful  assembly.  A  number  of  large-scale  civic  protests  took  place  in  early 

28 

 
 
2019;  all  of  them  were  conducted  without  major  incidents  and  in  an  overall  peaceful 
atmosphere. 

Issues  of  labour  and  trade  union  rights  are  further  covered  in  Chapter  19  -  Social  policy 
and employment. 

Regarding property rights, in October 2018, Parliament enacted amendments to the Law on 
expropriation,  after  a  shortened  legislative  procedure  and  without  public  consultation. 
Arbitrary interference in property rights in the application of domestic legislation needs to be 
prevented  and  due  process  ensured  in  line  with  the  EU  and  international  human  rights 
standards.  The  process  of  restitution  of  properties  expropriated  in  the  past  remains  slow. 
Montenegro needs to ensure fair restitutions proceedings within a reasonable time. 

On  non-discrimination,  the  legal  framework  is  largely  in  line  with  the  EU  acquis  and 
European standards, but a comprehensive strategy is missing. Court cases remain rare and a 
very  limited  number  of  cases  has  been  initiated  by  the  relevant  inspection  services. 
Discrimination on the basis of political affiliation in the area of employment continues to be 
the most commonly reported. The work of the Ombudsman's Office in this area has improved, 
but its capacity needs to be further strengthened on data collection as no uniform database on 
discrimination-related  complaints  and  cases  exists.  The  legal  framework  on  hate  speech  is 
broadly in line with EU standards, but the number of prosecuted cases of hate speech remains 
low.  Institutional  follow-up,  including  by  law  enforcement  and  the  judiciary,  needs  to  be 
improved. 

On  equality  between  women  and  men,  there  was  little  progress  in  the  reporting  period. 
Concerns remain regarding the impact of relevant legislation and the 2017-2021 action plan 
on  gender  equality.  The  process  remains  largely  donor-dependant,  and  adequate  human, 
technical  and  financial  resources  are  lacking.  The  gender  mechanism  does  not  effectively 
perform  its  coordinating  and  strategic  role,  and  the  Committee  on  the  Elimination  of 
Discrimination against Women (CEDAW) recommendations have not been properly followed 
up.  The  number  of  complaints  to  the  gender  referral  mechanism  remains  low,  indicating  a 
lack  of  public  awareness  and  confidence.  Montenegro  did  not  adopt  measures  to  counter 
stereotypes  and  discriminatory  practices,  or  the  trafficking  and  exploitation  of  prostitution. 
The  phenomenon  of  sex-selective  abortions  remains  an  area  of  concern  and  requires 
institutional follow-up.  

A  protocol  on  processing  cases  of  violence  against  women  and  domestic  violence  was 
adopted  in  September  2018  and  an  interdisciplinary  operational  team  was  set  up.  Work  is 
ongoing to set up a single electronic database on domestic violence to enable automatic data 
exchange between the Ministry of Interior and social work centres. Some improvement in the 
cooperation between the MoI and CSOs has been reported. However,  implementation of the 
Istanbul  Convention  is  proceeding  slowly,  and  gender-based  violence  remains  a  serious 
concern.  Particular  areas  of  concern  are:  attitudes  towards  victims  of  domestic  violence, 
referrals  of  victims  to  other  forms  of  dispute  resolution,  the  use  of  counselling  as  an 
alternative  to  criminal  complaints,  delays  in  handling  domestic  violence  cases  and  a 
reluctance to issue protection orders. Despite an increase in criminal complaints, lenient penal 
policy and the practice of processing gender-based violence cases as misdemeanour cases risk 
discouraging  victims  to  report  offences.  There  is  little  improvement  in  the  capacity  and 
gender  sensitivity  of  existing  institutions.  Effective  victim  support  services  are  yet  to  be 
provided, along with better and more accessible legal aid. 

Regarding the rights of the child, a working group was set up to monitor the implementation 
of the Strategy for the Prevention and Protection of Children from Violence, and the Ministry 
of  Education  assumed  the  responsibility  for  its  implementation.  Better  coordination  and 

29 

 
 
monitoring  of  policies  concerning  children  is  needed.  The  institutional  response  needs  to 
become more proactive, and should be accompanied by harmonised data collection among the 
child rights monitoring bodies, as well as additional financial resources. More efforts are also 
necessary to address forced child marriages and child begging, which affect mostly the Roma 
community, as well as overall violence against children. The treatment of juveniles in prisons 
also calls for improvement. The very low number of reported cases of sexual violence against 
children  raises  concerns  about  underreporting  and  identification  of  victims.  The  de-
institutionalisation  process  continues  slowly,  and  needs  to  be  accelerated  and  supported  by 
alternative services, including through the strengthening of child protections systems and the 
development  of  foster  care.  The  overall  access  and  quality  of  child  and  social  protection 
services and of inclusive education for children with disabilities should be improved, together 
with the nationwide early detection, intervention and rehabilitation services.    

Little progress was made on the rights of persons with disabilities, including on legislative 
alignment with the UN Convention on the Rights of Persons with Disabilities. Montenegro is 
yet  to  adopt  an  action  plan  to  address  the  recommendations  from  the  UN  Committee  on 
Rights  of  Persons  with  Disabilities.  Amendments  to  the  Law  on  professional  rehabilitation 
were prepared in 2018, but are yet to be adopted. Montenegro needs to ensure adequate and 
transparent  spending  from  the  future  fund  for  professional  rehabilitation.  The  issue  of 
deprivation  of  legal  capacity  remains  to  be  addressed  without  delay,  in  line  with  the  UN 
Convention.  An  adequate  budget  needs  to  be  allocated  to  implement  the  strategic  and  legal 
framework.  De-institutionalisation  of  persons  with  disabilities  and  the  adaptation  of  public 
buildings  to  ensure  access  to  persons  with  disabilities  is  progressing  slowly.  Further  efforts 
are needed to implement the strategies on mental health and de-institutionalisation of mental 
health  patients,  and  relevant  community-based  services  need  to  be  developed.  Likewise, 
Montenegro  needs  to  further  improve  the  consultation  mechanisms  for  persons  with 
disabilities and their representative organisations.   

On  the  rights  of  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons, 
cooperation between civil society, the government and police remains constructive. The Law 
on civil partnership is currently awaiting adoption in Parliament. The national LGBTI strategy 
(2013-2018) expired, but a significant portion of the planned activities were not completed. A 
new national  LGBTI  strategy is  under preparation;  its implementation  will require adequate 
budgetary  allocations,  ownership  and  genuine  and  constructive  consultations  with  CSOs.  In 
November 2018, the national pride parade took place in Podgorica without incidents and in an 
overall peaceful atmosphere. Despite existing legislation providing for protection on grounds 
of sexual orientation and gender identity, the number of reported cases of hate crime and hate 
speech  towards  LGBTI  persons  is  increasing  and  prosecution  of  these  crimes  remain 
insufficient.  Overall,  acceptance  of  sexual  diversity  is  advancing  at  a  slow  pace.  Continued 
and proactive efforts are necessary to ensure full and effective implementation of the existing 
legal and policy framework.  

In  the  field  of  procedural  rights,  substantial  efforts  are  needed  along  with  sufficient 
budgetary  allocations  to  ensure  full  alignment  with  the  EU  acquis  and  European  standards, 
notably  on  rights  for  suspects  and  accused  persons  in  criminal  proceedings  (including  the 
right  to  information  and  the  right  of  access  to  a  lawyer),  as  well  as  on  victims'  rights. 
Dissemination  of  information  on  free  legal  aid  has  begun,  but  deficiencies  in  terms  of 
awareness and accessibility remain, also with regard to children and other vulnerable groups. 
Concerns  still  persist  regarding  the  effective  application  of  the  ECtHR  case-law  in  cases  of 
prolonged pre-trial detention. 

Little progress was made on minority rights. The 2017 Law on the rights of minorities is yet 
to be implemented, despite the existence of secondary legislation. In accordance with this law, 

30 

 
 
Montenegro needs to eliminate the risk of conflict of interest in the process of allocating funds 
to  minorities.  Parliament  is  in  the  process  of  appointing  members  of  the  independent 
commission  for  evaluation  of  projects  funded  from  the  minority  fund.  However,  there  are 
concerns  regarding  the  qualifications  of  some  of  the  proposed  candidates.  Ethnically 
disaggregated  data  is  not  systematically  collected  in  the  country.  In  April  2019,  the 
Government  condemned  an  ethnically  motivated  attack  on  a  member  of  Croat  national 
minority.   

Despite  some  progress,  particularly  on  access  to  health  and  housing  of  IDPs,  Roma  and 
Egyptians, especially domicile Roma and Egyptians, still face limited access to opportunities 
in  various areas  of life,  with  women being subject  to  double discrimination.  The budget  for 
the  2016-2020  strategy  for  social  inclusion  of  Roma  and  Egyptians  remains  insufficient  to 
achieve  its  objectives.  Almost  all  marginalised  Roma  and  Egyptians  in  Montenegro  (94%) 
face severe material deprivation, compared to 49% of non-Roma living in the vicinity.  

There has been an increase in the enrolment of Roma and Egyptian pupils at pre-school and 
compulsory levels, but not in the completion rate. Both enrolment (62%) and completion rates 
(34%)  for  compulsory  education  remain  the  lowest  in  the  Western  Balkans.  A  number  of 
positive  measures  have  been  implemented,  notably  the  appointment  of  Roma  education 
mediators, with 18 mediators hired from the 2018/19 school year. A system for identification 
of  early  dropout  risks  is  now  in  place  and  a  protocol  for  prevention  and  action  upon  early 
school leaving has been adopted. Insufficient attention is given to adult education. In spite of 
active employment measures, the employment rate among marginalised Roma and Egyptians 
was  only  15%  in  2017,  versus  38%  among  non-Roma  living  in  their  vicinity.  Informal 
employment  continues  to  be  high  and  a  negative  trend  can  be  seen  compared  to  2011  data. 
The  great  majority  of  marginalised  Roma  and  Egyptians  have  health  insurance  coverage, 
although there has been an increase in  the gap with respect  to  non-Roma neighbours. Three 
Roma health mediators are employed in state-run health centres. 

Some  Roma  and  Egyptians  benefited  from  housing  solutions  through  the  Regional  Housing 
Programme  and  the  programme  for  identifying  durable  solutions  for  residents  in  the  Konik 
camp.  However,  a  gap  remains  compared  to  non-Roma  neighbours  when  it  comes  to 
overcrowding and access to public services. The authorities should address improving housing 
conditions  of  domicile  Roma  and  Egyptians  in  a  dynamic  and  positive  way,  addressing  the 
risk  of  eviction  and  further  facilitating  the  legalisation  process.  Possession  of  civil 
documentation  among  marginalised  Roma  and  Egyptians  is  on  the  rise,  with  about  96% 
having birth certificates and 83% of those aged 16 and above a national  ID card. There is a 
lack of a systemic solution and institutional response to child begging and early marriage risks 
among Roma children.  

Regarding  displaced  and  internally  displaced  people,  a  total  of  15  197  requests  for 
permanent or temporary residence have been submitted, of which 14 956 have been resolved. 
12 308  persons  were  granted  permanent  residence  and  615  persons  granted  temporary 
residence, while 2 365 requests were dismissed due to incomplete or double applications.  

Related to statelessness, birth registration of children abandoned by their mothers remains a 
challenge,  as  the  Ministry  of  Interior  does  not  register  children  in  such  circumstances.  The 
adoption  of  the  new  Law  on  foreigners  in  February  2018  represented  a  major  positive 
development,  introducing  a  statelessness  determination  procedure.  The  new  procedure  and 
legal status have been further defined by means of relevant secondary legislation adopted in 
November 2018. 

On  citizens’  rights,  in  November  2018  the  government  adopted  a  decision  introducing  a 
citizenship by investment scheme. The decision specifies the criteria, method and procedures 

31 

 
 
for the selection of investors who could obtain Montenegrin citizenship. The programme was 
launched  in  January  2019.  Montenegro  should  put  in  place  robust  monitoring  systems  to 
counter  the  risks  posed  by  such  schemes,  in  particular  to  counter  security  risks,  money 
laundering, tax evasion, terrorist financing, corruption and infiltration of organised crime. As 
a  candidate  country,  Montenegro  should  refrain  from  any  measure  that  could  jeopardise 
attainment of the EU's objectives, when using its prerogatives to award nationality. 

2.2.2  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 apply the acquis and European standards in this area. 
The  legislative  and  institutional  frameworks  are  now  largely  in  place.  Some  progress  was 
achieved  in  addressing  last  year’s  recommendations,  in  particular  as  regards  improving 
capacity to deal with migration flows and improving cooperation with neighbouring countries 
on border management issues.  

Progress  was  achieved  also  in  judicial  cooperation,  in  some  areas  of  the  fight  against 
organised  crime,  where  until  recently  there  was  a  standstill.  Montenegro  has  developed  an 
initial track record on investigations into money laundering, of financial investigations and of 
temporary  seizures  of  criminal  assets.  The  enhanced  international  police  cooperation  is 
bringing results, as illustrated by a number of high-profile international operations, arrests and 
drug seizures.  

Further results are needed to produce a convincing track record on the more complex types of 
organised  crimes  where  local  vested  interests  are  at  stake,  including  in  money  laundering, 
trafficking in human beings and tobacco smuggling, as well as in the confiscation of proceeds 
of crime.  

In the coming year, Montenegro should in particular: 

  adopt standard operating procedures on conducting financial investigations when dealing 
with organised crime, terrorism, money laundering and serious corruption cases, and take 
concrete  steps  to  ensure  that  financial  investigations  are  automatically  started  together 
with the criminal investigations;  

  take concrete measures to limit the use of plea bargains to exceptional cases, in order to 
enhance  the  transparency  and  the  credibility  of  the  judicial  response  to  organised  crime 
through a more deterrent and consistent sanctioning policy; 

  further strengthen the capacity to deal with mixed migration flows and the integration of 
refugees;  continue  to  increase  human  and  material  resources  devoted  to  border 
management and the migrant registration system.  

Montenegro is implementing a detailed action plan, which was adopted prior to the opening of 
the accession negotiations on this chapter in December 2013. 

Fight against organised crime  

Montenegro  has  some  level  of  preparation  in  the  fight  against  organised  crime.  Some 
progress  was  made  in  addressing  last  year’s  recommendations.  The  fight  against  organised 
crime is showing better results than in preceding years, partly due to the strengthened police 
cooperation with EU Member States. However, Montenegro has yet to establish a convincing 
track record on final convictions, in particular in the fight against trafficking in human beings, 
money laundering, tobacco smuggling and to increase the number of final asset confiscations.  

32 

 
 
In the coming year, Montenegro should in particular: 

  prioritise  the  confiscation  of  proceeds  of  crime,  including  through  firm  political  support 
and  by  raising  public  awareness  about  the  importance  of  confiscating  the  proceeds  of 
crime. Establish an integrated operational approach with all bodies  involved and provide 
them  with  the  necessary  legal  and  operational  tools  to  create  the  conditions  for 
establishing a convincing track record;  

  improve  the  efficiency  of  financial  investigations  by  updating  the  land  register  and  by 
working  on  the  establishment  of  a  centralised  bank  account  register,  in  line  with  the 
provisions of the 5th EU Money Laundering Directive; 

  take the appropriate legal measures to initiate the reform of the police, in order to raise its 
level of professionalism, including by ensuring a centralised, transparent and merit-based 
recruitment process, and by attracting  staff of the relevant level. 

Institutional set-up and legal alignment 

The total number of police officers increased to 4 123 (compared with 3 940 last year). This 
does  not  include  the  border  police  officers,  who  account  for  1  277.  There  are  662  police 
officers per 100 000 inhabitants, compared with the EU average of 318 in 2016 according to 
Eurostat. Key institutions in the fight against organised crime include the Special Police Unit 
(SPU) reporting directly to the Special Prosecutor’s Office (SPO). The SPU human resources 
were substantially increased by almost 50%, up to 29 staff members. In the SPO, 35 out of the 
37 positions are filled, including 11 special prosecutors, while two additional prosecutors are 
temporarily  seconded  to  the  SPO.  The  poor  office  conditions  of  the  SPO  have  yet  to  be 
addressed. Good cooperation between the SPU and the SPO continued. 

The police sector underwent  significant  institutional  changes.  In December 2018, the Police 
Directorate was changed into a separate entity from the Ministry of Interior. At the same time, 
the  Administration  for  the  Prevention  of  Money  Laundering  (until  now  an  independent 
administration)  was  transferred  to  the  Police  Directorate.  Other  measures  that  should  have 
been  part  of  the  police  reform  process,  such  as  merit-based  recruitment,  evaluation, 
promotion,  and  the  placing  of  the  Police  Academy  under  the  authority  of  the  Ministry  of 
Interior,  were  again  postponed,  even  though  they  had  been  under  discussion  for  over  two 
years.  Since  February  2018,  the  police  has  a  specialised  department  for  the  fight  against 
human trafficking, smuggling and irregular migration, which has now eight staff members. 

Montenegro  has  an  asset  management  office  (AMO)  under  the  Ministry  of  Property 
Administration.  An  asset  recovery  office  (ARO)  was  established  in  early  2019  within  the 
department of the police responsible for international police cooperation. It serves as a contact 
point  for  international  information  exchange  and  processes  the  incoming  requests  from 
foreign  AROs.  The  establishment  of  a  fully-fledged  ARO,  as  required  by  the  EU  acquis, 
beyond  the  processing  of  foreign  information  requests,  is  key  to  effectively  identifying, 
tracing  and  recovering  assets  frozen  before  confiscation  and  preserving  their  value  pending 
judicial determination. 

The  legal  framework  for  the  fight  against  organised  crime  is  largely  in  place  and  aligned 
with EU acquis. To comply with the recommendations of the Council of Europe’s Committee 
of  experts  on  the  evaluation  of  anti-money  laundering  measures  and  financing  of  terrorism 
(MONEYVAL), amendments were adopted in June and July 2018 respectively to the Law on 
the prevention of money laundering and terrorism financing, and to the Law on international 
restrictive measures. An amendment to the Law on the seizure and confiscation of assets was 

33 

 
 
also  adopted  by  the  government  in  early  2019,  aiming  to  facilitate  the  launch  of  financial 
investigations. 

Montenegro has a comprehensive strategic framework on the fight against organised crime. 
However,  several  relevant  strategies,  such  as  the  strategy  for  prevention  and  suppression  of 
terrorism,  money  laundering  and  financing  of  terrorism,  expired  during  2018,  and  their 
replacements  have  not  yet  been  adopted.  Montenegro  should  systematically  monitor  and 
assess the impact  of old  strategies prior to  adopting new ones in  line with  new rules on the 
development,  drafting,  monitoring  and  evaluation  of  strategic  planning  documents,  which 
came into force in  August  2018. New strategies  should also  refer to  alignment with  the EU 
acquis and address the recommendations of relevant Member States’ expert reports.    

Implementation and enforcement capacity 

As regards the track record, according to the national 2018-19 SOCTA (serious and organised 
crime threat assessment), since 2013 the number of organised criminal groups in Montenegro 
has been reduced from 20 to 11. Nevertheless, criminal activities continued to lead to frequent 
gang-related murders (7 in 2018, compared with 10 in 2017). These were mostly committed 
in  daytime  in  city  centres,  and  involved  either  shootings  or  car  explosions.  One  suspected 
Montenegrin  crime  group  member  was  shot  dead  in  a  restaurant  in  the  centre  of  Vienna  in 
January 2019. 

In  2018,  13  new  investigations  for  organised  crime-related  offences  were  launched  by  the 
SPO  against  262  individuals.  In  addition,  186  new  investigations  for  serious  crime-related 
offences  were  launched  by  high  and  basic  prosecutor’s  offices,  mostly  related  to  drug 
smuggling.  A  total  of  207  indictments  were  filed  against  289  individuals  for  organised  and 
serious crime offences, and 33 sentences were imposed based on plea agreements in organised 
crime cases. The systematic use of plea bargains creates a sense of impunity and hampers the 
credibility  of  the  justice  system.  There  is  an  urgent  need  to  address  the  gap  between  the 
sentencing  regime  applied  (including  limited  asset  confiscation)  and  the  seriousness  of  the 
crimes tried.  

In  2018  Montenegro  made  good  progress  in  international  police  cooperation.  This  is  a  key 
step in the fight against Montenegrin organised crime groups, as most of their members live, 
operate  and  launder  money  outside  Montenegro.  Cooperation  with  foreign  police  services, 
including  from  EU  Member  States,  was  intensified  with  the  support  of  EU  technical 
assistance,  and  led  to  an  unprecedented  number  of  successful  operations.  38  members  of 
organised crime groups, including several leaders, were arrested in 2018 either in Montenegro 
or  abroad,  thanks  to  police  cooperation  with  Bulgaria,  France,  Slovenia,  Italy,  Croatia, 
Czechia,  Germany,  Austria,  Portugal,  Spain,  Croatia,  Serbia,  Kosovo,  Turkey  and 
Switzerland. Investigations on prominent cases are ongoing with other Member States as well. 
The close cooperation between Italian and Montenegrin police has led to one of the biggest 
drug  seizures  in  recent  history.  Thanks  to  specific  intelligence  from  Montenegrin  police,  in 
July  2018  Italian  police  seized  20  tonnes  of  cannabis  worth  EUR  200  million  from  a 
Panamanian-flagged  ship  in  the  Mediterranean  Sea  and  arrested  the  crew  composed  of  11 
Montenegrin citizens. 

Montenegro also cooperates with Interpol and Europol, including through its participation in 
in  analytical  work  programmes  (e.g.  the  ‘Smoke’,  ‘Cannabis’,  ‘Cola’,  ‘Sustrans’  and 
‘Travellers’  programmes).  In  2018,  Montenegro  participated  in  the  annual  planning  of 

 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. 

34 

 
 
                                                 
operational  actions  under  the  European  Multidisciplinary  Platform  against  Criminal  Threats 
(EMPACT)  on  facilitation  of  irregular  migration.  It  committed  itself  to  participate  in  three 
operational  actions  together with  EU Member States to  combat migrant  smuggling in  2019. 
The Schengen  Information System is incorporated into the national database and the Secure 
Information Exchange Network Application (SIENA) is used as a national case management 
application for automatic communication with Europol. In 2018, 4 447 pieces of information 
were  exchanged  through  Europol  (compared  with  2  795  in  2017),  and  46  406  through 
Interpol.  Montenegro’s  law  enforcement  agencies  should  make  a  better  use  of  regional 
initiatives,  such  as  the  Joint  Operational  Office  in  Vienna,  and  the  Task  Force  Western 
Balkans, which serves as a regional operational platform for international investigations into 
migrant-smuggling  organised  crime  groups.  Since  the  signature  in  2017  of  an  inter-agency 
agreement  on  the  prevention  of  crime,  law-enforcement  agencies  have  a  secure  channel  of 
communication  with  key  state  institutions,  enabling  mutual  access  to  databases.  The 
agreement  will  need  to  be  revised  to  take  into  account  the  new  institutional  setup.  The 
national  land  registry  and  the  central  bank  still  need  to  join  the  agreement.  Despite  this 
improved  communication,  existing  national  police  databases  are  still  not  interoperable  and 
have no single search feature. Many databases, including the national land register database, 
have insufficient data and need to be updated.  

Montenegro  has  reached  a  good  level  of  preparation  to  implement  the  EU  acquis  on 
international  police  cooperation.  In  May  2018,  Montenegro  became  the  first  candidate 
country to join the EU ISA2 (Interoperability Solutions for European Public Administrations, 
in 
businesses  and  citizens)  programme,  which  allows  Montenegro 
ISA2 activities  and  benefit  from  the  interoperability  solutions  developed  under  the 
programme.  Since  the  signature  in  September  2018  of  the  agreement  on  the  automated 
exchange of  DNA,  fingerprint and vehicle registration data among member countries of the 
Police Cooperation Convention for Southeast Europe (PCC SEE), Montenegro can exchange 
sensitive data with Albania, Bulgaria, Hungary, North Macedonia, Moldova, Romania, Serbia 
and Austria. Technical solutions must however continue to be improved.  

to  participate 

Some  technical,  operational  and  legal  obstacles  continue  to  hamper  the  efficiency  of  the 
police.  Proactive  investigations  based  on  intelligence-led  policing  remain  rare,  compared 
with  those  launched  based  on  signals  received.  The  police  should  act  more  on  its  own 
initiative and prosecutors should delegate more actions to the police. This much-needed shift 
in investigative practice requires a better exchange of data between the local and the central 
levels.  

Seven new financial investigations were launched in relation to organised crime in 2018 and 
the  beginning  of  2019,  compared  with  18  in  2017  and  one  in  2016,  while  10  financial 
investigations were launched in relation to serious crime. Financial investigations are still not 
launched systematically at the beginning of each criminal investigation into organised crime. 
A  more  strategic  and  proactive  approach  must  be  promoted  with  regard  to  financial 
investigations,  going beyond the sole objective of confiscating assets. Training and capacity 
building continued for judges, prosecutors and investigators on financial investigations. The 
absence  of  a  central  bank  account  register  is  slowing  down  financial  investigations  and 
limiting their efficiency. There is also limited capacity to analyse financial data provided by 
banks and financial  institutions and to  feed it into financial investigations. Only 7 orders of 
temporary  asset  confiscation  were  issued  by  the  Special  Prosecutor’s  Office  in  2018 
(compared with 20 in 2017 and 5 in 2016), and affected more than 121 legal entities. Only 1 
conviction led to a final asset confiscation in 2018, compared with 12 in 2017 and 37 in 2016. 
The use of plea bargains as a tool to increase the level of confiscations continued to lead to 
milder  sentences  in  organised  crime  cases,  but  did  not  result  in  a  higher  number  of  final 

35 

 
 
confiscations. There is no national and standardised system for collecting statistics on frozen, 
seized  and  confiscated  assets,  including  their  estimated  value.  Montenegro  should  urgently 
improve  its  track  record  on  final  confiscation  of  the  proceeds  of  crime  as  a  strategic  policy 
priority in the fight against organised crime. 

Montenegro  is  a  party  to  the  Council  of  Europe’s  Budapest  Convention  on  cybercrime, 
which  is  largely  transposed  in  the  national  legislation.  A  new  cybersecurity  strategy, 
encompassing a component on cybercrime, was adopted in December 2018. However, there is 
no separated strategy on the fight against cybercrime. Ten new investigations were launched 
in  relation  to  cybercrime  in  2018,  leading  to  10  indictments.  With  the  recruitment  of  an 
additional  staff  member,  there  are  now  two  police  officers  in  charge  of  the  fight  against 
cybercrime  in  the  relevant  police  service,  which  is  far  too  low  considering  the  risk  factors. 
Montenegro’s administrative capacities to fight cybercrime and cyber-enabled crime must be 
addressed as a matter of priority. 

The  legal  and  institutional  framework  for  trafficking  in human  beings  is  in  place.  For  the 
first time, in five years, a first-instance court decision was issued in a trafficking case with the 
two  defendants  being  sentenced  to  a  prison  sentence  of  17  and  15  years  respectively.  The 
number of on-going investigations rose to three, involving five potential victims. In addition, 
four cases involving nine potential victims, of which four are children, are under preliminary 
investigation.  However,  the  cases  are  not  related  to  organised  crime  and  no  important 
trafficking rings has been uncovered in recent years, despite objective risk factors. Training, 
prevention  and  awareness-raising  activities  took  place.  A  new  2019-24  strategy  and  annual 
action plan were adopted in early 2019, reflecting a stronger awareness of the risk factors in 
the  country  and  aiming  at  strengthening  the  efficiency  of  law-enforcement  agencies  in  the 
detection  and  prosecution  of  trafficking  cases.  Risk  assessment  and  proactive  investigations 
must  become  general  practices  in  this  area,  as  no  signal  or  complaint  from  victims  can  be 
expected due to the nature of the crime. A good step in this direction was the creation of an 
anti-trafficking  task  force  in  December  2018,  bringing  together  representatives  of  the 
Ministries of Justice and Interior, the police and the prosecution service. The Podgorica High 
Prosecutor’s  Office  established  a  supervision  mechanism  over  cases  prosecuted  at  lower 
judicial  level  for  other  offenses  such  as  prostitution  and  child  begging  to  detect  potential 
human trafficking elements in these cases. Montenegro is yet to demonstrate that it is capable 
of establishing a solid track record in this area.  

An  initial  track  record  of  investigations  in  the  fight  against  money  laundering  is  being 
developed, but did not result in any conviction so far.  One investigation and 16 preliminary 
investigations  were  launched  in  2018,  in  which  money  laundering  is  prosecuted  as  a 
stand-alone  crime  –  this  is  a  long-standing  policy  recommendation.  More  than  EUR  63.7 
million were temporarily seized in relation to these cases, including EUR 62.7 million in the 
‘Atlas  bank’  case,  involving  79  people  and  95  companies.  Strengthened  police  cooperation 
with  EU  Member  States  (e.g.  Cyprus)  has  substantially  improved  the  effectiveness  of 
investigations in this area. However, the economic expertise within the police and prosecution 
is still insufficient. More systematic specialised training is needed for judges who are called to 
rule on complex crimes with important financial implications. 

Montenegro continued to  participate in  the implementation of the  2015-2019 action plan on 
illicit  trafficking  on  firearms  between  the  EU  and  the  South  East  Europe  region.  The 
strategy  for  control  and  reduction  of  small  arms  and  light  weapons  and  ammunition  was 
adopted in December 2018. The function of a national focal point on firearms will be fulfilled 
by  a  centre  of  expertise  on  firearms  within  the  police.  The  centre  will  have  a  staff  of  four 
specialists providing analytical support to law enforcement bodies and will have responsibility 
for international cooperation. The process of training and equipping of the centre is ongoing. 

36 

 
 
the  European 
Montenegro  participates 
multidisciplinary  platform  against  criminal  threats  (EMPACT)  on  firearms.  Despite  the 
success of several initiatives and significant seizures of arms in 2018, firearms are still widely 
available in the country.  

in  Europol  operational  activities  within 

Montenegro is still perceived as a regional platform for cigarette smuggling and as an entry 
point to the EU market. In 2018, there was an increase in illicit tobacco seizures, up to 11,500 
cigarette packages with a total value of EUR 11.5 million, leading to several investigations. In 
one prominent case, eight customs officials from the Port of Bar were arrested and are being 
prosecuted for corruption, together with 17 other people. However, no financial investigation 
was launched in relation to this case. The CEO of the main Montenegrin tobacco factory was 
convicted for abuse of office in a cigarette smuggling case, sentenced to 9 months in prison 
and fined EUR 40,000 following a plea bargain, but no financial investigation was conducted 
and no assets were confiscated. Cooperation has improved with EU Member States’ customs 
and the European Antifraud Office (OLAF) in this area, but Montenegro should step up joint 
investigations of the border police, the criminal police and customs. The country should make 
it  a  national  priority  to  establish  a  strategic  response  to  the  vulnerability  of  the  Port  of  Bar 
Free  Zone,  including  the  risk  of  political  interference  in  the  work  of  law-enforcement 
agencies and the infiltration of criminal interests into the local chains of command.  

On  witness  protection,  protection  measures  were  undertaken  in  relation  to  47  people,  of 
which 45 were requested by partner countries, including 44 relating to war crime cases. 

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

Cooperation in the field of drugs 

Institutional setup and legal alignment  

The legal, institutional and strategic frameworks are largely in place. Montenegro continued 
to  implement  its  2013-2020  national  drug  strategy  and  action  plan,  including  by  training 
relevant  staff.  Various  institutions,  such  as  the  National  Drug  Observatory  of  Montenegro, 
nevertheless  remain  understaffed  and  further  steps  are  needed  to  build  up  the  necessary 
capacity  to  effectively  deal  with  the  demand  side  of  drugs.  As  regards  the  supply  side,  the 
Special  Police  Unit  and  the  Criminal  Police  are  both  mandated  to  deal  with  drug-related 
crimes, one of their main priority areas.  

Implementation and enforcement capacity 

Montenegro  remains  an  entry  and  transit  country  for  drugs  to  the  European  market.  Drug 
trafficking  is  by  far  the  main  and  most  profitable  criminal  activity  of  local  organised  crime 
groups, and triggers many other criminal activities, such as homicides, gangs-related murders 
and  traffic  in  firearms.  Montenegrin  organised  crime  groups  are  active  in  the  trafficking  of 
cannabis, heroin and cocaine, and they have direct  links to  crime groups  in  South  America, 
which  gives  them  a  dominant  position  for  the  supply  of  cocaine  to  Europe.  They  operate 
largely  outside  Montenegro,  including  in  EU  countries,  although  local  trafficking  and 
consumption also exist.  

The number of new investigations into cases of drug smuggling rose to 155 in 2018, of which 
5 qualifying for organised crime and 150 for serious crime. Some 177 criminal charges were 
filed against 249 people. The amount of drug seizures continued to grow, with 3.3 tonnes of 
drugs seized in 2018, in which marijuana accounted for 3.2 tonnes.  In 87 drug-related court 
decisions,  the  sentence  imposed  was  based  on  a  plea  agreement.  Financial  investigations, 
seizure  and  confiscation  of  the  proceeds  of  drug-related  crimes  remain  rare.  The  lack  of 

37 

 
 
secure storage for drugs and drug precursors prior to destruction remains an issue of concern. 
According  to  current  legislation,  it  is  not  possible  to  keep  only  a  small  sample  as  material 
evidence for court proceedings, instead of the entire seized quantity. An appropriate process 
for the destruction of precursors has yet to be set up.  

International  police  cooperation  on  drugs-related  cases,  including  via  Europol  and  Interpol, 
increased  significantly  during  the  reporting  period,  as  illustrated  by  the  large  amount  of 
information exchanged and operational meetings held on drug-related cases. The Montenegrin 
police is an active member of Europol Balkan Kartel project. Montenegro participated in four 
multi-country  police  operations  involving  also  Austria,  Slovenia,  Croatia,  Italy,  Germany, 
France, the US, Australia, Albania, Serbia. 

Little  progress  was  made  on  strengthening  the  national  drug  information  system  on  new 
psychoactive  substances  in  line  with  the  European  Monitoring  Centre  for  Drugs  and  Drug 
Addiction (EMCDDA) standards. In 2018, Montenegro reported one first-time detection of a 
new  psychoactive  substance  in  its  territory.  However,  its  national  early  warning  system 
requires  further  strengthening.  Data  collection  on  drugs  remains  fragmented  and  is  not 
centralised.  Montenegro  should also  improve its coordination at  national  level  by: (i) hiring 
more  staff  and  giving  them  improved  training;  (ii)  creating  a  routine  system  for  data 
collection  and  increasing  the  exchange  of  information;  (iii)  preparing  a  country  drug  report 
giving  an  overview  of  the  drug  situation  in  the  country.  The  recommendations  from  a  July 
2018 report from the EMCDDA have not been addressed yet. 

Fight against terrorism 

Institutional setup and legal alignment 

Montenegro’s  legal  framework  is  largely  aligned  with  the  EU  acquis  and  international 
instruments  on  anti-terrorism.  The  Laws  on  prevention  of  money  laundering  and  terrorism 
financing  and  on  international  restrictive  measures  were  amended  to  comply  with  the 
Financial  Action  Task  Force  (FATF)  and  Moneyval  recommendations,  but  the  Law  on 
international  restrictive  measures  will  need  further  amendments  to  be  aligned  with  the  EU 
acquis. 

A new strategy for the prevention of terrorism, money laundering and terrorism financing is 
yet to be adopted following the expiration of the previous one, while the strategy to combat 
violent  extremism  is  extended  until  the  end  of  2019.  Montenegro  appointed  a  national 
coordinator  for  countering  violent  extremism.  Montenegro  signed  in  October  2018  the  joint 
action  plan  on  counter-terrorism  for  the  Western  Balkans  setting  out  specific  steps  for 
enhanced cooperation in countering terrorism,  including on money laundering and terrorism 
financing, and preventing radicalisation over the next 2 years.  Montenegro should now work 
on the bilateral follow-up of priority actions. 

Implementation and enforcement capacity 

The number of investigations and prosecutions remains very low in this area. The country has 
been only marginally affected by the phenomenon of radicalisation and foreign fighters so far. 
There is evidence of 26 departures of nationals to the battlefield in Syria since the beginning 
of the conflict, of which seven were killed. Some 10 returnees from Syria were identified, of 
which two were sentenced.  

Preventive monitoring measures for critical infrastructure are being implemented in Podgorica 
and  on  the  coast  during  the  summer  season.  Reconstruction  works  of  three  military 
warehouses  in  Nikšić  and  Pljevlja  were  carried  out  to  modernise  the  storage  conditions  for 
ammunition.  

38 

 
 
The  Ministry  of  Interior  is  cooperating  with  an  NGO  within  the  national  platform  for  the 
prevention  of  violent  extremism  and  radicalisation,  to  develop  awareness-raising  activities; 
including  e-learning  tools.  Further  preventive  anti-radicalisation  activities  are  needed,  also 
involving local authorities and civil society organisations in the prevention of radicalisation at 
local level. Institutional awareness needs to be increased to monitor possible terrorist threats, 
and to develop reintegration measures when radicalised people return.  

Montenegro  is  actively  participating  in  the  implementation  of  the  Western  Balkan  Counter 
Terrorism Initiative (WBCTi). 

Legal and irregular migration 

Institutional setup and legal alignment 

The  legal  framework  was  further  strengthened  with  the  entry  into  force  of  the  new  Law  on 
Foreigners  in  March  2018,  and  the  adoption  of  20  pieces  of  secondary  legislation.  This 
important legal package, largely in line with the EU acquis, regulates key aspects of legal and 
irregular migration. The Law introduced important new features, such as laying down rules on 
stateless status and introducing a definition of assisted voluntary return.  

In addition to its 13 existing implementing protocols on readmission with EU Member States, 
Montenegro  signed  an  implementing  protocol  with  Spain  in  December  2018  and  is  holding 
negotiations  with  Greece.  Montenegro  also  expressed  interest  in  negotiating  implementing 
protocols  with  France,  Sweden,  Denmark,  Finland,  Cyprus,  Poland,  Portugal,  Romania, 
Lithuania and Latvia.  

Montenegro  has  10  readmission  agreements  with  non-EU  countries  (including  all  its 
neighbouring  countries,  North  Macedonia  and  Turkey)  and  is  holding  negotiations  with 
Iceland and China. 

Implementation and enforcement capacity    

As regards legal migration, Montenegro delivered 15 543 resident permits in 2018, including 
1 540  for  long  stays.  Montenegro  is  an  attractive  country  for  labour  migration.  It  receives 
seasonal  workers,  mainly  from  Western  Balkans  countries,  in  its  tourism  and  construction 
sectors  during  the  summer.  Procedures  for  requesting  work  permits  were  simplified.  Some 
26 327  work  permits  were  delivered  in  2018,  a  25%  increase  compared  with  2017,  but  the 
number of foreign workers without permits is believed to be much higher. Supervision of the 
private sector should be strengthened to avoid exploitation on the black labour market.  

In 2018, Montenegro was hit by a sharp surge in irregular migration, due to the partial shift of 
regional  migration  flows  towards  the  ‘coastal  route’  (Albania,  Montenegro  and  Bosnia  and 
Herzegovina).  Montenegrin  authorities  apprehended  4  753  irregular  migrants  (a  460% 
increase  compared  with  2017),  which  put  the  country’s  reception  and  administrative 
capacities under pressure. Montenegrin authorities prevented 594 illegal entries to the country 
and  715  illegal  exits  from  the  country.  There  were  three  new  investigations  into  migrant 
smuggling,  often  conducted  in  cooperation  with  partner  countries’  police  services.  Assisted 
voluntary  returns  increased  to  34,  but  they  were  handled  by  international  organisations  and 
financed by the EU.  

The burden on Montenegro’s reception facilities was increased by secondary movements, in 
particular those created by readmissions from Bosnia and Herzegovina. Montenegro accepted 
to  readmit  730  third  country  nationals  from  neighbouring  countries  in  2018,  of  which  704 
from Bosnia and Herzegovina. However, it was able to return only 36 third country nationals 
to Albania, although Albania remains the main entry point to Montenegro. Efforts to improve 

39 

 
 
bilateral  cooperation  with  Albanian  authorities must continue to  improve  implementation  of 
the bilateral readmission agreement and harmonisation of data collection systems.  

Construction works for an open migration centre in Božaj, close to the Albanian border, are 
planned for 2020, with EU financial support. As a temporary solution, a container settlement 
was established on the same site, also with EU support, creating a reception capacity for 60 
people.  Although  the  border  police  collects  migrants’  fingerprints  on  paper,  the  lack  of 
resources  have  prevented  so  far  the  establishment  of  an  electronic  fingerprint  registration 
system at the border. 

The  readmission  agreement  with  the  EU  continued  to  be  implemented  smoothly  regarding 
Montenegrin  nationals,  with  the  number  of  readmission  requests  from  EU  Member  States 
continuing to decrease. According to Montenegrin authorities, Montenegro accepted 100% of 
readmission requests concerning Montenegrin nationals, or 402 individuals. However, 93% of 
the requests regarding non-Montenegrin nationals were refused, mostly regarding members of 
the Roma community with an invalid passport from the former Yugoslavia who did not meet 
the conditions for readmission according to the Montenegrin authorities.  

Montenegro must continue its efforts to cope with migratory pressure and increase its national 
capacity  to  do  so.  Voluntary  return  mechanisms  should  be  established  and  bilateral 
readmission  agreements  with  main  source  countries  of  irregular  migrants  (such  as  Pakistan, 
Iraq,  Iran,  Morocco,  Algeria)  concluded.  In  the  fight  against  migrant  smuggling,  law 
enforcement  agencies  should  continue  to  use  regional  initiatives  and  to  participate  in  joint 
investigation  teams  with  other  countries.  Setting  up  an  electronic  fingerprint  registration 
system  at  the  border  would  substantially  improve  collection,  management  and  sharing  of 
migration data. 

Asylum 

Institutional set-up and legal alignment 

With  the  adoption  of  the  secondary  legislation  for  the  Law  on  asylum,  Montenegro  is  now 
equipped with a largely EU-compliant legal framework. The Decree on financial assistance to 
people under international protection provides for monthly payments of financial assistance to 
refugees and a single payment to asylum seekers. The role of the Ministry of Interior has been 
strengthened,  including  a  coordinating  role  for  the  integration  of  people  under  international 
protection,  and  the  provision  of  financial  assistance.  A  database  of  people  granted 
international  protection  is  being  developed  with  the  aim  of  tracing  the  public  services 
delivered.  

Despite  the  continuous  training  delivered  in  2018,  migration  management  capacities  remain 
limited,  which  often  results  in  overstretching  the  system.  Civil  servants  have  limited 
opportunities to gain operational experience in status determination or integration, as most of 
the  asylum  applicants  leave  the  country  before  the  end  of  the  procedure.  An  information 
document  for  asylum  seekers  explaining  the  application  procedure  in  seven  languages, 
developed  with  EU  and  UNHCR  support,  is  distributed  at  border  points.  The  brochure  on 
‘rights and obligation of beneficiaries of international protection’ was finalised and published. 

Implementation and enforcement capacity 

In  2018,  Montenegro  demonstrated  its  resilience  and  commitment  to  address  several 
migratory challenges at the same time. It adapted to a sharp surge in numbers at a time when 
rules  and  procedures  were  becoming  qualitatively  more  demanding.  As  most  detected 
irregular migrants requested asylum, the upward trend in irregular migration was reflected in 
a proportional increase of asylum requests. Some 4 570 people declared their intention to seek 

40 

 
 
asylum,  3  127  of  which  subsequently  lodged  an  asylum  request.  This  represents  a  268% 
increase  compared  with  2017,  and  9%  of  applicants  were  accompanied  children  (compared 
with  6%  in  2017).  Syrians,  Pakistanis,  Algerians,  Iraqis  and  Moroccans  together  made  up 
83% of all declared nationalities. In 96% of processed cases, the applicants absconded. A total 
of 14 applicants were granted a protection status in 2018, which brings to 75 the total number 
of positive decisions in Montenegro since the asylum system was set up. However, only a few 
are still in the country.  

The Administrative Court, which is now in charge of the asylum appeal procedure, processed 
28  appeals  against  negative  decisions  of  the  Asylum  Office.  However,  in  several  cases  the 
applicants also absconded before the end of the appeal procedure. 

The reception capacity stands now at 304 beds in total, including 104 in the centre for asylum 
seekers  and  200  in  the  alternative  facility.  In  addition,  25  non-accompanied  minors  can  be 
accommodated in a specialised centre, which is, however, a closed facility primarily used for 
minors  in  conflict  with  the  law.  There  are  hardly  any  cases  of  non-accompanied  minors  in 
Montenegro.  Between  January  and  September  2018,  4  570  people  were  accommodated  in 
these facilities, mainly  for short stays of one  week. On  average the number of people to be 
accommodated was between 130-140 a day. The costs incurred by the state budget for asylum 
exceeded  EUR  1  million  and  represented  a  five-fold  increase  compared  with  2017.  The 
country’s capacity can still not be considered as sufficient, as long as the alternative facility 
does  not  offer  appropriate  standards  of  accommodation  and  access  to  services.  The 
government  is  therefore  considering  alternatives  to  further  increase  capacity  at  the  main 
centre  for  asylum  seekers.  The  integration  of  people  granted  international  protection 
continued  to  rely  on  external  assistance,  as  there  was  no  domestic  financial  support  for  the 
integration policy. 

Efforts  should  be  continued  to  further  enhance  reception  and  operational  capacities. 
Modernising  the  data  collection  tools  would  prevent  double  registration  of  migrants  in  the 
asylum  system  following  secondary  movements,  as  re-entry,  subsequent  applications  or 
further  representations  have  to  be  correctly  registered  in  line  with  the  relevant  EU  asylum 
rules.  Better  inter-ministerial  coordination  and  more  involvement  of  the  social  ministries  in 
the integration phase are necessary for the country’s asylum policy to reach its full potential.  

Visa policy 

Montenegro continued to align its visa policy with the EU acquis, adding Georgia to the list 
of  countries  benefiting  from  a  visa-free  regime.  There  are  now  23  countries  from  the  EU 
visa-free list for which short-term visa requirements are waived by Montenegro.  

However, Montenegro still exempts nationals from Russia, Armenia, Kazakhstan, Azerbaijan, 
Belarus, Cuba, Ecuador, Kuwait and Turkey from short-term visa requirements – either on a 
seasonal  basis  for  tourism  purposes  or  permanently.  Seasonal  visa  exemption  measures  are 
not  in  line  with  the  EU  acquis,  and  these  countries  are  on  the  EU  list  of  countries  whose 
citizens require a visa for the EU. Montenegro should take concrete steps to fully align its visa 
policy  with  the  EU  visa  policy.  Between  1  January  and  20  October  2018,  four  visas  were 
issued  at  border  crossing  points  for  urgent  or  humanitarian  reasons,  under  conditions  that 
were in line with the acquis. 

There are now 24 consular missions of Montenegro connected to the national visa information 
system  and  6  more  are  expected  to  be  connected  in  2019.  An  internet  portal  for  requesting 
Montenegrin visas online was created and connected to the national visa information system.  

41 

 
 
Under  the  post-visa-liberalisation  process,  Montenegro  continued  to  implement  the  relevant 
measures  to  prevent  the  abuse  of  the  visa-free  regime  with  the  EU  and  reported  on  it  on  a 
monthly basis.   

Increased  attention  is  required  for  successful  reintegration  of  returnees,  especially  the  most 
vulnerable  such  as  Roma  and  Egyptians.  Enhanced  coordination  is  needed  between  the 
government, local authorities, international organisations and NGOs. 

Schengen and external borders 

Institutional set-up and legal alignment 

The  border  police,  a  structure  within  the  Ministry  of  Interior,  is  responsible  for  the 
management  of  Montenegro’s  borders.  Montenegro  has  some  level  of  preparation  on 
Schengen  and  external  borders.  The  legislative  framework  was  further  aligned  with  the  EU 
acquis with the adoption of amendments to the Law on border control in November 2018. The 
strategy  on  Integrated  Border  Management  (IBM)  expired  in  2018  but  its  duration  was 
extended  by  one  year,  to  ensure  that  the  drafting  of  the  new  IBM  strategy  2019-2024  takes 
into account the new EU IBM concept.  

The  amendments  to  the  Law  on  internal  affairs  in  December  2018  paves  the  way  for  the 
creation of a national coordination centre (NCC). The establishment of the centre is crucial to 
improve  situational  awareness,  risk  assessment  capacity  and  the  ability  to  respond  to  crises 
and coordinate with neighbouring countries.   

Implementation and enforcement capacity 

Montenegro continued to strengthen its capacity in border management via numerous training 
activities,  TAIEX  support,  and  the  purchase  of  equipment  and  vehicles.  The  mobile  unit  is 
now  operational.  Some  115  forged  documents  were  seized,  reflecting  a  stronger  detection 
capacity at the borders. In total, 1309 illegal border crossings were prevented. 

The  material  and  human  resources  in  the  border  police  remain  nevertheless  insufficient  to 
cope with the challenges. The number of border police staff is 1 277, and 150 work positions 
are still to be filled. According to the Schengen action plan, around 600 more border police 
officers  would  be  needed.  Montenegro’s  temporary  response  in  August  2018  was  to  deploy 
military  personnel  in  support  to  the  border  police  for  patrols  on  the  Montenegrin-Albanian 
border, the main entry point for irregular migration. 

Cooperation with neighbouring countries at technical level remains good, with continued joint 
patrols.  A  new  joint  border  crossing  point  with  Albania  (Ckla-Zogai)  was  opened  in  July 
2018,  and  several  protocols  and  agreements  were  signed.  Border  cooperation  with  Serbia 
progressed  significantly  with  the  signature  in  August  2018  of  nine  bilateral  agreements 
concerning several international border crossing points and joint border crossing points. There 
was  no  progress,  however,  on  the  closure  of  the  87  roads  crossing  the  border  with  Serbia 
without  any  official  border  crossing  points.  Both  regional  centres  for  police  cooperation  in 
Trebinje and Plav are operational. The border demarcation agreement with Kosovo came into 
force in June 2018. 

However,  at  land  and  sea  borders  the  situational  awareness  and  reaction  capability  remain 
insufficient.  Most  of  the  current  border  crossing  points  are  still  too  small  and  not  fully 
compliant  with  Schengen  requirements.  Montenegro  continues  to  face  significant  technical 
shortcomings as regards electronic surveillance, in particular at the border with Albania. More 
financial  resources  need  to  be  devoted  to  modernising  border  infrastructure.  Border  police 
participation  in  combating  and  investigating  cross-border  crime  should  be  intensified.  The 
Advance  Passengers’  Information  system  and  carriers’  liability  (including  imposing  fines) 

42 

 
 
should  be  put  in  place.  Cooperation  with  Adriatic  Sea  countries  should  be  further 
strengthened,  to  address  the  challenges  of  this  high-risk  zone  for  cross-border  crime,  in 
particular drug and cigarette smuggling. 

Montenegro continued to cooperate smoothly with Europol, Interpol and the European Border 
and  Coast  Guard  Agency  on  countering  cross-border  criminal  activities.  The  Status 
Agreement  with  the  EU  for  deploying  European  Border  and  Coast  Guard  teams  with 
executive  powers  to  Montenegro  was  initialled  in  February  2019.  Montenegro  actively 
participated in the Western Balkan risk analysis network. 

Judicial cooperation in civil and criminal matters 

In the course of 2018, the legal framework was further aligned with the EU acquis through: (i) 
the adoption of the Law on judicial cooperation with EU Member States in criminal matters, a 
comprehensive piece of legislation encompassing 16 EU acquis instruments; (ii) amendments 
to the Law on civil procedures; and (iii) amendments to the Law on enforcement and security 
of  claims.  Montenegro  is  not  a  party  to  the  2007  Protocol  to  the  Hague  Convention  on 
International Recovery of Child Support and Other Forms of Family Maintenance, relating to 
maintenance obligations, or to the 2000 Hague Convention on the International Protection of 
Adults. 

The  agreement  on  cooperation  between  Montenegro  and  Eurojust  continued  to  be 
implemented. The appointment  of a Montenegrin  Liaison Prosecutor in  2017 had a positive 
impact on the number of cases involving Montenegro open in Eurojust, which rose from 2 in 
2016 to 12 in 2018, mostly related to swindling, fraud and money laundering. There are two 
Montenegrin  contact  points  for  Eurojust,  one  of  which  is  the  national  correspondent  for 
terrorism  matters.  Montenegro  is  encouraged  to  take  part  in  joint  investigation  teams 
whenever there is an operational need for it, as this would facilitate and increase its judicial 
cooperation with EU Member States. 

Montenegro joined the EU Justice Programme in September 2018, which allows the country 
to participate in projects on judicial cooperation in a number of crucial areas. 

Statistics  produced  by  the  national  IT  database  for  judicial  cooperation  (LURIS)  show  that 
Montenegro was increasingly involved in  international  judicial cooperation in  2018, both  in 
criminal  matters,  with  1  086  new  cases,  and  in  civil  matters  with  871  new  cases.  The 
cooperation  is  based  on  bilateral  agreements,  on  the  Law  on  mutual  legal  assistance  in 
criminal matters, and, when relevant, on the second protocol to the European Convention on 
mutual  legal  assistance.  The  first  partners  for  judicial  cooperation  remain  Western  Balkan 
countries,  in  particular  for  criminal  matters,  and  EU  Member  States.  The  backlog  is  being 
progressively  addressed,  thanks  to  the  improvement  of  data  input  in  LURIS  and  better 
communication between the Ministry of Justice and judicial authorities. The database, which 
is being further developed to integrate more analytical features, is expected to be integrated to 
the court IT system by 2020. 

A  training  plan  for  judges,  prosecutors  and law enforcement  officials was  adopted by  the 
Judicial Training Centre and the Police Academy and is being implemented. However, further 
training  is  needed  to  build  up  greater  administrative  capacity.  Montenegro  still  has  to 
complete  a  review  of  its  administrative  and  budgetary  capacity  in  judicial  cooperation  to 
address the needs in this area. 

All aspects of customs cooperation are now covered under Chapter 29 – Customs Union. 

Counterfeiting of the euro (criminal law aspects)  

The Central  Bank of Montenegro has three national centres responsible for the fight against 

43 

 
 
counterfeiting of the euro: the National Counterfeit Centre, the National Analysis Centre and 
the  Coin  National  Analysis  Centre.  Within  the  police,  the  National  Central  Office  is 
responsible for field work on money counterfeiting and liaises with Europol and Interpol on 
cases. There were 12 cases of money counterfeiting investigated by law enforcement agencies 
in  2018  and  four  court  decisions,  including  two  resulting  in  prison  sentences.  The  Central 
Bank continued to provide training for the police and the Supreme State Prosecutor’s Office 
(see Chapter 32 Financial control). 

3. 

FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT AND COMPETITIVENESS 

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. 

Economic  governance  has  become  even  more  central  in  the  enlargement  process  in  recent 
years.  The  European  Commission  monitoring  takes  place  in  two  processes:  the  Economic 
Reform  Programme  exercise  and  the  below  assessment  of  compliance  with  the  economic 
criteria for accession. 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  has  made  some  progress  and  is  moderately  prepared  in  developing  a 
functioning market economy. The economy continued expanding at a robust pace, improving 
labour  market  outcomes  but  the  unemployment  rate  still  remains  high  and  the  employment 
and  activity  rates  very  low.  Despite  positive  export  dynamics,  the  current  account  deficit 
remained very large, fuelled by strong domestic demand, and was only partially financed by 
net  inflows  of  foreign  direct  investment.  Financial  sector  solvency  and  liquidity  ratios 
improved,  but  access  to  finance  for  small  companies  remains  hampered  by  tight  lending 

44 

Montenegro: Key economic figures2010-15 average201620172018GDP per capita (% of EU-28 in PPS)41.045.046.0:Real GDP growth 2.02.94.74.9Economic activity rate of the population aged 15-64 (%), total59.863.463.564.8      female48.356.656.557.2      male66.370.270.572.3Unemployment rate (%), total19.218.016.415.5      female19.417.417.215.3      male19.018.515.715.7Employment (annual growth %)0.51.12.13.2Nominal wages (annual growth %)2.13.52.00.1 Consumer price index (annual growth %)1.90.12.82.9Exchange rate against EUR1.01.01.01.0Current account balance (% of GDP)-14.2-16.2 -16.1 -17.2Net foreign direct investment, FDI (% of GDP)12.19.411.37.1General government balance (% of GDP)-5.1-3.6-5.3-3.8General government debt (% of GDP)53.464.464.270.8Source: Eurostat and national sources 
 
 
conditions. Fiscal consolidation efforts continued through 2018, but the budget deficit target 
was  missed  by  a  wide  margin  while  public  debt  reached  a  new  record,  partly  due  to  the 
financing needs for a large highway project financed by an international loan. Private sector 
development remained constrained by weaknesses in the business environment, an inefficient 
judiciary and a high prevalence of informality, reflecting poor implementation capacity in key 
state institutions responsible for enforcing the rule of law and competition. 

In order to improve the functioning of the market economy, Montenegro should in particular: 

  strengthen debt sustainability by broadening the tax base  and lowering the public sector 

wage bill as a percentage of GDP; 

  provide public guidance on the implementation of laws that affect businesses and ensuring 

that the guidance is consistently followed by the public administration; 

  develop  a  strategy  to  assess  and  reduce  the  informal  economy  and  ensuring  close 

cooperation between central and local authorities in fighting informality; 

  strengthen  employment  activation  measures  and  improving  the  coordination  between 

employment and social services. 

Economic governance 

The implementation of economic and fiscal policy objectives has been delayed. The debt 
management  and  fiscal  strategies,  adopted  as  a  response  to  rising  public  debt,  are  the 
cornerstones for strengthened economic governance. However, despite some positive results, 
such as reduced refinancing risks and higher budget revenues, the 2018 budget deficit turned 
out  to  be  higher  than  the  revised  deficit  target.  This  delayed  –once  again–  the  objective  of 
reaching  a  balanced  budget.  Important  reforms  like  those  of  the  public  administration,  the 
labour  law  and  the  pension  system  were  delayed.  The  reform  of  the  tax  administration 
advanced slowly, while the restructuring of the indebted national air carrier stalled. Delays in 
implementing large infrastructure projects reveal  absorption capacity constraints. The policy 
guidance jointly adopted in May 2018 in the context of the Economic and Financial Dialogue 
between the EU and the Western Balkans and Turkey was implemented to a limited extent. 

Macroeconomic stability 

investment 

the  economy  continued 

and 
by 
Driven 
consumption, 
economy  has 
the 
expanded  at  a  robust  pace.  After 
recording  real  growth  of  4.7  %  in 
to 
2017, 
expand  at  a  healthy  pace.  In  the  first 
three  quarters  of  2018,  GDP  grew  by 
4.8 % year-on-year (y-o-y). Public and 
private investment have been the main 
drivers  of  growth  in  recent  years,  also 
reflected in  the strong performance by 
the  construction  sector.  In  spite  of 
declining  wages  in  real  terms,  household  consumption  was  supported  by  bank  lending, 
tourism expenditure on local services and remittances. Government consumption contributed 
modestly  to  GDP  growth  due  to  fiscal  consolidation  measures.  Export  performance 
accelerated  in  the  first  three  quarters  of  2018,  surging  by  14  %  y-o-y.  However,  due  to  the 
much larger volume of imports, net exports continued to be a drag on growth. Overall, solid 
growth over  recent  years helped raise Montenegro’s per-capita income in purchasing power 

45 

 
 
standards to 46 % of the EU-28 average, following a period of stagnation at around 41 % over 
2010-2015. 

The sustained growth of domestic demand has continue to fuel a large current account 
deficit. The completion of new hotels and power plants as well as the recovery of aluminium 
prices boosted exports in 2018 but was not sufficient to contain the expansion of the current 
account deficit. The current account widened to 17.2 % of GDP in 2018, compared to 16.1 % 
of GDP a year before. The merchandise trade deficit widened to 43.2 % of GDP as imports of 
goods outpaced the growth of exports. Rising exports of transport and tourism increased the 
services  balance  surplus  to  20.3  %  of  GDP,  or  half  percentage  point  higher  compared  to  a 
year before. Net income and remittances from abroad brought about surpluses of 1.2 % and 
5.7 % of GDP, respectively. Net inflows of foreign direct investment (FDI) only covered half 
of  the  current  account  deficit  in  2018,  contracting  by  32.4  %  over  the  year  due  to  large 
outflows from the repayment of intercompany debt and the withdrawal of equity investment 
following the sale of a stake in the national electric company by its foreign owner. 

Stronger demand and tax increases led to higher inflation. Consumer prices have recorded 
continuous growth since the end of 2016, further accelerating at the beginning of 2018 due to 
the introduction of higher rates for value-added-tax (VAT) and excise duties. After peaking at 
3.4 % y-o-y in June, the government withdrew the increase in excise on tobacco products in 
July,  allegedly due to  a  rise in  illegal  trade and  poor excise revenue collection. As  a  result, 
inflation started to  slow  in  the second half of the  year, settling at  2.8 % the average annual 
rate for the whole year, compared to a lower rate of 2.0 % in the period 2011-2015. 

After several years of high fiscal deficits and growing public debt, the government took 
measures to rebalance the budget, but the deficit target for 2018 was missed by a wide 
margin. The fiscal reform package included, among others, an increase in 2018 of VAT rates 
and excise duties, as  well as a new debt  management strategy.  In 2018,  central  government 
budget  revenues  increased  substantially,  boosted  by  VAT  receipts,  income  taxes  and  social 
security contributions. However, budget expenditure also kept increasing – albeit at a slower 
pace –  driven  by  growing  capital 
investment,  gross  salaries  (in  spite  of 
planned  downsizing),  transfers  to  the 
public  education  and  health  sectors, 
and  costs  generated  by  unfavourable 
court  case  rulings  against  the  public 
authorities.  As  a  result,  the  general 
government cash deficit totalled 3.8 % 
of GDP at the end of 2018, exceeding 
the  full-year  deficit  target  of  2.2  %  of 
GDP.  The  public  debt 
(including 
deposits)  increased  further  to  70.8  % 
of GDP at the end of 2018, up from 64.2 % a year earlier. The main reasons for this increase 
were  to  finance  the  budget  deficit  and  to  increase  government  deposits  to  service  future 
financial obligations. 

Inherent  limitations  in  macroeconomic  policy  compel  a  stronger  commitment  to  fiscal 
consolidation. Montenegro’s use of the euro as legal tender results in the practical absence of 
monetary  policy,  leaving  fiscal  and  structural  policies  as  the  main  macroeconomic  toolkit. 
The  strong  economic  performance  and  the  need  to  reduce  debt-related  vulnerabilities  called 
for a tighter fiscal stance in 2018 to strengthen macroeconomic resilience. Moreover, several 
important structural reforms were delayed. 

46 

 
 
Functioning of product markets 

Business environment 

The  regulatory  burden  represents  a  major  barrier  for  improving  the  business 
environment. In September 2017, the government adopted a law on administrative procedure 
and  developed  an  internet  portal  (eRegulations.org)  to  increase  the  transparency  of 
administrative procedures and facilitate business interaction with public services. Both market 
entry and exit procedures have been improved. Montenegro performs well at regional level in 
terms  of  the  time  and  cost  to  resolve  insolvency.  In  2017,  90%  of  bankruptcy  cases  were 
solved  within  six  months.  However,  other  obstacles  persist,  like  delays  in  the  issuing  of 
construction  permits.  Important  legislative  reforms,  like  the  Law  on  spatial  planning  and 
construction  of  buildings,  adopted  in  October  2017,  are  expected  to  improve  the  issuing  of 
construction  permits  and  the  regulation  of  existing  illegal  constructions.  However, 
implementation  of  the  law  is  delayed  by  a  number  of  factors,  including  the  shortage  of 
municipal  architects  to  perform  inspections,  resulting  in  delays  in  processing  some  of  the 
50,000  requests  to  regularise  informal  constructions.  Moreover,  the  cost  of  construction 
permits remains high and the time taken to issue the permits has increased since the new law 
came into force. 

Businesses  are  resorting  more  often  to  out-of-court  dispute  resolution  mechanisms.  In 
the  first  half  of  2018,  over  500  cases  were  referred  for  mediation,  an  increase  compared  to 
437  cases  in  2017.  The  bailiffs  system  is  a  key  pillar  for  enforcement  of  debt  claims. 
However,  the  rate  of  resolved  cases  fell  in  the  first  half  of  2018,  with  24%  of  cases  solved 
compared  to  34%  in  2017.  The  number  of  companies  and  entrepreneurs  with  frozen  bank 
accounts due to unpaid claims continued to increase in 2018, totalling 17,940 at the end of the 
year  (including  some  inactive  or  bankrupt  companies).  The  rising  trend  points  to  persistent 
solvency problems in local companies. 

The  fight  against  the  informal  economy  remains  modest.  Employers  and  investors 
associations often complain of unfair competition from other businesses’ informal practices. 
The  estimated  size  of  the  informal  economy  is  24.5%  of  GDP3.  However,  state  institutions 
responsible for enforcing the rule of law and competition are often side-lined or suffer from 
weak  capacity.  The  Special  Prosecutor’s  Office  is  investigating  several  cases  of  corruption 
involving  money  laundering,  banks,  politicians,  civil  servants  and  domestic  and  foreign 
companies.  These  cases  are  important  to  elucidate  the  independence  and  administrative 
capacity of the judiciary to protect the rule of law and fight against corruption. (See Chapter 
23 – Judiciary and fundamental rights). 

State influence on product markets 

The  government’s  direct  interference  in  the  economy  remains  limited.  Administered 
prices  account  for  0.05  %  of  the  harmonised  index  of  consumer  prices.  The  process  of 
alignment  with  EU  requirements  is  contributing  to  a  gradual  increase  in  market  regulators’ 
independence. Although  local  self-governments’  payment  arrears remain  substantial  (at  2 % 
of  GDP  at  the  end  of  2018),  these  are  mostly  owed  to  the  tax  administration  rather  than  to 
private  creditors.  Indebted  municipalities  are  subject  to  a  debt  restructuring  programme 
supervised by the Ministry of Finance.  At 0.6 % of GDP in  2018, the budget  allocation for 
State  aid  is  relatively  moderate.  The  national  airline  received  a  significant  part  of  those 
subsidies,  but  still  owes  a  significant  amount  of  debt,  including  to  the  tax  administration, 
putting  the  company  at  risk  of  bankruptcy.  The  government  provides  substantial  tax 
exemptions to develop some sectors of the economy, including tourism, energy, construction 

3   IPSOS (2014), Informal Employment and the Grey Economy in Montenegro. 

47 

 
 
                                                 
and agriculture. However, it lacks an analysis of the impact of these tax exemptions to inform 
its policy decisions and of the compatibility of such exemptions with State aid rules. (See also 
Chapter 8: Competition). 

Privatisation and restructuring 

Although  the  number  of  public  companies  is  relatively  low,  the  return  to  state-
ownership  of  the  energy  utility  EPCG  represented  a  setback  for  the  privatisation 
agenda.  Private  investors  made  use  of  a  put  option  to  sell  back  to  the  Montenegrin 
government their 41.7 % stake in EPCG, the largest company in the country. The government 
increased  its  stake  to  70  %  after  paying  a  first  instalment  in  May  2018,  while  the  former 
strategic  investor  still  holds  some  18  %.  In  October  2018,  BMJ  Industries  took  over  the 
majority  (70  %)  ownership  in  the  New  Tobacco  Combine,  restarting  production  more  than 
two years after it was privatised. In 2018, a local investor acquired a 26 % stake from Serbia 
in the ‘Dr Simo Milosevic’ health institute, and applied together with a foreign partner for an 
additional 56 % stake owned by Montenegro. Concerns are mounting about the state-owned 
Montenegro  Airlines  and  the  railway  operator  (ZPCG)  due  to  accumulating  debt.  The 
government  is  resorting  more  often  to  concession  agreements  to  modernise  and  develop  its 
assets,  and  is  developing  a  new  legal  framework  in  this  area  to  reinforce  the  principles  of 
transparency, equal treatment and proportionality. In November 2018, the government granted 
a 30-year concession for the Bijela shipyard to a consortium formed by a local marina with an 
international  shipyards  group.  Work  is  ongoing  on  the  concession  of  the  two  international 
airports and a ski resort, as well as for public forests and agricultural land. 

Functioning of the financial market 

Financial stability 

Although the situation of the financial sector keeps strengthening, small banks face large 
overhead  costs  and  low  profitability.  Bank  balance  sheets  have  recovered  significantly  in 
the last six years. The non-performing loan ratio declined to 6.7 % in September 2018 from 
17.6 % in 2012. The return on assets and on equity in the banking system stood at 1.5 % and 
12.6 %, respectively (they were both in negative territory in 2012), while the overall capital 
adequacy  ratio  was  16.5  %,  above  the  regulatory  minimum  of  10  %.  However,  large 
disparities still exist among credit institutions. Out of 15 banks operating in Montenegro, the 
four  largest  account  for  95  %  of  total  profits.  The  legal  framework  of  financial  supervision 
has been improved in 2017. There is a critical need to address vulnerabilities in the financial 
sector and effectively enforce financial supervision. On 4 January 2019, the Central Bank of 
Montenegro decided to start bankruptcy proceedings against Invest Bank Montenegro and to 
require that Atlas Banka recapitalise in order to continue operating. These banks account for 
1.1 % and 5.8 % respectively of the banking sector’s total assets. 

Access to finance 

While household credit has been rising faster, bank lending to the corporate sector has 
regained  pace  since  mid-2018.  In  the  first  eleven  months  of  2018,  bank  lending  to  the 
corporate  sector  grew  by  8.2  %  y-o-y.  Lending  to  households  kept  growing  even  faster,  at 
10.9 %. This difference is partly explained by banks’ extremely high collateral requirements 
for corporate loans as these account for the bulk of impaired loans and are thus seen as riskier. 
To  help  with  this  situation,  the  state-run  Investment  and  Development  Fund  (IDF)  provides 
finance to SMEs at reduced interest rates via local banks. 

The size of the non-bank financial sector remains very small. The stock market’s role in 
the local  economy is  marginal in  terms of market  turnover, while the assets  of insurers and 
micro-financial  institutions  both  represent  around  1.5  %  of  GDP.  In  2018,  the  lending 

48 

 
 
capacity  of  the  Investment  and  Development  Fund  accounted  for  almost  4  %  of  GDP, 
compared to an aggregated loan portfolio of commercial banks equivalent to 68 % of GDP. 

Functioning of the labour market 

Stronger  economic  growth  supported  better  labour  market  outcomes.  In  2018,  the 
average employment and activity rates in the age group 15-64 increased to 54.7 % and 64.8 % 
respectively; up from 47.4 % and 58.7 % in 2013. The unemployment rate, according to the 
Labour  Force  Survey  (LFS)  data,  fell  to  15.5  %  on  average  in  2018,  down  from  19.6  %  in 
2013. The average unemployment rate for women was slightly lower (15.3 %) compared to 
men’s  (15.7  %).  However,  women’s  participation  rate  (57.2  %)  remains  significantly  lower 
than that of men (72.3 %). Youth unemployment (i.e. for the 15-24 age group) also declined 
to  29.4  %  in  2018,  from  31.7  %  a  year  before.  Long-term  unemployment  also  declined.  In 
2018,  the  share  of  unemployed  workers  who  had  been  looking  for  a  job  for  more  than  12 
months was 75.1 %, down from 82.3 % in 2013. The Employment Agency registered similar 
trends  but  with  higher  unemployment  rates  (i.e.  17.8  %  in  December  2018).  This  data 
discrepancy reflects the high proportion of informality, estimated to affect between 25 % and 
33 % of employment.  

Labour  costs  contribute  to  reduced 
work  incentives  and  low  transitions 
from  informal  to  formal  work.  The 
tax  wedge  (at  around  40  %) 
is 
relatively  high,  especially  for  low-
wage  earners.  This  may  generate 
disincentives 
to  hire  and  work, 
particularly at the lower end of income 
distribution. In addition, this is coupled 
with  weak  employment  activation 
measures 
insufficient 
coordination with social assistance and 
opportunities  to  engage  in  undeclared  work.  This  further  contributes  to  unemployment  and 
inactivity.  The  upcoming  labour  law  reform  is  also  expected  to  improve  labour  market 
flexibility  and  ease  transfer  to  formal  employment,  but  its  adoption  is  still  pending.  Local 
companies hire foreign workers for seasonal jobs, but partly also to address the issue of low 
mobility  of  local  workers.  In  2018,  more  than  20,000  work  permits  were  issued  to  foreign 
workers. 

and 

its 

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

3.2 
Union 

Montenegro  has  made  some  progress  and  remains  moderately  prepared  in  terms  of  its 
capacity  to  cope  with  competitive  pressure  and  market  forces  within  the  EU.  The 
development of infrastructure in a number of areas is gradually setting the preconditions for 
improved economic competitiveness. However, further efforts are needed to enhance human 
capital  development  and  to  reduce  the  mismatch  between  education  outcomes  and  labour 
market  needs.  Local  companies  need  to  grow  and  step  up  efforts  to  increase  international 
competitiveness. 

In order to improve competitiveness and long-term growth, Montenegro should in particular: 

  increase the provision of upskilling and reskilling measures; 

  develop access to broadband networks and facilitate business use of the information and 

49 

 
 
communication technologies. 

Education and innovation 

Efforts  have  been  made  to  further  strengthen  the  national  education  system.  In  test 
scores  of  the  OECD’s  2015  Programme  for  International  Student  Assessment  (PISA), 
Montenegrin  students  underperformed  in  science  and  mathematics  by  an  equivalent  of  2.5 
years against the OECD average, but improved notably in reading (by 19 score points since 
2009).  The  new  higher  education  structure  (3+2+3  years)  is  being  strengthened  with  the 
reform  of  university  study  programmes,  and  by  the  implementation  of  on-the-job  learning, 
now  applied  to  25%  of  study  programmes  (See  Chapter  26:  Education  and  Culture). 
However,  there  is  a  persistent  mismatch  between  education  outcomes  and  labour  market 
needs. Modernisation of  secondary vocational education further advanced in its second  year 
of implementation, with both the number of participating students and employers increasing. 
However,  the  effects  of  the  introduction  of  practical  learning  in  higher  and  vocational 
education are yet to be established through comprehensive monitoring. 

Investment in research and development (R&D) is growing. Investment in R&D amounted 
to 0.32% of GDP in 2016 (or some 7% of total government spending), still below the target of 
0.6%  of  GDP  set  for  2020.  Montenegro  has  been  gradually  improving  its  participation  in 
numerous international programmes and cooperation projects. National programmes increased 
funding  by  resorting  to  business  co-financing.  In  2018,  the  voucher  scheme  for  innovation 
was  extended  to  all  SMEs.  However,  the  application  process  remains  complex  and  few 
companies applied. The groundwork is being laid for stronger links between business and the 
academic  community.  In  addition  to  the  work  on  the  institutional  and  legal  frameworks, 
progress  has  continued  on  two  practical  initiatives  in  this  area.  Firstly,  the  new  centre  of 
excellence  for  research  in  Nikšić,  the  first  in  a  network  of  four  institutions  and  part  of 
Montenegro’s science and technological park, is operating as a business incubator promoting 
entrepreneurial  and  innovative  culture.  Secondly,  work  is  continuing  on  the  innovation  and 
the science and technological park in Podgorica that will implement the smart specialisation 
strategy to prioritise which areas of investment could generate the strongest growth. 

Physical capital and quality of infrastructure 

Montenegro  keeps  improving  its  transport,  energy  and  environmental  infrastructures. 
Reconstruction  and  modernisation  of  the  road  network  has  been  advancing.  However,  the 
construction  of  the  priority  section  of  the  Bar-Boljare  highway  suffered  delays  and  cost 
overruns,  further  affecting  the  country’s  already  narrow  fiscal  space.  Decisions  on  the 
construction of the next sections must be based on a careful analysis of the financing scheme 
and  in  full  compliance  with  applicable  EU  standards  on  public  procurement,  State  aid  and 
environmental impact assessment. Meanwhile, preliminary studies are underway for building 
the  Adriatic-Ionian  highway,  which 
would set a second highway parallel to 
track 
the  coast.  Several 
sections  and  signalling  are  being 
upgraded.  The 
concession 
agreement for upgrading the two main 
airports  is  well advanced. New energy 
supply  capacities  progressed  with  the 
launch  of  a  50-megawatt  windmill 
farm  at  Mozura  and  the  issuing  of 
several  licences  to  build  and  operate 
solar  power  plants,  including  a  large 

railway 

draft 

50 

02004006008001000ME, 2006EU, 2006ME, 2016EU, 20160481216Montenegro: Selected indicators relative to populationElectricity production, GWh per 1000 inhabitantsRoad length, km per 1000 inhabitantsRail passenger-km per inhabitant, lhsSource: Eurostat 
 
250 MW solar plant at Briska Gora. The construction of the electricity transmission corridor 
towards Italy progressed as planned. Development of environmental infrastructure continues 
with  a  number  of  water  distribution  and  treatment  systems  and  waste  management  plants 
under construction.  

Implementation  of  the  strategy  for  developing  the  information  society  is  delayed. 
Legislative and infrastructure hurdles hamper attainment of the targets for broadband access 
(i.e. basic broadband access to all the population in 2018, and high speed broadband access of 
30 Mbit/s or more in 2020). The low population density and difficult topography increases the 
costs  of  broadband  deployment,  discouraging  investments  in  the  less-populated  areas.  In 
2018, 72.2% of households and 99.2% of enterprises (with 10 employees or more) had access 
to the internet. Moreover, 80% of companies with internet access have a website. However, in 
2018,  only  8%  of  SMEs  sold  online,  compared  to  the  EU  average  of  17%.  Overall,  the 
development  of  IT  skills  and  increased  business  use  of  ICT  could  boost  Montenegrin 
companies’  competitiveness  and  facilitate  their  access  to  foreign  markets.  Online  access  to 
real-time cadastral services is in place. 

Sectoral and enterprise structure 

Services,  and  tourism  and  sales  in  particular,  remain  the  mainstay  of  the  economy, 
despite  some  modest  rebalancing  towards  agriculture  and  manufacturing.  In  2017, 
services  provided  71.8%  of  total  gross  value  added  (GVA)  and  75%  of  total  employment, 
down from a 74.5% contribution five years earlier. Agriculture and manufacturing account for 
7.9% and 17.1% of employment, but their contribution to gross value added is more in favour 
of the former (10.9%) than the latter (11.9%). Construction's share in total GVA has remained 
relatively stable, at around 5.4% in 2017, accounting for 7.6% of employment. 

Local  firms  suffer  from  low  levels  of  competitiveness.  SMEs  are  the  backbone  of 
Montenegro's economy, generating almost 70% of value added and more than three quarters 
of employment. However, SMEs face numerous challenges. Firms identify access to finance 
as  one  of  the  biggest  obstacles  to  doing  business.  Other  challenges  include  red  tape, 
inadequate infrastructure and an insufficiently skilled workforce. Several support mechanisms 
to  increase  the  competitiveness  of  local  SMEs  have  been  developed.  These  include 
programmes  for  cluster  development,  and  a  strategy  to  improve  SME  innovation  and 
competitiveness. The Investment and Development Fund is also offering new credit lines for 
competitiveness.  However,  complex  procedures  when  applying  for  small  grants  discourage 
applicants. 

Economic integration with the EU and price competitiveness 

Trade  integration  with  the  EU  has  strengthened  gradually.  In  2018,  trade  with  the  EU 
accounted for 44.9% of Montenegro's goods exports and 48.3% of its goods imports, showing 
some  increase  compared  to  five  years  earlier  (41.0%  and  44.0%  in  2013).  During  the  same 
period in 2018, trade with CEFTA parties accounted for 40.2% of Montenegrin exports and 
28.5%  of  its  imports,  a  significant  decline  compared  to  the  2013  levels  of  49%  and  39%, 
respectively.  The  Regional  Economic  Area  framework,  to  which  all  Western  Balkan 
economies  have  committed,  offers  an  opportunity  for  increasing  trade  exchanges.  However, 
regional  non-tariff  barriers,  in  particular  the  time  taken  and  procedures  needed  for  border 
crossing,  still  appear  to  hamper  stronger  intra-regional  trade.  Financial  integration  with  the 
EU remains substantial, as the EU accounted for 85.8% of capital in local banks and 45.6% of 
total FDI inflows during the first nine months of 2018. 

51 

 
 
Montenegro’s  trade  exchanges  remain  heavily  tilted  towards  imports.  Imports  of  goods 
and services totalled 64.5% of GDP in 2017, or 1.5 times higher than the value of its exports. 
This  situation reflects  several  shortcomings, including the fact  that only  7% of firms  export 
their goods, and that only one out of three export flows that start in a given year will survive 
past  the  first  year.  The  manufacturing  base  remains  concentrated  on  commodities  with  low 
value-added and with a high dependence on imported intermediate goods. Trade openness has 
slightly declined over time, from 106.7% of GDP in 2011, to 105.6% in 2017. 

4. 

GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION 

Good  neighbourly  relations  and  regional  cooperation  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  (SEECP),  the  Regional  Cooperation  Council,  CEFTA,  the  Western 
Balkans  Six,  the  Energy  Community  Treaty,  the  European  Common  Aviation  Area 
Agreement,  the  Central  European  Initiative  (CEI),  the  Regional  Initiative  for  Migration  and 
Asylum  (MARRI),  the  Coalition  for  the  Commission  Tasked  with  Establishing  the  Facts 
about All Victims of War Crimes and Other Serious Human Rights Violations Committed on 
the  Territory  of  the  Former  Yugoslavia  (RECOM),  the  Regional  School  of  Public 
Administration (ReSPA), the ‘Brdo-Brijuni process’, the Adriatic-Ionian Initiative, the Igman 
Initiative,  and  the  European  Union  macro-regional  Strategies  for  the  Danube  Region 
(EUSDR) and the Adriatic and Ionian Region (EUSAIR). Between June 2018 and May 2019, 
Montenegro held the chairmanship of EUSAIR.  

Montenegro  progressed  in  implementing  the  multiannual  action  plan  (MAP)  for  the 
development of a Regional Economic Area in the Western Balkans, although more attention 
is needed to secure timely adoption of the incurred measures as well as streamlining regional 
commitments  into  national  policies,  and  the  Transport  Connectivity  Reform  Measures. 
Further  efforts  are  needed  with  regard  to  energy  measures  necessary  for  the  creation  of  a 
regional  electricity  market,  improved  procedures  at  border  crossings,  the  regional  trade 
the  current  regional  roaming  agreement.  The  continued 
agenda  and  extension  of 
implementation of MAP will allow further economic integration within the region, based on 
EU rules and standards. 

Building  on  the  results  of  previous  summits,  the  July  2018  London  Summit  brought  a 
renewed  commitment  to  the  connectivity  agenda  as  the  core  element  of  the  Berlin  process. 
Dialogue with the Western Balkans continued in Skopje on the implementation of the Digital 
Agenda, to which all leaders of the region had committed though a statement of support. More 
particularly concerning the negotiations on roaming fees, a regional agreement was signed in 
Belgrade in  April 2019  enabling Roam  like at  Home (RLAH) as of July  2021. Cooperation 
continued  in  previously  established  areas,  including  implementation  of  youth  mobility 

52 

0510152009201020112012201320142015201620172018Montenegro: Exports compositionEUCEFTAOtherSource: Monstat% ofGDP02550752009201020112012201320142015201620172018Montenegro: Imports compositionEUCEFTAOtherSource: Monstat% ofGDP 
 
 
projects supported through the Regional Youth Cooperation Office (RYCO) and its Podgorica 
branch. In February 2019, the country hosted a regional ministerial on clean energy transition.  

In  February  2019,  Montenegro  signed  a  Memorandum  of  Understanding  with  the 
International Residual Mechanism for Criminal Tribunals. For the handling of domestic war 
crimes cases, see chapter 23 — Judiciary and fundamental rights. 

Montenegro  has  continued  to  cooperate  closely  with  Bosnia  and  Herzegovina,  Croatia  and 
Serbia under the Sarajevo Declaration Process, which aims to find 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.  The  construction,  purchase  of  apartments  and 
distribution  of  construction  material  under  the  Regional  Housing  Programme  (RHP) 
continued  to  progress  well  throughout  the  country,  while  needs  and  interest  for  housing 
solutions in different municipalities still remain high. Challenges also remain with regard to 
ensuring  that  RHP  beneficiaries  have  sustainable  livelihoods  and  are  fully  integrated  into 
society. 

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 57, is low, but all efforts should be made to ensure that missing persons in the country are 
identified as soon as possible. In November 2018, Bosnia and Herzegovina, Croatia, Kosovo, 
Montenegro  and  Serbia  signed  a  framework  plan  to  promote  regional  cooperation  in 
addressing  the  issue  of  missing  persons  from  conflicts  on  the  territory  of  the  former 
Yugoslavia. 

Montenegro remained committed to  constructive  bilateral  relations  with  other enlargement 
countries and neighbouring EU Member States. Montenegro has signed bilateral conventions 
on regional cooperation under the Stabilisation and Association Agreement with all partners 
with  an  SAA  in  force.  The  last  such  bilateral  convention  was  signed  in  March  2019  with 
Kosovo. 

Relations  with  Albania  continue  to  be  good.  The  first  common  session  of  the  two 
governments  was  held  in  Shkodra  in  July  2018,  which  resulted  in  the  signature  of  five 
bilateral  agreements,  including  on  mutual  assistance  in  extraordinary  circumstances,  on  the 
opening of the Ckla-Zogai joint border crossing for international road and lake transport, and 
on air policing. Consultations between the two Foreign Ministries were held in March 2018 in 
Tirana.  Montenegro  also  cooperates  with  Albania  under  the  Albania-Montenegro-Croatia 
Trilateral, established in 2017 as part of the Adriatic-Ionian dialogue. One trilateral meeting 
took place during the reporting period in July 2018. In December 2018, Montenegro allocated 
funds  for  technical  and  expert  support  for  Albania’s  EU  accession  process.  Montenegro 
agreed with Albania on the modus operandi for the joint border railway station in Tuzi, but its 
implementation needs to improve with a view to establishing efficient customs clearance for 
freight transport.  

The Ministries of Foreign Affairs of Montenegro and Bosnia and Herzegovina held bilateral 
consultations on co-location and consular affairs in May and July 2018 respectively. A plan 
on bilateral cooperation between the two Ministries of Defence was signed in May 2018.  

Relations  between  Montenegro  and  Kosovo  remained  good.  The  border  demarcation 
agreement  came  into  force  in  June  2018.  An  agreement  on  international  transport  of 
passengers and cargo was signed in August 2018.  

Relations  with  North  Macedonia  remained  good.  An  agreement  on  fighting  human 
trafficking  was  signed  in  July  2018.  A  plan  for  bilateral  defence  cooperation  for  2018  was 
signed in April 2018. Consultations between the two Ministries of Foreign Affairs with regard 

53 

 
 
to NATO cooperation were held in July in Podgorica. In November 2018, the two countries 
signed an agreement on property relations. In March 2019, Montenegro ratified the protocol 
on the accession of North Macedonia to NATO. 

Relations  with  Serbia  remained  good.  Political  consultations  between  the  two  Ministries  of 
Foreign  Affairs  were  held  in  May  2018.  Several  agreements  on  road  and  railway  border 
crossings  were  signed  during  the  reporting  period,  among  which  the  agreement  on  opening 
the  Cemerno-Granice  common  border  crossing  in  August  2018.  There  have  been  no 
developments on issues related to citizenship rights in the two countries. The demarcation of 
borders is still pending.  

Relations with Turkey remained good. In April 2018, the countries signed the annual plan for 
bilateral cooperation on defence. Consultations between the two Ministries of Foreign Affairs 
were held in April in Podgorica. The agreement on transportation of passengers and cargo in 
international  road  traffic  came  into  force  in  January  2018.  In  December  2018,  the  two 
countries initialled two revised protocols (on agriculture concessions and trade in services) to 
their free trade agreement.  

Relations remain good overall with Croatia, despite some pending bilateral issues. Joint work 
on  finding  a  solution  for  the  border  demarcation  between  Montenegro  and  Croatia  is 
ongoing.  The  first  consultations  between  the  two  Ministries  of  Defence  were  held  in  April 
2018.  

A  plan  for  bilateral  cooperation  on  defence  for  2018  was  signed  in  March  2018  with  Italy. 
Consultations  between  the  two  Ministries  of  Foreign  Affairs  on  implementation  of  the 
agreement  on  strategic  cooperation  were  held  in  October  2018.  In  November  2018,  the 
competent  authorities  of  the  two  countries  signed  a  memorandum  of  understanding  on 
strengthening cooperation in the area of migration. 

5.   ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

5.1 

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 in the area of free movement of goods. Some progress 
was  made  on  EU  acquis  alignment  in  this  area  during  the  reporting  period.  However,  last 
year’s recommendations have not been fully or adequately addressed, and are therefore partly 
reiterated below.  

In the coming year, Montenegro should in particular:  

  ensure  that  sufficient  human  and  financial  resources  are  allocated  to  its  market 
surveillance,  standardisation  and  accreditation  bodies,  and  for  REACH  (Registration, 
Evaluation,  Authorisation  and  Restriction  of  Chemicals),  in  order  to  ensure  the 
implementation of aligned legislation;  

  comply with the action plan for alignment with the acquis in this chapter.  

General principles 

In  April  2018,  the  government  adopted  the  2018  actions  plans  for  its  accreditation  and 
standardisation.  On  horizontal  legislation,  Montenegro's  legal  framework  for  the  free 
movement of goods, including product  safety (see also  chapter 28) is  largely aligned to  the 
EU  acquis.  As  recommended  in  last  year’s  report,  Montenegro  updated  its  action  plan  for 

54 

 
 
alignment with the EU acquis in this chapter, in  order to address changes in the  acquis and 
delays in alignment. 

Non-harmonised area 

In  the  reporting  period,  Montenegro  adopted  16  secondary  legislative  acts  on  metrological 
requirements for instruments implementation of its action plan for  compliance with Articles 
34-36 of the Treaty for the European Union (TFEU). 

Harmonised area: quality infrastructure 

During the reporting period, the Institute for Standardisation of Montenegro (ISME) adopted 
a  total  of  440  Montenegrin  standards  and  related  documents,  designed  to  be  completely 
compliant  with  European  and  international  standards  -  ISME  estimates  that  73%  of  these 
standards  and  documents  are  now  compliant  with  EU  standards.  In  February  2018,  ISME 
signed a cooperation agreement with the Public Procurement Administration of Montenegro. 
Montenegro  had  planned  to  join  European  Committee  for  Standardization  (CEN)  and  the 
European Committee for Electro-technical Standardization (CENELEC) in 2018 (it is already 
an  associate  member  of  both  committees),  but  resource  constraints  have  led  to  this  being 
postponed to 2019. 

During the reporting period, two pieces of secondary legislation were adopted in the field of 
metrology. The Metrology Bureau has gradually strengthened its administrative capacity by 
employing four additional staff; it currently has 44 staff out of the 52 to which it is officially 
entitled. 

The  2019  general  market  surveillance  programme  was  adopted  in  2018.  Some  4 771 
inspections  were  carried  out  during  the  reporting  period,  of  which  4  086  were  in  proactive 
surveillance  and  685  in  reactive  surveillance.  In  the  area  of  product  safety,  285  types  of 
hazardous  products  were  identified  (44 969  items  in  total).  Of  these,  235  products  (5 028 
items  in  total)  were  classified  as  dangerous  products  representing  a  serious  risk.  Some  171 
products  (35  152  items  in  total)  were  withdrawn  from  the  market,  and  19  products  (1 570 
items)  were  destroyed;  administrative  measures  were  imposed  accordingly.  Cooperation 
between the Administration of Inspection Affairs and the Customs Administration continued 
in  the  form  of  increased  surveillance  of  the  energy,  efficiency  and  design  of  electric  light 
bulbs, and of electric coffee machines. 

On accreditation, the Accreditation Body of Montenegro (ATCG) appointed a new director 
in  February  2018.  ATCG  currently  has  7  permanent  staff  who  undertake  managerial  and 
technical  activities,  which  it  considers  adequate  for  its  current  needs,  plus  9  registered  lead 
assessors (three are permanent  staff), 33 technical  assessors (one is permanent  staff) and 22 
technical  experts.  There  were  three  new  formal  accreditations  of  conformity  assessment 
bodies, while one previously granted accreditation was withdrawn. 

Harmonised area: sectoral legislation 

Under the ‘New and Global Approach’ product legislation, Montenegro adopted legislation 
in the reporting period designed to align with the EU  acquis on appliances burning gaseous 
fuels.  Seven  pieces  of  secondary  legislation  were  also  adopted  in  the  reporting  period  to 
increase alignment with the EU acquis in the area of construction.  

On ‘Old Approach’ product legislation, in the reporting period, seven pieces of secondary 
legislation were adopted in the reporting period to increase alignment with the EU acquis in 
the area of chemicals and REACH. Legislation was adopted to ensure alignment with the EU 
acquis  on  labelling  of  footwear,  labelling  and  marking  of  textile  products,  and  for  aerosol 
dispensers. On fertilisers, a law amending the Law on plant nutrition products was adopted, 

55 

 
 
designed  to  increase  alignment  with  the  EU  acquis.  However,  the  administrative  capacity 
necessary to implement REACH still needs strengthening. 

On  drug  precursors,  Montenegro  has  adopted  a  national  list  of  controlled  substances 
designed  to  be  compliant  with  the  EU  acquis.  It  also  has  mechanisms  in  place  to  detect 
smuggled  drug  precursors  and  requires  economic  operators  to  report  suspicious  orders  or 
transactions in line with EU procedures. However, national legislation is only partly aligned 
with  the  EU  acquis.  On  good  laboratory  practices,  national  legislation  is  in  place  that  is 
designed to be aligned to the EU acquis. With regard to procedural measures, Montenegro 
adopted  its  2019–2025  strategy  and  action  plan  on  combating  the  illicit  possession,  misuse 
and  trade  of  small  arms  and  light  weapons.  Montenegro  adopted  amended  legislation  on 
cultural goods, which is now designed to be aligned with the EU acquis. 

5.2 

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. 

Montenegro  has  some  level  of  preparation  in  this  area.  Some  progress  was  made  on 
freedom of movement for workers as concerns the coordination of social security systems. 

In the coming year, Montenegro should in particular:  

  establish  structures  and  develop  administrative  capacity  to  implement  the  EU  acquis  in 
line with the results of the EU support project on social security schemes and the chapter 
2 action plan under preparation. 

On access to the labour market, the new Law on foreigners that governs the entry, stay and 
work  of  foreign  citizens  entered  into  force  in  March  2018.  As  of  2021,  foreigners  will  be 
required  to  submit  requests  for  temporary  residence  and  seasonal  employment  permits 
through Montenegro’s representations in their country of origin.  

On  preparations  to  join  EURES  (the  European  network  of  employment  services),  the 
Department  for  EURES  and  International  Employment  Mediation  within  Montenegro’s 
Employment Agency successfully implemented its recruitment plan by employing one more 
EURES manager and three advisors in the Podgorica, Bar and Bijelo Polje regional offices. 

On the coordination of social security systems, the development of bilateral agreements on 
social insurance continued. The agreement with Romania is still to be ratified by Romania, 
while  negotiations  are  ongoing  to  amend  the  agreements  with  Serbia  and  with  Bosnia  and 
Herzegovina.  Social  security  institutions’  administrative  capacity  is  yet  to  be  strengthened. 
The ongoing project “Towards the EU rules on the coordination of social security schemes” 
provides  support  for  developing  sufficient  administrative  capacity  for  the  coordination  of 
social security systems upon EU accession.  

The  European  Health  Insurance  Card  is  recognised  under  the  Law  on  health  insurance. 
However  its  introduction  is  pending  until  the  ongoing  analysis  on  its  impact  on  the  state 
budget is completed.  

5.3 

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. 

56 

 
 
Montenegro  remains  moderately  prepared  in  this  area.  Good  progress  was  made  on 
alignment with the general framework set out in the EU Services Directive and with the EU 
acquis on mutual recognition of professional qualifications.  

In the coming year, Montenegro should, in particular:  

  continue  inter-ministerial  coordination  and  adopt  implementing  rules  to  fully  align  with 

the EU Services Directive;  

  prepare a test phase for a future fully operational Point of Single Contact; 

  implement the required electronic systems for the electronic company registration. 

On the right of establishment, no progress was made on full electronic company registration. 

On  the  freedom  to  provide  cross-border  services,  close  alignment  with  the  EU  Services 
Directive  was  achieved.  The  inter-ministerial  coordination  for  the  screening  of  sectoral 
legislation  has  been  strengthened.  Preparatory  activities  started  for  the  establishment  of  a 
Point  of  Single  Contact.  The  staff  resources  of  the  services  department  in  the  Ministry  of 
Economy should increase. 

On  postal  services,  the  legislation  is  aligned  with  the  EU  Postal  Services  Directive.  The 
postal  services  market  is  fully  opened  to  competition.  Amendments  to  the  Law  on  postal 
services  were  adopted  in  July  2018  with  the  aim  of  further  regulating  the  financing  and 
sustainability of the universal postal service, in line with the EU acquis. The department for 
postal services within the Ministry of Economy currently employs four staff. The new 2019-
2023 postal services strategy and its 2019-2020 action plan were adopted in December 2018. 

On  the  mutual  recognition  of  professional  qualifications,  the  Law  on  the  recognition  of 
foreign  qualifications  for  regulated  professions  was  adopted  in  June  2018.  Implementation 
continued under the national plan to develop qualifications for regulated professions. The list 
of regulated professions was adopted in November 2018. Montenegro has reached a satisfying 
level of alignment and partially implements the EU acquis in this field. 

5.4 

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.  In  line  with  last  year’s  recommendation, 
some  progress  was  made  on  the  legal  framework  relating  to  the  fight  against  money 
laundering, resulting in an important upgrade in the country’s ranking by MONEYVAL, the 
Council  of  Europe’s  Committee  of  Experts  on  the  Evaluation  of  Anti-Money  Laundering 
Measures.  Conditions  should  be  created  to  preserve  the  independence  of  the  Financial 
Intelligence Unit (FIU) in its new form as a service of the police.  

In the coming year, Montenegro should still:  

  align  with  the  EU  acquis  on  capital  movements  and  payments,  including  on  the 

acquisition of property rights, and on payment systems; 

  strengthen  the  institutional  capacity  to  perform  checks  on  all  reporting  entities,  enhance 
the 

the  quality  of  reporting,  ensure 

cooperation  between  all  stakeholders  and 
independence and efficiency of the relevant institutions; 

57 

 
 
  take  into  account  potential  risks  of  money  laundering  linked  to  investor  schemes  in  the 
national risk assessment, basing this on the EU anti-money laundering rules, and take the 
necessary mitigating measures. 

On  capital  movements  and  payments,  since  2017  Montenegro’s  regime  features  free 
movement  of  capital,  no  limitation  to  the  transfer  of  property,  and  no  foreign  exchange  or 
currency  control.  However,  alignment  with  the  EU  acquis  has  not  yet  been  completed. 
Amendments  to  the  Law  on  voluntary  pension  funds,  adopted  in  February  2018,  removed 
provisions  that  would  have  resulted  in  differential  treatment  of  national  and  EU  securities. 
However, a new draft insurance law and draft amendments to the Law on ownership rights, 
removing preferential national treatment, are still pending.  

As regards the payment system, the legislation is largely in place, but further alignment with 
the  EU  acquis  is  needed.  In  addition,  a  legal  package  still  needs  to  be  adopted  on  the 
comparability  of  fees  charged  to  customers,  payment  account  switching,  access  to  payment 
accounts with  basic features, and interchange fees for card-based payment  transactions. The 
total number of registered payments was reduced from 20 to 19.  

Significant  improvements  were  made  to  the  legal  framework  on  the  fight  against  money 
laundering  and  terrorism  financing.  To  comply  with  MONEYVAL  recommendations, 
amendments were adopted in summer 2018 to the Law on the prevention of money laundering 
and terrorism financing, and to the Law on international restrictive measures. Two pieces of 
secondary legislation for the Law on the prevention of money laundering were adopted, one 
on indicators for recognising suspicious transactions, and one on risk analysis. MONEYVAL 
recommendations were also addressed by amendments to the Law on investment funds and to 
the Law on voluntary pension funds, adopted in January and February 2018 respectively. As a 
result,  in  December  2018  MONEYVAL  removed  Montenegro  from  the  step  2  of  the 
compliance  enhancing  procedure  and  placed  it  under  the  regular  ‘follow-up’  reporting 
procedure. 

A new strategy for the prevention of terrorism, money laundering and terrorism financing is 
yet to be adopted. The institutional setting for the prevention of money laundering changed in 
December 2018, with the adoption of the Decree on the organisation and manner of work of 
the public administration. The decree transformed the independent Financial Intelligence Unit 
(FIU) into a service of the police, which, due to the same decree, now has greater autonomy 
and  is  separate  from  the  Ministry  of  Interior.  However,  discussions  are  ongoing  on 
administrative  details  for  the  new  service  and  the  specific  degree  of  autonomy  it  will  have. 
The  ability  of  the  FIU  to  keep  its  data  confidential  and  not  share  it  with  the  police,  despite 
being  part  of  that  organisation,  is  of  paramount  importance  in  securing  Montenegro’s 
inclusion in international networks for the prevention of money laundering, and for it to have 
access to international data. In 2018 the FIU sent 215 requests to foreign FIUs and received 
43 requests for financial intelligence. This administrative change will also require the recently 
adopted laws to be amended. 

The  Central  Bank  of  Montenegro  performed  10  checks  of  banks  and  1  check  of  a  payment 
institution in 2018, as in 2017. Two requests for initiating misdemeanour proceedings against 
two commercial banks were lodged and one written warning measure was imposed on a bank.  

The  FIU  received  240  suspicious  transaction  reports  from  reporting  entities,  carried  out  94 
controls of reporting entities and identified 22 suspicious transactions, a slight increase on the 
previous year. Some 102 notifications were forwarded to other competent authorities. 

Risk  assessment  capacities  were  strengthened  with  the  FIU’s  adoption  of  guidelines  on 
developing risk analysis for preventing money laundering and terrorist financing. 

58 

 
 
Since  January  2019,  Montenegro  runs  an  economic  citizenship  scheme,  allowing  foreign 
investors to acquire Montenegrin citizenship for a minimum investment  of EUR 365 000 in 
the local economy. Montenegro should put in place robust monitoring systems linked to this 
scheme,  in  particular  to  counter  possible  security  risks  such  as  money  laundering,  terrorist 
financing  and  infiltration  of  organised  crime.  Under  new  EU  anti-money  laundering  rules, 
Montenegro  should  devote  particular  attention  to  enhanced  customer  due  diligence  in  the 
context of the investors’ citizenship programme. 

5.5 

Chapter 5: Public procurement 

EU rules ensure that public sector 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  remains  moderately  prepared  on  public  procurement,  which  is  an  area 
particularly vulnerable to corruption. Limited progress was achieved in 2018, as preparations 
continued for new laws on concessions and public procurement, aimed at alignment with the 
2014  EU  Procurement  Directives.  Institutional  changes  concerning  public  procurement 
administration,  introduced  at  the  end  of  2018,  may  have  an  impact  on  the  country’s 
implementation  and  enforcement  capacity.  The  previous  year’s  recommendations  were 
partially addressed. 

In the coming year, Montenegro should in particular:  

  adopt and implement the laws on public-private partnerships and public procurement; 

  prepare a detailed and comprehensive plan for the rollout of e-procurement; 

  further  improve  the  functioning  of  the  remedies  system  as  well  as  the  administrative 
capacity  and  IT  infrastructure  of  the  State  Commission  for  the  Control  of  Public 
Procurement.   

Institutional set-up and legal alignment 

Following  backsliding  on  legal  alignment  in  2017,  Montenegro  stepped  up  efforts  to  adopt 
new  laws,  aligned  to  a  large  degree  with  the  2014  Procurement  Directives.  The  amended 
Public Procurement Law and a new Public-Private Partnership Law (aimed at alignment with 
the EU Concessions  Directive) have been prepared and  are  expected to  be adopted by mid-
year  of  2019.  In  this  context,  all  legal  and  financial  instruments  used  in  the  area  of  public 
procurement and concessions, including inter-governmental agreements concluded with third 
countries  for  the  implementation  of  joint  projects,  should  comply  with  the  principles  of 
transparency, competition, equal treatment and non-discrimination. Procurement in the area of 
defence and security still needs to be fully regulated. 

The adoption of a government Decree on the organisation and working methods of the state 
administration at the end of 2018 resulted in the previously independent Public Procurement 
Administration  being  incorporated  into  the  Ministry  of  Finance’s  Department  for  Public 
Procurement,  which  has  a  lead  role  in  developing  public  procurement  policy.  The  decision 
may possibly lead to improvements in the administrative capacity and foster implementation 
of  the  public  procurement  laws,  but  it  has  been  taken  without  internal  analyses  and 
consultations.  The  internal  reorganisation  in  the  Ministry  of  Finance  should  be  finalised  by 
mid-year, which coincides with the planned adoption of the new legal framework. 

Implementation and enforcement capacity 

Montenegro’s  public  procurement  market  corresponded  to  an  estimated  9.1%  of  GDP  in 
2018, based on preliminary data, compared to 10% and 11.8% in the previous two years. 

59 

 
 
Capacity to manage public procurement processes continues to improve slowly over time. 
However,  time  is  needed  to  internalise  recent  and  upcoming  changes  in  the  legislative  and 
institutional framework, which could limit the effectiveness of public procurement processes 
and  slow  them  down.  The  high  number  of  contracting  authorities  is  not  conducive  to 
efficiency.  Centralised  purchasing  has  become  more  widely  used  for  certain  standard 
procurements,  but  contract  management  and  ex-post  evaluation  of  procurement  processes  is 
still  very  rare.  Lowest  price  as  the  only  award  criterion  is  still  applied  in  90%  of  all 
procedures.  Further  efforts  are  necessary  to  align  procurement  planning  with  the  allocated 
resources. 

On monitoring of contract awards and contract implementation, the number of inspectors 
in the Public Procurement Inspectorate increased from four to eight in 2018. This allowed for 
an increase in  the number of controls  and inspections by more than 150% in  comparison  to 
2017.  The  inspection  services  have  now  the  capacity  to  monitor  some  15%  of  all  contracts 
awarded. Capacity to monitor contract awards and verify contract implementation needs to be 
further strengthened. 

By  October  2018,  582  public  procurement  officers  passed  the  professional  certification  and 
training  programme.  This  figure  is  still  lower  than  the  current  number  of  contracting 
authorities in the country, which stood at 620 in 2017. Practical workshops for representatives 
of contracting authorities and bidders, as well as specialist trainings for the police, courts and 
prosecutors were held in the course of 2018. 

A  regulatory  and  institutional  framework  is  in  place  on  integrity  and  conflict  of  interest 
mechanisms in public procurement. On data management systems, the implementation of an 
e-procurement system has been receiving EU support since November 2018 in view of further 
alignment with the EU acquis. 

Efficient remedies system 

The remedies system is based on a review of appeals by the State Commission for the Control 
of  Public  Procurement  (PPC),  an  independent  administrative  body  reporting  directly  to 
Parliament. Appeals against the PPC decisions can be made to the Administrative Court. The 
number  of  appeals  in  2018  decreased  by  almost  40%,  mainly  as  a  result  of  legal  and 
procedural changes introduced in 2017. In 2018, the PPC decided upon 626 cases, including 
appeals  received  in  2017.  The  administrative  capacity  increased,  leading  to  a  reduction  of 
processing times and case backlogs, but further improvements in the processing times are still 
necessary.  Furthermore,  the  remedies  system  is  still  not  available  for  public-private 
partnerships/concessions  procedures.  The  number  of  Administrative  Court  rulings  annulling 
decisions  of  the  PPC  is  high  at  25%  of  all  reviewed  complaints,  which  points  to  existing 
weaknesses in the remedies system.  

5.6 

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 good level of preparation on company law. As limited progress 
was made on the 2018 recommendations, they remain valid.   

In the coming year, Montenegro should therefore, in particular: 

  adopt the Law on companies, aligned with the EU company law acquis; 

60 

 
 
  adopt  the  necessary  secondary  legislation  to  align  with  EU  corporate  accounting  and 

statutory audit acquis. 

On  company  law,  work  continued  on  the  amendments  to  the  Law  on  companies,  aimed  at 
further  alignment  with  the  EU  acquis  on  a  wide  range  of  issues,  including  cross-border 
mergers, and shareholder rights; the law however has yet to be adopted. National legislation 
on company takeovers is in line with main EU acquis provisions. Secondary legislation was 
adopted  to  further  align  with  the  EU  acquis  on  transparency  requirements  for  listed 
companies.  Further  compliance  of  Montenegro’s  corporate  governance  code  with  EU 
corporate  governance  principles  is  necessary.  The  Central  Registry  of  Commercial  Entities 
keeps an electronic database of companies and makes company data publicly available online. 
Legal  and  technical  preparations  are  underway  to  develop  online  electronic  company 
registration to facilitate the business environment. The database of companies in the business 
register  should  be  ready  to  interconnect  with  EU  Member  States’  business  registers  in  the 
future. 

On corporate accounting and auditing, national legislation includes provisions aligned with 
the EU acquis, including on company size, special provisions for small companies and public-
interest  entities,  rules and procedures on registering  and training of certified auditors,  and a 
system  of  inspection  and  penalties.  All  companies  must  comply  with  international  financial 
reporting  standards  (IFRS),  and  reduced  obligations  exist  for  micro  and  small  companies 
(balance sheet and profit and loss account only). Statutory audits are performed on the basis 
of  international  auditing  standards  (IAS)  and  are  mandatory  for  public-interest  entities.  The 
staff  of  the  Department  for  Audit  Oversight  -  the  competent  authority  for  statutory  audits  - 
was increased; adequate funding must continue to be ensured to enable its proper functioning. 
New  rulebooks  on  accounting  and  audit  aimed  at  further  EU  acquis  alignment  should  be 
adopted.     

5.7 

Chapter 7: Intellectual property law 

The EU has harmonised rules for the legal protection of intellectual property rights (IPR), 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 
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.  Good  progress 
was made as regards coordination of concerned bodies, joint operations and reporting.  

In the coming year, Montenegro should in particular: 

  develop and adopt a new national intellectual property strategy; 

  align with the EU acquis on the collective management of copyright and related rights; 

  improve its track record on investigations, prosecutions and judicial follow-up. 

On  copyright  and  neighbouring  rights,  collective  management  of  copyright  and  related 
rights and multi-territorial licensing of rights in musical works for online use still need to be 
fully reflected in the national legislation. A licence was issued on the collective management 
of reprographic rights of written works, bringing the number of collective rights management 
organisations  in  Montenegro to  three. Future collective management of intellectual property 
rights (IPR) should be aligned with the EU Collective Rights Management Directive. 

On  industrial  property  rights,  there  was  further  progress  on  integrating  IT  tools  into  the 
public  administration.  The  European  Union  Intellectual  Property  Office  (EUIPO)  search 

61 

 
 
engines  TmView,  DesignView  and  the  EUIPO  User  Satisfaction  Survey  (USS)  have  been 
fully  integrated.  The  World  Intellectual  Property  Office  Industrial  Property  Automation 
System (IPAS) for trademarks has also been implemented. 

On  enforcement,  Montenegro  provides  quarterly  updates  of  its  statistical  report  and  has 
produced  comparative  statistics  for  the  period  2014-2017.  The  track  record  on  criminal 
investigation  and  prosecution  remains  poor  and  needs  to  improve.  The  intellectual  property 
rights  coordination  team  established  an  interdisciplinary  working  group,  which  so  far  has 
carried out seven actions to suppress and prevent IPR infringements. The Ministry of Health 
started  to  monitor  trafficking  in  counterfeit  medical  products.  Montenegro  has  formally 
requested membership of the European Patent Convention and is expected to become the next 
member of the European Patent Organisation (EPO). 

The staffing of the Intellectual Property Office (IPO) increased by 11 employees. Staffing of 
the  Market  Inspectorate  of  the  Administration  for  Inspection  Affairs  was  increased  by  12 
inspectors trained in IPR matters. The IPO enhanced its international cooperation, intensified 
cooperation  with  the academic community  and traders  and took  an active role in  awareness 
raising. The Office was incorporated into the Ministry of Economy in December 2018. 

5.8 

Chapter 8: Competition policy  

EU rules protect free competition. They include antitrust rules against restrictive agreements 
between companies and abuse of dominant position, and also include rules on concentrations 
between  companies  which  would  significantly  impede  competition.  EU  rules  also  set  out  a 
system  of  State  aid  control.  Governments  are  only  allowed  to  grant  State  aid  if  restrictive 
conditions are met, with a view to preventing distortion of competition. 

Montenegro  is  moderately  prepared  in  this  area.  Some  progress  was  registered,  in 
particular by completing the set-up of the independent State aid authority. Montenegro has a 
good level of preparation as regards alignment with the EU acquis on antitrust and mergers. 
The State aid legislative framework is to a large extent aligned with the EU  acquis. Further 
significant  efforts  are  needed  in  the  enforcement  of  the  antitrust,  mergers  and  State  aid 
legislation.  

In the coming year, Montenegro should in particular:  

  ensure  the  functioning  of  the  State  aid  authority,  now  placed  in  the  Agency  for  the 
Protections of Competition, and the effectiveness of its control on State aid at all levels, 
including the building up of an enforcement record;  

  ensure transparency on all State aid decisions;  

  improve the track record of the Agency for the Protection of Competition on antitrust and 

mergers.  

The  legislative  framework  provides  a  good  level  of  alignment  with  the  EU  acquis  and  the 
Stabilisation  and  Association  Agreement  (SAA).  The  Law  on  protection  of  competition  is 
largely  aligned  with  TFEU  Articles  101  on  restrictive  agreements  and  102  on  abuses  of 
dominant  position.  The  law  also  provides  for  ex  ante  control  of  mergers  above  certain 
turnover thresholds, in line with the principles of the EU Merger Regulation. A good level of 
implementing legislation is in place. Secondary legislation is largely in line with the relevant 
EU acquis regulations and Commission guidelines.  

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

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The powers of the APC are broadly comparable to those of the European Commission in the 
area of competition. It may (i) act upon a complaint or a notification (e.g. for mergers) or on 
its  own  initiative,  request  information  and  carry  out  on-site  investigations;  (ii)  approve 
mergers, with or without conditions, or prohibit them; and (iii) comment on draft legislation 
that may affect competition. The APC’s decisions may be appealed before the Administrative 
Court. A leniency policy for self-reporting cartel members is in place. However, fines can still 
only be imposed by a decision of misdemeanour courts, not directly by the APC.  

On  enforcement  capacity,  the  APC’s  staffing  level  and  expertise  remain  insufficient.  On 
implementation,  the  number  of  decisions  on  cartels  and  abuses  of  dominant  position  has 
stagnated over time, with six in 2014, three in 2015, four in 2016, none in 2017, and two in 
2018. No in-depth investigation of a merger has been reported by the APC since 2015, while 
to date the misdemeanour court has imposed only one fine in 2014 and two in 2017. The APC 
has so far carried out only two on-site inspections, none of which during the reporting period. 
The APC issued three opinions on primary legislation. To demonstrate that it is stepping up 
its enforcement policy, the APC needs to make full use of its enforcement powers, by carrying 
out more on-site inspections, and further promoting the use of its leniency policy as a means 
to  uncover  cartels.  The  courts’  capacity  to  handle  complex  competition  cases  must  be 
significantly strengthened. 

State aid  

The  legislative  framework  is  to  a  large  extent  in  line  with  the  EU  acquis  and  the  SAA  as 
well as with Articles 107 and 108 TFEU. One important piece of the legislative framework is 
the 2018 Law on State aid control, which sets out the notion of aid as well as procedural State 
aid rules. However, important parts of the EU  acquis, such as the Banking Communication, 
have  not  yet  been  aligned  with.  The  rules  on  the  financing  of  services  of  general  economic 
interest  are  largely  aligned  with  the  EU  State  aid  acquis,  however  Montenegro  needs  to 
demonstrate their proper enforcement.  

Amendments to the Law on the protection of competition entered into force in March 2018. 
They expanded the mandate of the APC to include State aid control, in order to meet the SAA 
requirement on the operational independence of the State aid authority.  

As  regards  the  institutional  framework,  the  State  Aid  Control  Commission  (SACC)  was 
dismantled  in  July  2018.  In  line  with  the  Law  on  State  aid  control,  the  newly  established 
Council  of  the  APC  took  over  its  responsibilities.  Decisions  on  State  aid  can  be  appealed 
before the Administrative Court.  

The  State  aid  authority  has  yet  to  establish  a  solid  track  record  on  enforcement.  The 
enforcement  capacity  of  the  former  SACC  and  the  current  APC  Council  remains 
significantly  insufficient.  The  SACC  was  assisted  by  the  Ministry  of  Finance’s  State  Aid 
Control  Unit,  which  continued  to  have  a  staff  of  seven.  The  State  Aid  Control  Unit  was 
transferred to the APC in January 2019.  

On  implementation,  the  number  of  decisions  adopted  by  the  SACC  decreased  from  31  in 
2015  to  19  in  2016  and  13  in  2017  before  rising  to  22  in  2018  (with  only  two  negative 
decisions taken in  2015). The SACC received no complaint between  2013 and 2018, which 
could  indicate  a  low  awareness  of  State  aid  rules  among  stakeholders.  There  is  continued 
evidence  that  some  aid  measures  granted  at  central  or  local  level  (e.g.  through  VAT 
exemptions  or  debt  relief),  in  particular  to  large  companies,  were  not  notified  or  properly 
investigated  by  the  SACC/APC.  One  example  is  Montenegro  Airlines,  where  further  State 
support  was  granted,  including  in  the  reporting  period,  to  keep  the  airline  operational.  This 
happened  despite  the  “one  time  last  time”  principle,  as  the  airline’s  2012  restructuring  plan 

63 

 
 
has only been partially implemented. In the future, the State aid authority should also further 
monitor the implementation of State aid rules in large projects undertaken in cooperation with 
third countries. It should thus have access to all necessary information to provide opinions and 
take  binding  decisions.  Awareness  of  State  aid  rules  among  aid  grantors  is  still  insufficient 
and advocacy must be stepped up considerably.  

Liberalisation  

The  Law on the protection of competition  and the  Law on State aid  control apply to  public 
undertakings  and  undertakings  with  special  or  exclusive  rights.  This  does  not  include  cases 
where  applying the laws would obstruct the performance of the particular tasks of services of 
general economic interest assigned to such undertakings, in line with Article 106 TFEU and 
with the SAA. There are no monopolies of a commercial character as provided for in Article 
37 TFEU. 

5.9 

Chapter 9: Financial services  

EU  rules  aim  to  ensure  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  on  legal  alignment  and  in  addressing  the  high  level  of  non-performing  loans,  as 
recommended last year.  

In the coming year, Montenegro should in particular:  

  further  advance  its  alignment  with the  EU  acquis  through  the  adoption  of  legislation  on 

deposit protection and the reorganisation and winding-up of credit institutions.  

On  banks  and  financial  conglomerates,  the  legislation  is  partially  aligned  with  the  EU 
acquis  and  based  on  Basel  II  rules.  Work  has  continued  on  further  legislative  alignment  on 
capital  requirements  and bank recovery and resolution.  In May 2018, the  Law on voluntary 
financial restructuring of debts to financial institutions was amended and extended for another 
calendar year to facilitate further the resolution of non-performing loans.  

The  Central  Bank  of  Montenegro  adopted  the  macro-prudential  policy  framework  in  June 
2018, which also provides guidelines in case of systemic risks to the financial stability in the 
country, further extending the supervisory tasks of the central bank. Secondary legislation for 
the  2017  Law  on  financial  leasing,  factoring,  purchase  of  receivables,  micro-lending  and 
guarantee operations was also adopted to further regulate the sector.  

The non-performing loan ratio declined to 6.7% in September 2018, although large disparities 
still  exist  between  bigger  and  smaller  financial  institutions.  In  December  2018,  the  central 
bank  introduced  interim  administration  in  two  small  banks.  In  January  2019,  based  on  the 
reports of interim administration and current banking legislation, the central bank introduced 
bankruptcy proceedings in one of them (Invest Bank) and at the beginning of April 2019 in 
the other (Atlas Bank). 

Montenegro’s rules on insurance and occupational pensions are partially aligned with those 
of the EU and are primarily based on Solvency  I rules. Work on further alignment  with the 
EU acquis continues. The Insurance Supervision Agency adopted secondary legislation based 
on the 2016 Law on insurance, including on depositing and investing technical reserve funds 
of the insurance company. Amendments have been prepared to the Law on compulsory traffic 
insurance in order to align it with the EU rules. 

64 

 
 
On  financial  market  infrastructure,  securities  markets  and  investment  services,  the 
Securities and Exchange Commission has been transformed in the Capital Market Authority 
following the adoption of the Law on capital markets in December 2017. The Capital Market 
Authority adopted extensive secondary legislation related to the Law on capital markets and 
to the Law on investment funds, which provide for partial alignment with the EU  acquis on 
rules concerning markets in financial instruments, securities, investment funds, prospectuses 
and capital markets. 

5.10  Chapter 10: Information society and media 

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

internal  market 

functioning  of 

the  smooth 

the 

Montenegro  remains  moderately  prepared  in  the  area  of  information  society  and  media. 
There was no progress during the reporting period and the previous recommendations have 
not been implemented. A new set of media laws, aimed at strengthening the responsibilities of 
the  regulatory  authorities  for  electronic  communication  and  electronic  media  is  in  the 
consultation  phase.  The  regulatory  authorities’  capacity  and  independence  will  need 
improvement to implement the new media laws. 

In the coming year, Montenegro should in particular: 

  create  the  conditions  for  the  media  regulators  and  public  service  broadcaster  to  operate 

free from undue political interference and in line with professional standards; 

  grant  the  Agency  for  Electronic  Media  (AEM)  powers  to  impose  a  complete  set  of 
measures,  including  warnings,  fines,  suspensions  and  revocation  of  licences  ensuring 
proportionality and effectiveness; 

  establish a track record to  demonstrate administrative capacity to  enforce the EU  acquis 
for  electronic  communications,  information  society  services  and  audio-visual  media 
services, including as regards regulatory independence. 

The electronic communications and information and communication technologies  sector 
is regulated by the Law on electronic communications. The Ministry of Economy’s General 
Directorate  for  Electronic  Communications,  Postal  Services  and  Radio  Spectrum  is 
responsible for this area. Mapping of the national broadband infrastructure continued with a 
view  to  reducing  broadband  deployment  costs,  as  recommended  by  the  Economic  Reform 
Programme (ERP). 

The European emergency number 112 has been implemented and is functioning. 

Information  society  is  under  the  responsibility  of  the  Ministry  for  Public  Administration. 
The  2018-2020  action  plan  implementing  information  society  development  strategy  was 
adopted. It is based on the Digital  agenda for Europe and the Digital  single market strategy 
and  identifies  key  steps  to  achieve  necessary  standards  such  as  accessibility  of  broadband 
services,  cyber security, digital  business,  eHealth and e-education. The 2018 action plan for 
the implementation of the cyber security strategy 2018-2021 was also adopted. A Council for 
Information  Security  is  in  place,  in  accordance  with  the  EU  Network  and  Information 
Security  Directive  (NIS).  Legal  provisions  on  electronic  identification  and  electronic 
signature  were  further  detailed  in  line  with  the  electronic  identification  and  trust  services 
(eIDAS)  Regulation.  The  e-government  portal  currently  supports  527  electronic  services 
under the competence of 50 institutions, among which 191 services for natural persons, 313 
services for legal persons and 23 services for the public administration. Authorities took part 

65 

 
 
in  the  preparations  of  the  Regional  Roaming  Agreement  and  signed  the  agreement  in  April 
2019.  

On  audio-visual  policy,  AEM,  the  regulatory  agency  for  electronic  media  continues  to 
exercise its mandate in a professional manner. The Agency is responsible for overseeing the 
media  during  elections,  although  by  law  this  should  be  done  by  an  ad-hoc  parliamentary 
committee,  thus  creating  an  overlapping  jurisdiction.  During  elections,  candidates  lodging 
media-related complaints to the broadcasters can appeal against their decisions directly to the 
AEM, which has  to  respond within 24 hours. However, AEM lacks the authority to  impose 
appropriate  sanctions,  as  it  is  limited  to  issuing  either  warnings  or  suspending  licences. 
Related legal provisions  and AEM operational capacities should be strengthened. The AEM 
should be the only body responsible for supervising broadcasters during elections. 

A  new  set  of  media  laws  has  been  drafted,  including  on  electronic  media  and  the  national 
public  broadcaster.  The  Law  on  public  broadcaster  is  expected  to  continue  to  regulate  the 
financing  of  the  public  broadcaster  Radio  Televizija  Crne  Gore  (RTCG)  through  a  contract 
between it and the government. The State currently allocates 0.3% of GDP for RTCG, while 
additional  revenues  are  generated  from  marketing  activities.  The  Law  lays  down  a  clear 
distinction between commercial and public funds, with the assessment that the latter make up 
90%  of  the  revenues.  RTCG’s  budget  for  2019  is  expected  to  further  increase  due  to  the 
projected  GDP  growth.  Stable  financial  resources  need  to  be  ensured,  and  editorial 
independence  and  professional  standards  restored.  Dismissals  from  the  RTCG  and  AEM 
councils  raised  serious  concerns  about  their  representativeness,  independence  and  ability  to 
operate without undue influence and political pressure. 

5.11  Chapter 11: Agriculture and rural development  

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

Montenegro remains moderately prepared in the area of agriculture and rural development. 
Good  progress  continued  in  particular  on  the  implementation  of  the  Instrument  for 
Pre-accession Assistance for Rural Development programme (IPARD II).  

In the coming period, Montenegro should in particular:  

  implement  the  measures  entrusted  to  it  under  the  IPARD  II  programme  and  seek  to  be 

entrusted with budget implementation tasks for other measures of the programme; 

  implement the action plan for EU acquis alignment on agriculture and rural development, 
in  particular  by  further  developing  the  Integrated  Administration  and  Control  System 
(IACS). 

On horizontal issues, progress remains to be made in bringing direct support measures in line 
with  the  EU  acquis  by  fully  decoupling  them  from  production  and  linking  the  payments  to 
cross-compliance.  A  Land  Parcel  Identification  System  (LPIS)  has  been  established  and  is 
operational on a pilot basis. Work should continue on its further expansion. Preparatory steps 
are  being  taken  to  establish  a  decentralised  branch  for  the  future  paying  agency.  The 
development of a Farm Accountancy Data Network (FADN) remains to be completed. Farm 
advisory services are provided, but these services need to be strengthened. 

On common market organisation, following the adoption of the Law on the organisation of 
the market in agricultural products in 2017, Montenegro continued the process of EU acquis 
alignment by adopting several pieces of secondary legislation.   

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On rural development, implementation of IPARD II continued with two successful calls for 
proposals  for  the  measures  ‘Investments  in  physical  assets  of  agricultural  holdings’  and 
‘Investments  in  physical  assets  concerning  processing  and  marketing  of  agricultural  and 
fishery products’. Montenegro strived to be entrusted with the management of two additional 
measures:  ‘Farm  Diversification  and  Businesses  Development’  and  ‘Technical  Assistance’. 
To further improve implementation of the IPARD II programme, the IPARD Agency should 
continue to increase its capacity and complete its staffing.  

On quality policy, following the adoption of the Law on quality schemes for agriculture and 
food  products  in  2017,  secondary  legislation  has  been  adopted  and  two  products  have  been 
protected as geographical indications at national level. 

Organic farming development remains slow, although the required infrastructure is in place 
(i.e.  the  competent  authority,  an  accreditation  system  for  control  bodies  and  a  certification 
system). Montenegro should further explore the business opportunities in this growing sector. 

5.12  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  remains  moderately  prepared  on  this  chapter.  Good  progress  was  made, 
including on implementing the strategy for transposing and implementing the EU acquis and 
on the upgrading process of food establishments. 

In the coming year, Montenegro should in particular:  

  implement the strategy for aligning with and implementing the EU acquis, especially with 

regards to food safety controls, and as concerns inspection and control capacity;  

  implement the programme for improving raw milk quality and the accompanying plan for 

handling non-compliant raw milk;  

  support the ongoing process of upgrading  food establishments. 

On general food safety, the integral 2018 safeguard measures programme for food and feed 
safety was adopted and has been implemented since February 2018. 

On  veterinary  policy,  amendments  to  the  Veterinary  Law  were  adopted  in  June  2018.  The 
multi-annual  programme for the eradication of rabies continued, and the  spring  and autumn 
2018  vaccination  campaigns  were  completed.  Since  2012,  no  cases  of  rabies  have  been 
reported. Vaccination against lumpy skin disease and bluetongue disease continued in 2018. 
There have been no cases of lumpy skin disease since September 2016 and no reported cases 
of  bluetongue  disease  since  May  2017.  The  results  for  rabies,  lumpy  skin  disease  and 
bluetongue  disease  are  important  steps  towards  stopping  their  spread  into  the  EU  and 
contributing to  their eradication.  The programme of compulsory measures for animal  health 
protection  for  2018  was  implemented  and  the  national  programme  to  improve  facilities 
dealing with products or by-products of animal origin was further pursued. Capacity building 
for veterinary services continued.  

On  the  placing  on  the  market  of  food,  feed  and  animal  by-products,  the  national 
programme  for  improving  raw  milk  quality  and  accompanying  plan  for  handling  non-
compliant  raw  milk  were  adopted  in  June  2018,  creating  the  preconditions  to  improve  the 
quality of raw milk according to EU standards. The national programme for the upgrading of 
food-processing establishments continued. Some 64 establishments producing food of animal 
origin were compliant with EU regulations, and 13 of them are licensed to export to the EU. 

67 

 
 
In June 2018, the government adopted a plan for the management of animal by-products not 
intended  for  human  consumption  and  started  its  implementation.  The  programme  for 
monitoring  of  undesirable  substances  in  feed  was  adopted  in  August  2018  and  its 
implementation has started to align with EU standards in this area.   

Secondary legislation on food safety rules and on specific rules for feed was adopted.  

On phytosanitary policy, amendments to the Law on plant nutrition products were adopted 
in  June  2018,  as  were  several  pieces  of  secondary  legislation  in  the  area  of  phytosanitary 
policy.  The  programme  of  phytosanitary  measures  for  2018  was  adopted  and  implemented. 
The implementation of the national plan for the sustainable use of plant protection products 
continued,  in  line  with  the  2016-2021  action  plan.  Capacity  building  for  phytosanitary 
services was further pursued. 

On genetically-modified organisms, the programme for genetically modified food and feed 
monitoring was adopted in November 2018 and its implementation has started. 

5.13  Chapter 13: Fisheries 

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

Montenegro  is  at  an  early  stage/  has  some  level  of  preparation  in  this  area.  While  some 
progress  was  made  in  this  area,  last  year’s  recommendations  have  not  yet  been  fully 
addressed.  

In the coming year, Montenegro should, in particular:  

  implement its action plan on aligning with, implementing and enforcing the EU acquis;  

  strengthen  administrative,  data  collection,  scientific  advice,  inspection  and  control 

capacities. 

  at  international  level,  continue  implementing  actions  agreed  under  the  Ministerial 
Declaration  MedFish4Ever,  the  Regional  plan  of  action  for  sustainable  small-scale 
fisheries in the Mediterranean and the Black Sea and the recommendations of the General 
Fisheries Commission for the Mediterranean (GFCM). 

Montenegro  continued  to  implement  its  action  plan  on  aligning  with,  implementing  and 
enforcing  the  EU  acquis.  Administrative  capacity  in  this  area  was  further  strengthened 
through training of the existing staff at in the Directorate General for Fisheries.  

On resource and fleet management, the annual data collection programme on Montenegrin 
fisheries was reviewed and its implementation continued using the newly developed register 
of biological and sampling data within the Fisheries Information System (FIS). 

On inspections and control, the FIS was significantly improved by developing the following 
subsystems:  a  register  of  stakeholders  in  fisheries,  a  vessel  register,  a  licences  system,  sale 
notes,  electronic  log  books,  catch  certificates,  and  a  biological  and  sampling  data  register. 
The Vessel Monitoring System (VMS) was overhauled in order to be fully integrated into the 
rest  of  the  subsystems.  An  automatic  location  and  identification  system  for  fishing  vessels 
exceeding  10m 
installed  and  connected  with  VMS.  An 
inter-institutional  data  exchange  has  been  established  by  connecting  FIS  and  the  Maritime 
Transport  Surveillance  System  with  the  aim  of  helping  protect  fishermen’s  safety  and 
reducing illegal fishing activities. 

length  overall  was  also 

68 

 
 
Montenegro established a register of State aid for the marine fisheries sector in accordance 
with the action plan for the 2015-2020 fisheries strategy. 

There  were  no  substantial  developments  on  fleet  management,  structural  actions  and 
market  policy.  At  the  international  level  (GFCM),  Montenegro  has  signed  the  Ministerial 
Declaration  adopting  a  Regional  plan  of  action  for  sustainable  small-scale  fisheries  in  the 
Mediterranean and the Black Seas. 

5.14  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.  There  was  some  progress  on  legislative  alignment  with  the  EU  acquis,  but  overall 
there  was  no  progress  in  completing  key  outstanding  sector  reforms  and  the  2018 
recommendations remain valid. In the coming year, Montenegro should in particular: 

  ensure  the  operational  independence  and  appropriate  staffing  of  the  railway  regulatory 

body and the railway safety authority; 

  lay down the strategic framework for implementing intelligent transport systems (ITS) on 

its core road, rail and maritime network and to align with the EU ITS Directive; 

  achieve full membership of the Paris Memorandum of Understanding (MoU) on Port State 

Control. 

On the general transport EU acquis, the new transport development strategy and its related 
action  plan  are  yet  to  be  adopted.  There  was  no  further  alignment  with  the  EU  acquis 
concerning  summertime  arrangements,  public  service  obligations,  passengers'  rights,  and 
procedures and criteria for the award of public service contracts in the field of road and rail 
transport. The administrative capacity of the Ministry of Transport and Maritime Affairs has 
improved,  but  there  is  a  need  to  further  increase  the  number  of  trained  staff  working  in 
regulatory functions and to achieve stronger inter-ministerial coordination. 

On road transport, legislative amendments were adopted in November 2018 to the Law on 
working hours, mandatory break periods of mobile workers and recording equipment, further 
aligning  with  the  EU  acquis  on  the  social  conditions  of  mobile  workers.  Montenegro  is 
applying digital tachographs, but is not aligned yet with the EU acquis on smart tachographs. 
The new Law on roads is still to be adopted. Implementation of the Law on the  transport of 
dangerous  goods  is  lagging  behind  and  the  national  body  for  the  control  of  transport  of 
dangerous goods has not been set up yet. The legislative framework for intelligent transport 
system is still at an early stage of preparation. 

More efforts are needed on aligning with and implementing the social EU acquis, as well as 
aligning with EU legislation and implementing good practices in road safety. The 50% fatality 
reduction  target  by  2019  was  achieved,  but  more  coordinated  action  is  needed  by  all 
responsible institutions, especially for education and awareness-raising among road users. The 
preparation  of  the  new  2020-2030  road  safety  strategy  should  be  finalised  in  2019.  In 
November 2018, the government adopted the 2019-2022 programme for the reconstruction of 
state  roads,  with  a  EUR  185  million  budget.  Further  efforts  are  needed  on  establishing  a 
national system for continuous road crash data collection. 

On rail transport, a new railway law is yet to be adopted. The former railway directorate has 
recently become a single administrative body, but is not yet functioning as an independent and 

69 

 
 
effective railway regulatory and safety authority. The government adopted a EUR 6.8 million 
rail maintenance programme but multi-annual maintenance contracts have not been finalised 
yet.  

Public transport and compliance with passengers’ rights remain a concern. Further efforts are 
needed to implement related EU legislation effectively and to reduce delays and cancellations 
of trains. Further secondary legislation for the interoperability of the rail systems was adopted 
in July 2018. The network statement for 2019 was published, but its content and methods for 
calculating  charges  need  to  be  further  aligned  with  the  EU  acquis.  Track  access  to  freight 
terminals  needs  to  be  prepared  in  line  with  the  revised  methodology  and  information  on 
available  services  and  charges  need  to  be  included  in  the  network  statement  of  the 
infrastructure manager.   

On  maritime  transport,  the  ports  management  authority  and  the  maritime  safety  affairs 
authority  were  merged  in  a  single  administrative  body.  The  adoption  of  several  rulebooks 
provided  further  alignment  with  the  EU  acquis,  but  no  further  progress  was  observed  on 
achieving full member status of the Paris MoU on Port State Control. The implementation of 
the  National  Maritime  Single  Window  is  still  lagging  behind.  Secondary  legislation  on  a 
single window for formalities is yet to be adopted. The community vessel traffic monitoring 
and information system (VTMS, phase one) has been successfully operational since 2015 and 
its upgrade and expansion to inland waterways is planned by the end of 2020. 

On  inland  waterway  transport,  no  progress  was  made  on  alignment  with  the  relevant  EU 
acquis; the Law on merchant shipping is  yet to  be adopted.  Montenegro takes part in in the 
EU  strategy  for  the  Danube  region  (EUSDR).  However,  the  country  is  not  a  signatory  of 
international  agreements  on  internal  navigation.  Montenegro  has  a  bilateral  agreement  with 
neighbouring Albania on the border crossing across Lake Skadar. 

On  aviation,  Montenegro  has  a  good  level  of  alignment  with  the  EU  acquis  under  the  first 
transitional phase of the European Common Aviation Area (ECAA) and the Single European 
Sky (SES). However, there are still outstanding issues on economic regulation with the ECAA 
first transitional phase, which need to be urgently addressed. The Law on legal obligations in 
air  transportation  was  amended,  providing  for  further  alignment  with  the  EU  acquis  on 
compensation and assistance to passengers in the event of denied boarding and cancellation or 
long delay of flights. The adoption of several rulebooks in 2018 provided an advanced level 
of  alignment  with  the  EU  acquis  on  aviation  safety,  air  navigation  services  and  air  traffic 
management.  

Montenegro is applying security standards equivalent to the EU common basic standards on 
civil  aviation  security  for  the  purposes  of  one-stop  security  with  the  EU  on  passengers, 
baggage, aircraft and cargo. 

The government plans to offer 25- or 30-year concessions the country’s two main airports in 
Podgorica and Tivat. The future concessions should comply with the upcoming legislation on 
public-private  partnership  and  concessions.  The  national  airline  company  Montenegro 
Airlines continues to face financial sustainability problems; an option study was conducted in 
2018, but no decision on the future of the company was taken yet.  

The  beginning  of  2019  saw  the  adoption  of  amendments  to  the  national  air  transport 
facilitation programme. 

No further progress  can be reported on  combined transport, since the adoption of the new 
Law on combined freight transport in 2014. Significant efforts are needed to further develop a 
balanced  intermodal  transport  approach,  especially  for  container  transport  from  the  port  of 
Bar. 

70 

 
 
5.15  Chapter 15: Energy  

EU  energy  policy  covers  energy  supply,  infrastructure,  the  internal  energy  market, 
consumers,  renewable  energy,  energy  efficiency,  nuclear  energy  and  nuclear  safety  and 
radiation protection.  

Montenegro has reached a good level of preparation in this area. Some progress was made 
in the reporting period, especially on further legislative alignment related to renewable energy. 
The 2018 recommendations remain valid. 

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

 create  or  join  a  functioning  day-ahead  market  and  couple  with  neighbouring  markets, 

including Italy;  

 move to market-based support schemes for renewable energy production and streamline the 

permitting and connection procedures;  

 adopt the Law on security of supply of oil products and set up the stockholding body for 

the mandatory oil stocks.  

On security of supply, Montenegro has an energy development strategy up to 2030, with  a 
2016-2020 action plan and a long-term energy balance for 2017-2019. The 2015 action plan 
on compulsory strategic reserves of oil and petroleum products is yet to be revised. The Law 
on  security  of  supply  of  oil  products,  in  preparation  since  2016,  and  the relevant  secondary 
legislation need to be adopted and the central body for strategic oil reserves established. The 
current level of stocks remains close to zero.  

Montenegro has been a member of the European Network of Transmission System Operators 
in  Electricity  since  its  beginning,  and  CGES,  the  country’s  national  transmission  system 
operator,  was  certified  in  April  2018.  An  interconnection  with  Italy  is  planned  to  be 
operational at the end of 2019, and others with Serbia and Bosnia and Herzegovina are also 
planned. 

Despite  the  signature  of  a  multilateral  memorandum  of  understanding  under  the  Berlin 
process to establish a day-ahead market and merge it with a neighbouring market, there was 
no  progress  on  market  coupling  and  on  day-ahead  market  integration.  The  BELEN  power 
exchange sent to potential partners a request for submission of a final binding bid to establish 
a strategic partnership. 

Concerning the internal energy market, the 2015 Energy Law and the 2016 Law on cross-
border  exchange  of  electricity  and  natural  gas  provide  alignment  with  the  Third  Energy 
Package.  However,  Montenegro  does  not  have  a  gas  market.  During  2018,  Montenegro 
achieved further legislative alignment with the EU acquis through the adoption of secondary 
legislation, including a rulebook on the publication of data in electricity markets. Secondary 
legislation needs to be further adopted in order to promote interconnection projects. 

The  distribution  system  operator  has  been  unbundled  since  2016.  The  wholesale  and  retail 
electricity markets in Montenegro are formally open for competition, and the market has been 
open  for  individual  customers  since  January  2015.  A  decree  on  the  supply  of  vulnerable 
electricity  customers was adopted in  November  2018, but  the supplier of last resort has not 
yet been selected.   

Despite  the  favourable  investment  environment,  challenges  remain  over  connection  of  new 
generation facilities to the system, expropriation procedures and drafting planning documents. 

71 

 
 
The  Energy  Regulatory  Agency  (ERA)  is  an  operationally  and  financially  independent 
authority with 35 staff, and has been an observer in the Agency for the Cooperation of Energy 
Regulators (ACER) since January 2018. ERA regulates prices for electricity supplied to small 
customer  and  households  entitled  to  universal  service  based  on  market  prices  and  prices  of 
grid  services.  Wholesale  electricity  market  prices  are  freely  formed.  ERA’s  overall 
independence still requires further improvement, since its statutes are subject to governmental 
approval. In addition, the possible penalty levels that ERA can apply are significantly below 
the legally required 10% threshold. The Agency’s ability to attract and retain highly qualified 
staff remains a reason of concern.  

The national legislation  is  aligned with  the EU  Hydrocarbons  Licensing  Directive;  the EU 
Safety of Offshore Operations Directive is yet to be fully implemented. Concession contracts 
for production of hydrocarbons were signed in 2016 and 2017 and related investigation works 
in  the  submarine  area  started  in  November  2018.  Further  to  the  adoption  in  2017  of  the 
gasification master plan, including the list of priority investment projects, progress was made 
on preparatory studies for the Ionian-Adriatic gas pipeline.  

The renewable energy national action plan aims to achieve a target of 33% of energy from 
renewable  sources  in  gross  final  energy  consumption  by  2020.  In  2017,  40%  of  gross  final 
consumption of energy came from renewable sources, largely due to the revision of biomass 
data. Some secondary legislation was adopted to further align with the EU Renewable Energy 
Directive, mainly on the mandatory share of biofuel in the transport sector and sustainability 
criteria  for  biofuels  and  bio-liquids.  In  2018,  regulations  were  adopted  on  (i)  issuing, 
transferring  and  withdrawing  guarantees  of  origin  of  electricity  produced  from  renewable 
energy  sources  and  high  efficiency  cogeneration,  and  (ii)  an  incentive  fee  to  foster  energy 
production. Support to renewable energy producers is based on feed-in tariffs. Montenegro is 
yet to adopt rules for auctions for granting support to renewable energy producers compliant 
with the 2014-2020 guidelines on State aid for environmental protection and energy. 

In December 2018, the Ministry of Economy awarded a contract to design, build, operate, and 
maintain a solar plant with an installed capacity of 250 MW at Briska Gora (near Ulcinj). The 
contract went to a consortium of Finland’s state energy company, Montenegro’s state power 
utility and the company Sterling and Wilson.  

The development of new projects, particularly on hydropower, should be in conformity with 
the  EU  acquis  on  concessions  and  environment  and  should  take  into  account  the  impact  on 
areas of high natural interest. 

On  energy  efficiency,  amendments  to  the  Law  on  efficient  use  of  energy  to  ensure  further 
alignment  with  the  EU  Energy  Efficiency  Directive  were  not  adopted.  The  annual  energy 
efficiency  operating  plan  for  public  administration  institutions  was  adopted  in  March  2018. 
Montenegro  submitted  its  second  annual  report  under  the  Energy  Efficiency  Directive  in 
November  2018.  Additional  efforts  are  needed  to  fully  align  Montenegro’s  regulatory 
framework  with  the  Energy  Performance  of  Buildings  Directive  and  with  the  Labelling 
Regulation.  The  envisaged  change  in  status  of  the  Directorate  for  Energy  Efficiency  to  a 
department within the Directorate for Energy might reduce the capacity for effective energy 
efficiency  action.  Administrative  capacity  still  has  to  be  considerably  strengthened,  in 
particular for inspection supervision and local administration. The energy efficiency fund has 
not  been  established.    Montenegro  should  also  improve  statistical  data  collection  and  put  in 
place a functional system for calculating energy efficiency indicators and savings as well as 
monitoring the implementation of the Energy Efficiency Action Plan of 2016. 

On nuclear energy, nuclear safety and radiation protection, the Law on ratification of joint 
protocol  relating  to  application  of  the  Vienna  and  the  Paris  Convention  was  adopted  in 

72 

 
 
December  2018.  In  June  2018,  the  International  Atomic  Energy  Agency  carried  out  an 
inspection of nuclear materials in Montenegro.  

Montenegro does not have a nuclear industry, research reactor or any other facility producing 
radioactive materials, and national legislation prohibits the construction of nuclear facilities. 

Montenegro is a party to the Convention on nuclear safety as well as the Joint Convention on 
the safety of spent fuel management and on the safety of radioactive waste management. The 
country does not envisage using or building nuclear power plants. 

Montenegro  is  implementing  the  2017-2021  strategy  and  action  plan  for  protection  from 
ionising radiation, radiation safety  and management  of  radioactive waste. There is  only  one 
central  storage  facility,  which  was  licensed  in  2012,  and  provides  63  m2  of  storage  for 
radioactive  waste.  National  legislation  on  ionising  radiation  protection  and  basic  safety 
standards is still partly aligned with the EU acquis. Full alignment with the EU Directive on 
the supervision and control of shipments of radioactive waste and spent fuel is pending. The 
amendments to the Convention on the physical protection of nuclear material were ratified in 
2016.  Montenegro  is  implementing  the  Treaty  on  the  non-proliferation  of  nuclear  weapons 
and additional protocols.  

Montenegro  has  provided  all necessary  information  in  connection  with  the  European 
Community arrangements for the early exchange of information in the event of a radiological 
emergency  (ECURIE),  and  made  progress  towards  becoming  a  fully  operational  member. 
Montenegro  should  also  join  the  European  Radiological  Data  Exchange  Platform,  which  is 
part of the ECURIE arrangements.  In December 2018, the radon protection programme and 
its 2019-2023 action plan were adopted. 

The  national  regulatory  body  for  radiation  and  nuclear  safety  and  security  for  ionising 
radiation  is  composed  of  eight  members  representing  the  Ministry  of  Sustainable 
Development and Tourism, the Ministry of Interior, the Nature and Environmental Protection 
Agency and the Administration for Inspection Affairs. Montenegro has currently no intention 
to  participate  in  the  Capital  and  Advisory  Committee  of  the  Euratom  Supply  Agency.  The 
country is not a member of the European Nuclear Safety Regulators Group. 

5.16  Chapter 16: Taxation  

EU rules on taxation cover value-added tax and excise duties as well as aspects of corporate 
taxation.  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 
area. While there was some progress on last year’s recommendations, as Montenegro joined 
the Global Forum on Transparency and Exchange of Information for Tax Purposes, they have 
not  all  been  fully  or  adequately  addressed,  and  are  therefore  partly  reiterated  below. 
Therefore, in the coming year, Montenegro should:  

  continue  to  implement  the  action  plan  addressing  the  issues  highlighted  by  the  TADAT 

(tax administration diagnostic assessment tool  analysis); 

  ensure  that  by  end  2019  it  has  joined  OECD’s  Inclusive  Framework  on  BEPS  (base 
erosion and profit shifting), and has signed and ratified the OECD Multilateral Convention 
on mutual administrative assistance in tax matters. 

Montenegro is implementing its action plan to address the issues highlighted by the TADAT 
analysis.  Of  the  80  activities  foreseen  in  the  action  plan,  24  have  been  completed,  52  have 

73 

 
 
been  started  or  are  ongoing,  while  four  activities  have  not  yet  been  realised  or  have  been 
postponed. 

The Montenegrin tax administration is implementing its annual action plan for suppression of 
the  grey  economy;  between  January  and  December  2018,  it  conducted  3  416  tax  audits, 
detected  434  irregularities,  and  issued  fines  totalling  over  EUR  1.15  million.  The  tax 
administration  also  pursued  its  efforts  to  increase  tax  compliance  in  connection  with 
non-resident  seasonal  workers.  The  national  tax  administration's  business  strategy  has  been 
updated for the period 2019-2022, in accordance with the EU fiscal blueprint. 

On  indirect  taxation,  the  specific  part  of  excise  on  cigarettes  -  which  had  risen  to  EUR 
40/1 000  cigarettes  on  1  January  2018  -  was  lowered  by  EUR  10/1 000  in  July  following  a 
significant  decrease  in  tax  collection.  The  excise  on  unleaded  petrol  and  diesel  was  kept  at 
EUR  549/1 000  litres  and  EUR  440/1 000  litres  respectively.  A  new  law  on  VAT  (value 
added tax), designed to ensure further alignment with the EU acquis still needs to be adopted, 
and exemptions without the right to deduct VAT are not yet aligned either. Similarly, fuel for 
pleasure  boats  continues  to  be  excise  and  VAT  exempt.  On  direct  taxation,  legislative 
changes to the Law on corporate profit tax to ensure greater alignment with several parts of 
the EU acquis still need to be adopted.  

On administrative cooperation and mutual assistance, Montenegro is yet to align with the 
acquis  on  administrative  cooperation.  In  April  2018,  Montenegro  became  a  member  of  the 
Global Forum on Transparency and Exchange of Information for Tax Purposes. By the end of 
2019, Montenegro needs to have joined the OECD Inclusive Framework on BEPS, and signed 
and  ratified  the  OECD  Multilateral  Convention  on  mutual  administrative  assistance  in  tax 
matters. 

On operational capacity and computerisation, there was further progress in improving the 
tax  administration’s  business  processes,  including  a  feasibility  study  on  the  introduction  of 
online  cash  registers.  Development  of  the  specifications  for  the  future  software  solution  is 
ongoing.  

The  Decree  on  the  organisation  and  method  of  work  of  the  state  administration,  adopted  in 
December 2019, made the tax administration an independent administrative body within the 
Ministry  of  Finance.  In  order  to  monitor  the  implementation  of  the  business  strategy  each 
year, a (tax) reform plan for 2019 was prepared and a Reform Committee established. A Risk 
Management  Committee  was  also  formed,  and  three  new  departments  (internal  audit, 
international cooperation and tax police for dealing with tax evasion) will be added to the tax 
administration. 

5.17  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  remains  moderately  prepared  in  the  area  of  economic  and  monetary  policy. 
Some progress was achieved through further implementation of an action plan for EU acquis 
alignment  on  economic  and  monetary  policy;  and  a  medium-term  fiscal  consolidation 
strategy, in line with the 2018 report’s recommendations.  

In the coming year, Montenegro should in particular:  

→ continue to implement the action plan for alignment with the EU acquis. 

74 

 
 
Montenegro does not have standard monetary policy tools at its disposal, as it uses the euro 
as legal  tender, thus  leaving fiscal  policy as the main macroeconomic  policy instrument.  Its 
present use of the euro, which was decided by the Montenegrin authorities under exceptional 
circumstances, is fully distinct from membership of the euro area.   

Amendments to the Law on the central bank were introduced in October 2017. They included, 
among  others,  the  EU  rules  prohibiting  the  monetary  financing  of  the  public  sector  and 
prohibiting privileged access by the public sector to financial institutions. However, laws on 
insurance and on deposit protection still need to be brought in line with the EU rules.  

On economic policy, further alignment with the EU Directive on requirements for budgetary 
frameworks is still needed. Montenegro’s  multiannual budgetary framework requires further 
upgrades of both its content and reliability. Implementation of the 2017 medium-term fiscal 
consolidation  strategy  improved  the  sustainability  of  public  finances  by  rising  budget 
revenues. However, further efforts are necessary to contain public expenditure and reduce the 
level of public debt in order to comply with the fiscal rules. In March 2018, the government 
adopted  the  2018-2020  medium-term  debt  management  strategy  establishing  measures  for 
expenditure  management  and  debt-related  risks.  There  was  some  further  progress  under  the 
strategy  implementing  the  2010  methodology  of  the  European  System  of  National  and 
Regional  Accounts  standards  (ESA  2010).  However,  Montenegro's  fiscal  notifications 
continue  to  be  incomplete,  pending  substantial  alignment  with  the  EU  requirements,  in 
particular as regards excessive deficit procedure data. There is no independent fiscal council 
in place. 

The  government  submitted  its  2019-2021  Economic  Reform  Programme  (ERP)  on  time. 
The reliability of the ERP fiscal planning has been challenged by two budget adjustments in 
2018,  rising  substantially  the  central  government  deficit  in  comparison  to  the  ERP 
projections. Further efforts are needed to ensure sufficient capacities for the design and timely 
implementation of the economic policy measures.    

5.18  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 is  moderately  prepared  in  the area of statistics.  Some progress  was made on 
harmonising the statistical methodology with EU standards and on an increased transmission 
of  data,  notably  in  macroeconomic,  business,  social,  and  agricultural  statistics.  However, 
significant efforts are still needed to address the 2018 recommendations. In the coming year, 
Montenegro should in particular:  

  considerably  strengthen  the  human  and  financial  resources  of  the  Statistical  Office  of 
Montenegro (Monstat) so that it can fulfil its responsibilities, and ensure staff retention;  

  make significant progress in aligning its statistics with ESA 2010, including government 

finance statistics. 

On  statistical  infrastructure,  Monstat  is  compliant  with  the  European  statistics  Code  of 
Practice. It is the main producer and overall coordinator of statistics. The law proclaims the 
professional independence of Monstat's director and provides good confidentiality protection 
and  an  effective  mandate  for  data  collection.  The  government  of  Montenegro  signed  a 
Commitment  on  Confidence  in  Statistics  in  February  2018,  setting  out  its  commitment  to 
respecting  European  statistical  standards,  including  professional  independence,  access  to 
administrative  and  register  data,  and  confidentiality  protection.  The  government  also 

75 

 
 
committed to providing human and financial resources to improve the quality of Montenegrin 
statistics.  However,  Monstat's  financial  and  administrative  capacities  remain  limited  due  to 
inadequate resources and premises: only 103 of 200 available posts are filled, while more staff 
left  than  were  recruited  in  the  reporting  period.  The  strategy  for  official  statistics  for  2019-
2023 was adopted. 

Monstat  established  a  good  basis  for  effective  coordination  of  the  other  national  authorities 
producing official statistics and improved its cooperation with  administrative data providers 
thanks  to  the  signature  of  an  additional  memorandum  of  understanding  with  the 
Mediterranean  University.  The  main  classifications  (NACE  Rev.  2,  ISCO-08,  NUTS,  CPA, 
GEONOM and ISCED 2011) are compliant with the EU acquis. 

to 

transmission 

to  Eurostat  continued 

increase.  Progress  was  achieved  on 
Data 
macroeconomic  statistics  and  alignment  with  ESA  2010.  Monstat  transmits  annual  (2006-
2017)  and  quarterly  (Q1  2010  to  Q2  2018)  GDP  figures  using  the  output  and  expenditure 
approach in current and previous year’s prices to Eurostat, and has started sending partial data 
for the annual GDP using the income approach. However, considerable efforts are needed to 
improve compliance with the ESA 2010 methodology. Monstat does not yet transmit annual 
or quarterly sector accounts to Eurostat.  

Considerable  efforts  are  also  needed  to  develop  government  finance  statistics  (GFS)  and 
financial accounts; in the reporting period, three new staff were allocated to the Ministry of 
Finance to work on GFS. Excessive deficit procedure (EDP) tables are sent to Eurostat since 
October  2014,  but  important  tables  are  lacking.  The  central  bank  compiles  statistics  on  the 
balance of payments, foreign direct investment, and statistics on trade in services, which are 
partially aligned with the EU acquis. The harmonised index of consumer prices (HICP) and 
the purchasing power parities (PPP) framework are both largely aligned.  

In  business  statistics,  Monstat  continued  sending  a  number  of  structural  business  statistics 
(SBS)  variables  to  Eurostat.  Short-term  statistics  improved  over  the  reporting  period,  but 
foreign  affiliates'  statistics  have  not  been  sent  to  Eurostat.  The  Business  Register  is  largely 
compliant  and  the  PRODCOM  list  is  fully  compliant  with  EU  standards.  In  2018,  Monstat 
sent,  for  the  first  time,  data  on  international  trade  in  goods  by  invoicing  currency  (TIC)  to 
Eurostat.  The  sending  of  transport  statistics  to  Eurostat  increased  with  the  transition  to 
detailed  reporting  of  railway  and  maritime  transport  statistics  and  road  freight  -  rail  and  air 
transport statistics  are fully  aligned. Research and development  data is  partially in  line with 
the EU acquis. Monstat started compiling innovation statistics on enterprises and sent its first 
data sets for the period 2014-2016 to Eurostat. Tourism statistics are largely compliant with 
EU standards. 

In social statistics, preparations continued on applying a register-based census methodology 
for the 2021 population and housing census making maximum use of registers kept by other 
public bodies. To apply this method, Monstat needs to obtain access to all identifiers of the 
population  register  and  an address register has to  be established. The survey  of income  and 
living conditions (EU-SILC), - the Labour Force Survey (LFS) and crime statistics are largely 
compliant,  while  social  protection  data  (ESSPROS)  transmitted  to  Eurostat  are  under 
validation.  Eurostat  received  data  on  migration  and  demographic  statistics  from  the 
demographic  balance  and  the  unified  demographic  data  collections,  but  data  availability 
should be further improved with data on migrant populations, acquisition of citizenship, and 
on emigration of non-nationals. Furthermore, Monstat has transmitted monthly and quarterly 
asylum  data  to  Eurostat  since  January  2018  and  is  encouraged  to  start  transmitting  the  EIL 
(enforcement of immigration legislation) statistics and residence permit data. 

76 

 
 
Progress  continued  in  agricultural  statistics,  with  the  transmission  of  organic  production 
data and the data collection on pesticides sales being sent to Eurostat for the first time. Annual 
crop  statistics  (ACS)  and  animal  production  statistics  (APS)  are  highly  compliant  with  EU 
standards,  and  Eurostat  received  the  2016  Farm  Structure  Survey  (FSS)  data  and 
methodological  report.  Monstat  provided  some  evidence  of  good  work  on  agricultural 
accounts  and  prices,  and  is  encouraged  to  send  comprehensive  data  sets  to  Eurostat.  In 
December 2018, it started to send aquaculture data.  

Energy statistics are highly compliant with EU standards.  In environmental statistics, waste 
statistics  are  compliant with  Eurostat  requirements,  but  statistics  on  environmental  accounts 
have not yet been transmitted to Eurostat. 

5.19  Chapter 19: Social Policy and employment  

EU  rules  in  the  social  field  include  minimum  legal  labour  standards,  equality,  health  and 
safety at work and non-discrimination as well as promote social dialogue.  

Montenegro  has  some  level  of  preparation  on  social  policy  and  employment.  Limited 
progress was made during the reporting period in line with recommendations from last year. 
Alignment with the EU acquis is ongoing. However, the discrepancy between the education 
system  and labour market  needs, the high proportion of inactive population and insufficient 
social dialogue remain of concern. 

In the coming year, Montenegro should, in particular:  

  finalise the draft labour law and shape more responsive employment policies based on a 
fuller  analysis  of  labour  market  performance  while  also  using  a  gender  assessment  of 
policies;  

  continue  to  fight  the  grey  economy  and  introduce  better  quality  employment  measures 

aimed at young people, women, minorities and other job seekers;  

  reinforce  cooperation  with  social  partners  and  other  non-state  actors  operating  in  the 

sector. 

On labour law, alignment with EU legislation has progressed but the adoption of the labour 
law is still pending. The labour law reform is intended to improve labour market functioning 
and  to  transpose  relevant  EU  social  legislation.  This  includes  alignment  to  a  number  of 
directives,  including  non-discrimination,  protection  of  young  people  at  work,  working  time, 
collective redundancies, and part-time, fixed-term and temporary agency work. In addition, it 
aims  for  alignment  with  EU  legislation  on  protection  of  employees  in  case  of  insolvency, 
obligation  to  inform  employees  of  employment  contract  conditions,  and  transfer  of 
undertakings.  While  the  draft  law  has  been  prepared  in  the  working  group,  which  included 
social  partners,  the  consultation  process,  particularly  with  workers  and  employers  needs  to 
continue  throughout  its  finalisation.  Considering  its  relevance  both  as  a  structural  reform 
measure and one of the key pieces of legislation to align with the EU acquis in this area, the 
monitoring  of  its  effects  –  once  adopted  –  will  be  essential.  There  is  not  yet  a  monitoring 
mechanism in place. 

Amendments to the Law on health and safety at work were adopted in June 2018 along with 
relevant  secondary legislation.  Limited changes  were noted in  terms  of the capacities of the 
authorities to  inspect  and monitor the  Law’s implementation.  As part of the amendments  to 
the Law the obligation for employers to nominate a coordinator to manage occupational safety 
and health issues  was  introduced. The National  Institute for Occupational  Health is  still not 
performing its required role to ensure the health and safety of workers. An occupational safety 

77 

 
 
and  health  fund  was  meant  to  have  been  set  up  under  the  2010-14  strategy  on  the 
improvement  of  health  of  employees  and  safety  at  work  (now  replaced  by  the  2016-2020 
strategy) and its action plan but this has not yet been established.  

Some progress was made on social dialogue, with the adoption of the revised Law on Social 
Council in June and the Law on representation of trade unions in February 2018. More efforts 
are  needed  to  enhance  the  position  and  role  of  both  the  Social  Council  and  trade  unions. 
Discrimination against trade union activities and leaders jeopardises social dialogue and needs 
to be systematically addressed.   

On  employment  policy,  Montenegro  is  implementing  its  national  strategy  for  employment 
and human resources development, but since no outcome data is systematically collected via 
monitoring and evaluation activities, performance is difficult to assess. Based on the Labour 
Force Survey for the third quarter of 2018, the unemployment rate decreased to 14.1% (14.7 
for me, 13.4 for women). However, the activity rate although improving is still low at 57.6% 
and  regional  disparities  are  considerable,  with  unemployment  disproportionately  high  in  the 
north  of  the  country,  particularly  affecting  women  and  young  people.  Just  over  50%  of  the 
unemployed  total  are  women  while  the  Roma  and  Egyptian  community  makes  up  almost  a 
2% share in the total registered unemployed. There is also room to further improve activation 
of  social  benefit  recipients  and  enhance  work  incentives,  including  measures  related  to 
increase vocational education focused on Roma and Egyptian. The effective use of the Fund 
for the Professional Rehabilitation and Employment of Persons with Disabilities in its role to 
foster  the  employment  of  people  with  disabilities  is  still  not  assured.  The  working  group  in 
charge  of  proposing  amendments  to  the  corresponding  law  has  failed  so  far  to  ensure  the 
genuine involvement of disability organisations and needs to do more in this regard. On the 
informal economy, further reinforcement of labour inspections is needed, as well as reliable 
and regular statistics and diagnostic tools. As the national  commission  to fight  the informal 
economy  was  established  in  2018,  the  outcomes  of  its  works  are  yet  to  be  seen.  It  will  be 
essential to establish a follow up system to review its function and impact. The Employment 
Agency  of  Montenegro  is  participating  in  a  pilot  bench  learning  exercise  based  on  the 
experience developed by the European Public Employment Services Network (PES Network.) 
The IT system of the Employment Agency is still to be updated.  

As regards preparations for the European Social Fund (ESF), implementation of the second 
operational  programme  for  human  resources  development  (2015-2017)  was  delayed,  but  is 
now  starting  to  undertake  activities.  The  programme  will  focus  on  education,  research, 
employment and social policies to foster inclusive growth in Montenegro.  

On  social  inclusion  and  protection,  Montenegro  has  adopted  and  is  implementing:  (i)  the 
2018  action  plans  for  the  2017-2021  strategy  for  the  prevention  and  protection  of  children 
against violence; and (ii) the 2018-2022 strategies for the development of a system for social 
and child protection and of a system for protection of the elderly. Implementation of the new 
amendments to the Law on social and child protection that withdrew the benefits for mothers 
of  three  or  more  children  have  continued.  Around  3  000  women  whom  had  been  excluded 
from the labour market, are entitled for compensation, equal to their previous wages, for up to 
five  years.  The  Employment  Agency  is  piloting  targeted  active  labour  market  measures  for 
former beneficiaries in order to enhance incentives to work. The (SILC) Statistics on Income 
and Living Conditions survey published in December 2018 showed high risks of poverty and 
social  exclusion  with  the  rate  of  34.6%  reported  in  2016.  Poverty  is  particularly  high  for 
children, the low skilled and those living in the North and rural areas.  The Institute for Social 
and Child Protection still lacks  adequate resources and capacity to efficiently supervise and 
secure service quality. The continuity and range of social services, especially at local level is 

78 

 
 
still  inadequate.  Implementation  of  the  second  phase  of  the  social  card/social  welfare 
information system continued, and is nearing completion. 

On  de-institutionalisation,  the  previous  reduction  in  the  total  number  of  children  living  in 
institutions  (this  includes  the  absence  of  any  child  younger  than  three)  has  been  sustained. 
Alternative care services need to be both reinforced and expanded in order to complete the de-
institutionalisation reform.  

On  non-discrimination  in  employment  and  social  policy,  Montenegro  adopted  both  the 
2018 action plan to implementing the Roma and Egyptians social inclusion strategy and the 
2018  action  plan  to  implement  the  strategy  on  improving  the  quality  of  life  of  the  LGBTI 
population, yet no official reports on implementation are available. The Ministry for Human 
and Minority Rights has put focus on increasing local authorities cooperation and awareness 
with  regard  to  combating  different  types  of  discrimination  and  there  has  been  a  rise  in  the 
number  of  investigations.  However,  there  is  not  yet  enough  evidence  of  concrete  results  on 
implementation. More efforts are needed to establish sustainable and effective services which 
are available to the Roma community. Treatment of LGBTI persons by social services and the 
authorities remains inadequate. A pride march was again organised successfully in November 
2018 by civil society activists and supported by some local and state institutions. Civil society 
is not sufficiently involved in relevant policy discussions. 

Even  though  further  measures  have  been  put  in  place  to  secure  a  higher  level  of  equality 
between  women  and  men  in  employment  and  social  policies,  women  still  face  various 
forms of discrimination, especially over permanent employment contracts and access to paid 
maternity leave. Pro-women employment initiatives and projects have gained importance and 
visibility  during  the  reporting  period  but  results  are  only  expected  during  the  next  years. 
Women continue to face barriers to joining the workforce and while the wage gap is higher in 
the  private  sector  women  in  the  public  sector  are  more  educated  and  have  better  jobs  than 
men, but earn less due to gender discrimination. Montenegro should introduce active labour 
market  measures  for  women  and  at  the  same  time  make  greater  efforts  to  combat 
discriminatory practices. Financial and non-financial support to single parents is insufficient 
despite an increased number of facilities.  

5.20  Chapter 20: Enterprise and industrial policy  

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

Montenegro  is  moderately  prepared  on  enterprise  and  industrial  policy.  Some  progress 
was  made  on 
industrial  policy  and  strengthening  Small  and 
Medium-sized  Enterprise  (SME)  support,  as  recommended  last  year.  There  is  a  need  to 
further build up administrative capacity and enhance inter-ministerial coordination. 

implementing 

the 

In the coming year, Montenegro should in particular: 

  continue  to  improve  the  implementation  of  industrial  policy,  in  cooperation  with 

stakeholders; 

  adopt a revised industrial policy and action plan after finalising a mid-term review. 

On enterprise and industrial policy principles, a mid-term  review of the industrial policy 
2016-2020 has been completed in March 2019 and the revision of the industrial policy is due 
to take place by the end of second quarter of 2019. 

The  2018-2022  strategy  for  development  of  micro,  small  and  medium-sized  enterprises 
(MSMEs)  was  adopted  in  July  2018,  followed  by  the  adoption  of  the  2019  action  plan  in 

79 

 
 
December  2018.  The  strategy  has  five  objectives  related  to:  (i)  improving  the  business 
climate;  (ii)  access  to  sources  of  finance;  (iii)  entrepreneurship  skills  and  competences;  (iv) 
strengthening  competitiveness  of  MSMEs;  and  (v)  promotion  of  entrepreneurship  among 
women  and  young  people.  The  2019  action  plan  for  development  of  women’s 
entrepreneurship was also adopted in December 2018. 

The  draft  Small  Business  Act  assessment  for  2019  indicates  that  Montenegro  has  made 
progress  on  implementing  the  Small  Business  Act  since  the  last  assessment  in  2016.  Most 
notably, entrepreneurial learning has been systematically integrated into the education system, 
resolving insolvency has become faster and cheaper, and the legal framework regulating non-
bank financial instruments has been strengthened.  

Efforts should be made to improve the human resources and financial capacity of the newly 
created Directorate of Investments, Development of SMEs and Management of EU funds in 
the  Ministry  of  Economy.  The  implementation  rate  of  national  budget  funding  leaves  room 
for  improvement,  in  particular  for  the  competitiveness  objective  and  in  terms  of  investment 
incentives. The legal and regulatory framework would benefit from a coordinated approach to 
the  provision  of  SME  support  measures,  which  are  currently  spread  across  different  public 
institutions.  Another  action  that  should  be  prioritised  is  the  implementation  of  a  single  and 
transparent  system  for business licensing and permits to  streamline the existing lengthy  and 
expensive procedure.  

In March 2019 a Law on administrative charges was adopted. This constitutes a welcome first 
step in reducing different local taxes, fees and parafiscal burdens on businesses and investors. 
Out of overall 659 local administrative charges applied in Montenegro, 72 should be reduced 
and 49 abolished, leading to possible business savings of over 2 million EUR annually. 

Furthermore, national legislation aimed at further alignment with the EU acquis on combating 
late payments has been adopted. 

On enterprise and industrial policy instruments, 10 contracts totalling 108,000 EUR were 
signed  under  the  2017-2020  cluster  development  programme.  The  Investment  and 
Development  Fund  of  Montenegro  (IDF)  has  approved  loans  and  factoring  arrangements 
worth 209 million EUR, approximately 20% more than in 2017, securing or maintaining some 
7,300  jobs.  In  addition,  the  IDF  submitted  an  application  for  participation  in  the  loan 
guarantee  facility  of  the  EU  programme  for  the  Competitiveness  of  Enterprises  and  SMEs 
(COSME),  which  was  approved.  The  contract  is  expected  to  be  signed  in  the  first  half  of 
2019.  Effective  working  structures  still  need  to  be  created  to  help  Montenegrin  applicants 
prepare their applications for EU funding under the programme. 

5.21  Chapter 21: Trans-European networks 

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

 Montenegro  is  moderately  prepared  in  this  area.  Some  progress  was  made  in  the 
reporting  period,  notably  on  implementation  of  connectivity  reform  measures.  The  2018 
recommendations remain predominantly valid. 

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

 adopt  and  start  implementing  the  new  transport  development  strategy  with  its  annual 

action plans;  

 strengthen  the  administrative  capacities  for  trans-European  networks  in  transport, 

80 

 
 
telecommunications and energy; 

 continue harmonising the legal framework with the TEN-T and TEN-E Regulations. 

On transport networks, Montenegro is part of the Transport Community Treaty. It continues 
to participate in the Western Balkans 6 Connectivity Agenda, under whose aegis it has made 
some  progress  on  implementing  the  connectivity  reform  measures,  particularly  over  the 
border  crossing  agreement  with  Albania  for  the  Tuzi  rail  border  crossing  point.  The  new 
2019-2035 transport development strategy is planned to be adopted in 2019.  

At the second Ministerial  Council meeting of the Transport Community in December 2018, 
Montenegro and the five other Western Balkan partners endorsed a declaration to develop a 
regional  rail  strategy.  This  declaration  followed  the  two  declarations  on  road  safety  and 
border  crossing  facilitation  endorsed  in  the  margins  of  the  TEN-T  days  in  April  2018.  The 
aim  is  now  to  develop  regional  projects  to  eliminate  road  safety  blackspots  on  the  trans-
European transport network (TEN-T) and to improve infrastructure and procedures at border-
crossing points. 

On infrastructure development in  the context  of  the TEN-T, progress  continued on building 
the first priority section between Smokovac and Matesevo of the Bar-Boljare highway, which 
is  part  of  the  indicative  extension  of  the  Orient/East-Med  corridor  in  the  Western  Balkans.  
However, delays and cost overruns are to be expected before the completion of this complex 
project,  which  is  financed  through  a  Chinese  loan.  In  March  2018,  Montenegro  signed  a 
memorandum  of  understanding  with  a  Chinese  contractor  to  build  further  sections  of  the 
highway on a public-private partnership basis. In 2019, a comprehensive cost benefit analysis 
for  the  entire  highway  will  set  recommended  standards  and  means  of  financing  for  the 
remaining sections. 

Montenegro must ensure that its transport network projects are implemented in line with the 
TEN-T regulatory framework, and that future infrastructure investments  are implemented in 
full  compliance  with  applicable  EU  standards  on  public  procurement,  State  aid  and 
environmental  impact  assessment,  while  also  taking  due  account  of  Montenegro’s  fiscal 
space.  This  is  particularly  required  for  projects  whose  technical  preparations  receive 
significant  EU  funding,  as  is  the  case  for  the  Bar-  Boljare  highway,  which  is  supported 
through the Western Balkans Investment Framework. Projects should be channelled through a 
single  project  pipeline,  confirming  the  strategic  orientation  towards  the  trans-European 
networks.   

Upgrading  of  the  Bar-Vrbnica  railway  continued  with  EU  funding.  The  high  number  of 
studies  and  rehabilitation  works  simultaneously  undertaken  along  the  railway  corridor 
requires  significant  coordination.  Progress  also  continued  on  studies  for  the  design  of  the 
Adriatic-Ionian highway. 

The  institutional  framework  and  administrative  capacity  in  the  Ministry  of  Transport  and 
Maritime  Affairs  were  boosted  with  the  hiring  of  two  additional  staff  to  deal  with  the 
Connecting Europe Facility (CEF) and TEN-T. A state-owned company, currently operating 
with  adequate  capacities,  is  responsible  for  the  development  of  highways  and  road 
infrastructure.  In  the  rail  sector,  the  administrative  and  technical  capacity  of  the  four  state-
owned companies remained limited.  

On  energy  networks,  some  progress  was  made  on  the  connectivity  reform  measures  for 
energy, such as the certification in April 2018 of the electricity transmission system operator.  

Progress  continued  on  interconnecting  the  electricity  systems  of  Serbia,  Bosnia  and 
Herzegovina,  Italy  and  Montenegro,  which  is  part  of  the  Projects  of  Energy  Community 

81 

 
 
 
Interest (PECI) list. In this context, the Montenegro and Italy undersea cable interconnector is 
planned to be operational at the end of 2019. In May 2018, work began (with EU funding) on 
drafting the concept design for the Ionian-Adriatic pipeline’s routes through Montenegro and 
Albania. The pipeline features on the list of projects of mutual interest. 

The  Ministry  of  Economy’s  energy  directorate  is  in  charge  of  trans-European  energy 
networks  (TEN-E).  One  fully  dedicated  post  is  dealing  directly  with  TEN-E  and  should  be 
filled in early 2019. 

Montenegro  is  yet  to  fully  align  its  legislation  with  the  TEN-T  and  TEN-E  EU  acquis.  As 
regards the trans-European communication networks, the Law on electronic communications 
is aligned with the EU acquis. 

5.22  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  implementation  which  requires  adequate 
administrative capacity and sound financial management of projects' design and execution. 

Montenegro  is  moderately  prepared  in  this  area.  Limited  progress  was  made  in  the 
reporting period. Planning procurement capacities still need to be strengthened, and project 
preparation and strategic planning capabilities need to improve as underlined last year. 

In the coming year, Montenegro should in particular: 

  make further efforts to enhance the implementation of EU pre-accession funding under 
indirect management, in particular by  developing a management information system; 

  continue  implementing  the  action  plan  for  meeting  requirements  deriving  from  EU 

cohesion policy; 

  take  measures  to  put  a  far  greater  emphasis  on  cross-sector  strategic  planning  and 

preparation. 

On the legislative framework, Montenegro continued implementing its work focused on the 
action  plan  for  meeting  the  requirements  of  EU  cohesion  policy  and  acquis  alignment.  The 
transposition of key parts of the EU  acquis under other chapters is a prerequisite for proper 
implementation of EU structural and investment funds.  

On  the  institutional  framework,  changes  have  been  made  to  the  management  of  EU 
pre-accession  assistance  (IPA).  The  national  IPA  coordinator  (NIPAC)  was  moved  to  the 
Office for European Integration, itself placed within the Office of the Prime Minister, with the 
NIPAC  formally  becoming  deputy  chief  negotiator.  In  addition,  the  Directorate  of  Public 
Works was turned into the Public Works Administration and its decision making powers were 
increased. 

On  administrative  capacity,  some  reinforced  resources  and  staffing  helped  improve 
procurement  and  contracting  efficiency  but  considerable  efforts  are  still  needed  to  maintain 
and enhance implementation capacity. Staff retention remains an issue, and a recruitment and 
retention plan is now in place, although it has not yet had an impact. 

On  programming,  the  country  continued  its  sectoral  approach  under  IPA.  A  single  project 
pipeline exists and is updated on a regular basis.  

Regarding  monitoring  and  evaluation,  monitoring  committees  under  indirect  management 
continue  to  meet  regularly.  An  interim  evaluation  for  the  regional  development  operational 
programme  was  completed,  as  well  as  an  ex-post  evaluation  for  the  human  resources 
development  operational programme. The pace of implementation  of the programmes under 

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indirect  management  was  slow.  No  progress  was  made  in  establishing  a  management 
information system. 

The financial management, control and audit, the framework is in place. On-going efforts 
are needed to maintain the State Audit Authority’s programme of audit and control. 

5.25  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.  

Montenegro demonstrates a good level of preparation in this sector. While some progress 
was  made  -  notably  on  the  2018  recommendation  to  advance  the  development  of  a  smart 
specialisation strategy, but also  in the field of innovation – this was offset by Montenegro’s 
lower than expected performance in the EU Horizon 2020 programme.   

In the coming year, Montenegro should in particular: 

 finalise and start to implement the Smart Specialisation Strategy;  

 increase participation in Horizon 2020 and intensify investment in research. 

On research and innovation policy, implementation  of the strategies on scientific research 
and  innovation  activities  continued.  The  Ministry  of  Science  2018  budget  was  increased  by 
60%  and  national  programmes  grew  in  funding  and  number,  most  of  them  based  on  the 
principle of business co-financing. Gross domestic expenditure on research and development 
(R&D) stood at 0.32 % in 2016, and there is no data yet to substantiate an increase in private 
sector  funding.  Montenegro  should,  as  planned,  participate  in  the  European  Innovation 
Scoreboard,  following  a  pilot  survey  by  Monstat.  A  programme  for  supporting  innovative 
start-ups was adopted in June 2018, supported by the Horizon 2020 Policy Support Facility. 
The number of full-time equivalent researchers employed in R&D remains low (624 in 2016). 
A new programme, adopted in June, to ‘strengthen human resources and research capacities in 
scientific  research  institutions’  aims  to  achieve  more  efficient  employment  in  the  academic 
and business world and to aid integration into the Regional Economic Area. The University of 
Montenegro  is  preparing  a  human  resources  strategy  for  researchers  (HRS4R),  with 
accompanying action plan, under the Euraxess initiative.  

Following  extensive  preparation,  adoption  of  the  Smart  Specialisation  Strategy  (S3)  is 
expected  by  mid-2019;  the  related  S3  guidelines  (2018-2024)  were  adopted  in  December 
2018.   

A  Centre  of  Excellence  for  Research  and  Innovation  was  established  at  the  University  of 
Montenegro in May 2018, aimed at fostering cooperation between academia and the private 
sector.  Early  steps  have  been  taken  to  establish  an  office  for  technology  transfer  within  the 
Centre.   

Montenegro’s  participation  in  the  framework  programme  H2020  was  suboptimal  despite 
substantial  efforts  in  support  and  preparatory  measures.  Latest  figures  show  only  a  small 
number of new projects (with limited funding) granted so far for the first half of 2018. 

Montenegro has maintained active  engagement  with  international  bodies such as EUREKA, 
COST, CERN, IAEA and other relevant institutions. In October 2018, Montenegro became a 
member of the European Social Survey of the European Research Infrastructure Consortium 
(ESS-ERIC),  and  research  under  the  ninth  round  of  the  European  Social  Survey  is  being 
implemented in the country for the first time.  

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5.26  Chapter 26: Education and culture 

The EU supports cooperation in education and culture through funding programmes and the 
coordination of Member State policy through the open method of coordination. The EU and 
the Member States must also prevent discrimination and ensure quality education for children 
of migrant workers, including those from disadvantaged backgrounds.  

There is a good level of preparation in this area. In line with last year’s recommendations, 
some progress  was achieved on  learning outcomes, inclusion, and early  steps were taken 
towards  improving  governance  in  the  education  sector.  In  general,  challenges  remain  to 
drive reforms further, including limited institutional capacity to review and monitor, as well 
as to develop results-based and feasible medium-term plans.  

In the coming year, Montenegro should in particular:  

  optimise  participation  rates  in  early  childhood  education  and  minimise  drop-outs, 

especially from vulnerable groups;  

  improve the quality of education through continuous reform of primary and secondary 

education, teaching basic and transversal skills, focused on learning outcomes;  

  improve  sector  governance  and  develop  adequate  monitoring  and  quality  assurance 

mechanisms for vocational education and training. 

On education and training, implementation of education strategies continued, and the annual 
budget  for  education  remained  relatively  stable  at  3.9%  of  GDP.  Participation  in  early 
childhood education and care continues to rise slowly, and more focus was put on expanding 
coverage  in  the  north  of  the  country;  however,  the  overall  rate  remains  low  at  43%. 
Montenegro performed better than the EU average (EU cooperation in education and training 
target i.e. ET 2020) regarding early school leavers, where its share declined to 4.6% in 2018 
(from 5.4% in 2017). However, participation in lifelong learning, at 3.3%, is well below the 
ET 2020 target of 15%. Implementation of the national qualifications framework (in line with 
the European qualifications framework) continued, and activities were carried out to promote 
Europass.  The  number  of  children  with  special  needs  enrolled  in  mainstream  schooling 
increased  and  children  with  disabilities  and  of  Roma  background  have  better  access  to 
education.  However,  to  ensure  that  they  remain  in  school,  and  learn  and  progress,  stronger 
support  is  required,  including  reinforcing  positive  measures  already  taken  such  as  longer 
preparatory  pre-school,  free textbooks, and  scholarships.  Montenegro’s 2019-2025 inclusive 
education strategy - in force since January 2019 - sets standards and recommendations in line 
with the UN Convention on the Rights of Persons with Disabilities. A curriculum for teacher 
training was developed to build capacities to foster a democratic school culture. 

Progress  continued  on  vocational  education  and  training  (VET).  The  dual  education 
programme  (to  address  the  skills  mismatch)  saw  significant  increases  in  student  enrolment 
and employer participation, and there was further teacher and mentor training in companies. A 
memorandum  of  understanding  between  the  Ministry  of  Education  and  the  Chamber  of 
Economy facilitates implementation of the programme, with particular emphasis on financial 
commitments  from  both  sides.  Further  new  modular  curricula  based  on  learning  outcomes 
were  implemented,  and  300  scholarships  were  provided  for  first  grade  students  to  enrol  in 
recognised  deficit  occupations.  A  comprehensive  evaluation  of  the  outcome  of  the  dual-
education programme needs to be carried out. Student transfers from VET to higher education 
continue to be comparatively high (58% in 2017). The skills mismatch continues to manifest 
itself  at  secondary  and  higher  education  levels  and  needs  continued  priority  attention.  

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Follow-up on the findings and recommendations from the pilot assessment on governance and 
financing of the VET sector is ongoing. 

A  new  performance-based  financial  contracting  model  was  adopted  for  the  University  of 
Montenegro (UoM) in December aimed at improving the quality of public funding. Following 
an independent external evaluation, improved implementation of the 3+2+3 model is expected 
to  better  align  with  main  Bologna  principles.  The  results  of  implementing  25%  practical 
teaching in all study programmes at UoM needs to be systematically monitored and evaluated. 
The outcomes of ongoing tracer studies should help to provide information on transition and 
skills mismatch issues.  In March 2019, an ambitious Law on academic integrity was adopted 
aiming to strengthen responsibility for ethical behaviour at higher education institutions, and 
to address plagiarism. 

The  country  continues  to  participate  actively  in  the  EU  Erasmus+  programme.  Since  2014 
there  have  been  1,200  mobilities  of  staff  and  students  from  Montenegro,  and  18  capacity 
building projects are  currently being implemented in the field of higher education involving 
local beneficiaries.  

The  PISA  (Programme  for  International  Student  Assessment  -  in  mathematics,  science  and 
reading)  working  group  adopted  an  action  plan  aimed  at  achieving  improved  results  in  the 
2018  round  of  testing  (results  due  in  December  2019).  TIMSS  (Trends  in  International 
Mathematics and Science Study) testing for fifth grade pupils was carried out for the first time 
in  2018,  and  Montenegro  will  participate  in  the  PIRLS  2021  international  assessment  on 
reading literacy. For the 2018/2019 school year, the Adolescence Skills programme – which 
includes  socio-emotional  competences  -  and  the  Content  and  Language  Integrated  Learning 
(CLIL) approach are being implemented in selected primary schools.  

On  culture,  more  than  200  local  and  national  events  were  organised  as  part  of  the  2018 
European  Year  of  Cultural  Heritage.  The  Ministry  of  Culture  established  a  directorate  for 
projects on culture and developing creative industries; it also launched calls for funding NGO 
initiatives  and  co-financing  projects  of  special  public  interest.  Close  attention  to  preserving 
Kotor's  UNESCO  World  Heritage  status  should  continue.  The  country  shows  a  satisfactory 
level of participation in the EU Creative Europe Programme. 

Financial  support  for  youth  projects  increased  significantly  and  a  new  Law  on  youth  was 
adopted  with  provisions  along  the  lines  of  the  renewed  EU  youth  strategy  2018.  The  local 
branch  office  of  the  Regional  Youth  Cooperation  Office  (RYCO)  implements  many  varied 
actions to support youth mobility and regional cooperation.  Montenegro participated for the 
first time in the European Week of Sports by organising a large number of sport activities in 
the country.    

5.27  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 has some level of preparation in this area. Limited progress has been made in 
further aligning legislation with  the EU  acquis. However, significant  efforts  are still needed 
on implementation and enforcement, in particular on waste management, water quality, nature 
protection  and  climate  change.  The  2018  recommendations  remain  valid  and  in  the  coming 
year, Montenegro should in particular: 

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  accelerate  implementation  of  the  national  strategy  for  transposition,  implementation  and 
enforcement of the EU acquis on environment and climate change, especially in the waste, 
water and nature protection sectors; 

  take urgent measures to preserve and improve the ecological value of protected areas and 
potential Natura 2000 sites such as  Ulcinj Salina,  Lake Skadar, the Tara river and other 
river courses; 

  develop  its  National  Energy  and  Climate  Plan  in  line  with  the  Energy  Community 

recommendations; 

Environment 

On horizontal legislation, in June 2018 Montenegro adopted the 2018-2020 action plan for 
its national strategy to align with and implement the EU acquis on environmental protection 
and climate change. However, the lack of administrative capacity  and financial resources  at 
national and local level are delaying the strategy's implementation. Genuine dialogue between 
civil  society  and  the  government  is  required  to  achieve  effective  public  participation  and 
consultation  in  decision-making.  The  Fund  for  Environmental  Protection  was  established  in 
November  2018  and  needs  to  become  operational.  The  Law  on  environmental  impact 
assessment, aligning with the EU Environmental Impact Assessment Directive was adopted in 
November  2018.  Further  progress  is  needed  on  the  implementation  of  the  remaining 
horizontal  EU  Directives  such  as  the  Environmental  Crime  and  the  Environmental  Liability 
Directives.  Montenegro  also  needs  to  ensure  the  independent  functioning  of  the  Nature  and 
Environmental Protection Agency. 

On air quality, the level of legislative alignment with the EU acquis is relatively advanced. 
Amendments  to  the Decree establishing the air quality monitoring network were  adopted in 
September  2018.  All  activities  related  to  the  national  air  quality  management  strategy  for 
2017 have been undertaken. 

Regarding  waste  management,  Montenegro  remains  partially  aligned  with  the  EU  acquis. 
Considerable efforts in terms of strategic planning and investments are needed to implement 
the  national  strategy  for  waste  management  until  2030  and  the  2015-2020  national  waste 
management  plan.  Amendments  to  the  2015-2020  national  waste  management  plan  were 
adopted  in  May  2018  but  did  not  clarify  the  country’s  basic  waste  management  model, 
although four waste management centres are envisaged for the whole country. Some progress 
has  been  achieved  on  managing  municipal  waste  and  separate  waste  collection  in  the 
municipalities of Gusinje, Danilovgrad and Tivat. There is an urgent need to remedy illegal 
waste disposal and the use of temporary waste disposal in all municipalities. Infrastructure for 
separate waste collection and recycling needs to be established. 

Alignment  on  water  quality  remains  limited.  The  national  strategy  for  water  management 
until 2035 is being implemented and work on river basin management plans is ongoing, but 
the competent management authorities are yet to be operational. Preparations have started for 
a water status monitoring system and for improved quality monitoring of surface and ground 
waters. Wastewater remains a main source of pollution. The development of a floods hazard 
map  and  flood  risk  map  is  being  prepared.  The  implementation  of  the  Marine  Strategy 
Framework Directive remains at an early stage.  

On nature protection, Montenegro is partially aligned with the EU acquis. Work continued 
on  the  designation  of  future  Natura  2000  sites.  Temporary  management  of  the  potential 
Natura 2000 site Ulcinj Salina through the public enterprise for national parks was extended, 
but  no  tangible  progress  was  achieved  on  protecting  the  site,  which  continues  to  require 

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resolute and urgent action. The responsibility lies now with the municipality of Ulcinj to take 
the necessary measures to declare Ulcinj Salina a protected area. The authorities should also 
strictly assess and prevent  possible negative environmental impacts  of building construction 
in the Skadar Lake national park and on Tara River in the context of the Bar-Boljare highway 
development. Work to identify and designate marine protected areas needs to continue while 
ensuring  in  the  meantime  that  marine  species  are  protected,  for  example  during  seismic 
surveys  for  oil  and  gas  exploration.  Potential  investments  in  hydropower  and  touristic 
developments  need  to  comply  with  nature  protection  and  water  management  legal 
requirements.  

On industrial pollution and risk management, Montenegro is partially aligned with the EU 
acquis.  Amendments  to  the  Law  on  integrated  prevention  and  control  of  environmental 
pollution were adopted in July 2018. In March 2018, the Nature and Environmental Protection 
Agency issued an integrated permit to the national electric power company for the operation 
of the Pljevlja thermo-power plant.  

On  chemicals,  Montenegro  is  partially  aligned  with  the  acquis.  Secondary  legislation  was 
adopted  in  October  2018  on  methods  of  use,  production  and  placing  on  the  market  of 
chemicals  that  represent  a  risk  for  human  health  and  the  environment,  in  line  with  the 
REACH  Regulation.  Montenegro  ratified  the  Minamata  Convention  on  mercury  in  March 
2019.  A  national  helpdesk  has  been  established  in  May  2018  as  first  point  of  contact  for 
questions related to the Biocidal Products, REACH and CLP regulations. Montenegro became 
observer  within  HelpNet,  the  respective  European  network  on  those  regulations  in  October 
2018. 

On  noise,  Montenegro  continues  its  work  on  the  preparation  of  strategic  noise  maps.  The 
strategic noise map for Podgorica was adopted in September 2018. 

On  civil  protection,  Montenegro  has  been  a  member  of  the  Union  Civil  Protection 
Mechanism  since  April  2015.  Montenegro  could  contribute  more  to  the  Mechanism  by 
registering experts or response capacities in the voluntary pool and participating regularly in 
the committees and working groups established under the Mechanism. It still needs to connect 
with the Common Emergency Communication and Information System (CECIS) and needs to 
establish  the  Secure  Trans  European  Services  for  Telematics  connections  between 
Administrations  (sTESTA),  as  a  precondition  to  connect  to  CECIS.  The  2018-2019  action 
plan to implement the disaster risk reduction strategy was adopted in March 2018.  

Climate change 

Montenegro’s  level  of  alignment  on  climate  change  remains  limited.  Montenegro  has  a 
Climate Change Strategy in place, but has to intensify its work to ensure consistency with the 
EU 2030 climate and energy policy framework and to ensure that its strategy is integrated into 
all relevant sectoral policies and strategies.  

As  for  the  UN  Framework  Convention  on  Climate  Change  (UNFCCC),  Montenegro  has  so 
far submitted two national communications and its second bi-annual report was submitted in 
April  2019.The  Law  on  the  Doha  amendment  to  the  Kyoto  Protocol  to  the  UNFCCC  was 
adopted in October 2018.  

The adoption of a climate change law, which will, among others, incorporate elements of the 
EU  emissions  trading  system  (ETS),  the  Effort  Sharing  Regulation  and  the  monitoring  and 
reporting  mechanism  (MMR),  is  still  pending.  Considerable  efforts  are  still  needed  to  align 
with the EU climate acquis. 

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5.28  Chapter 28: Consumer and health protection  

EU rules protect consumers economic interests and 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, notably on alignment with the EU acquis. However, the previous recommendations on 
health protection remain to be met, and the one on consumer protection still needs to be met. 
Therefore, in the coming year Montenegro should: 

  ensure the necessary implementation capacity to implement the EU consumer protection 

EU acquis; 

  ensure  further  alignment  with  the  EU’s  health  protection  acquis,  notably  with  regard  to 
tobacco  control  and  patients’  rights  in  cross-border  healthcare,  and  start  to  implement  it 
fully; 

  adopt  the  action  plan  on  substances  of  human  origin  and  start  implementing  the  action 

plan on communicable diseases. 

Consumer protection 

Regarding  the  legislative  framework  for  consumer  protection,  Montenegro  has  adopted 
legislation  designed  to  ensure  alignment  with  the  acquis  on  consumer  protection  and 
legislative  amendments  designed  to  ensure  alignment  on  general  product  safety  in  February 
2018. In October 2018, amendments were made to the Decree on the operation of the system 
for rapid exchange of information on products posing a risk, and in July 2018 to the Law on 
market surveillance.  

In  the  period  January  2018  to  February  2019,  the  Administration  for  Inspection  Affairs 
performed  2,277  inspections  in  the  field  of  consumer  protection  (including  161  inspections 
following  consumer  complaints),  identifying  436  irregularities  leading  to  administrative 
measures (245 indictments and 186 decisions). 

On  product  safety,  4,771  inspections  were  carried  out,  4,086  in  proactive  surveillance  and 
685 in reactive surveillance, identifying 235 dangerous products (44,696 items). Of these, 132 
(5,028  items)  were  classified  as  dangerous  products  representing  serious  risk  and  were 
withdrawn from the market, and 19 products (1,570 items) were destroyed. 

Public health 

Regarding  public  health,  national  legislation  on  healthcare  is  partly  aligned  with  the  EU 
acquis.  Average  life  expectancy  rose  slightly  from  76.1  to  76.8  between  2010  and  2018. 
Implementation is continuing of the 2015-2020 master plan for health development, aiming to 
provide accessible and comprehensive health care. Although the country’s health budget has 
remained over 5 % of GDP for a number of years, the lack of fiscal sustainability continued to 
impact  negatively  on  the  work  of  public  health  bodies,  programmes  and  actions.  The 
over-prescription of medicines continues, and the prescription of antibiotics needs to be better 
regulated  to  fight  against  anti-microbial  resistance.  External  surveys  assessing  corruption 
affecting  the  sector  have  received  significant  public  attention.  With  regard  to  the  health 
information system, the integrated information system (IIZS) covers all health providers; in 
June  2018,  the  government  adopted  the  2018-2023  strategy  for  development  of  the  Integral 
Health Information System and e-Health foresees the establishment of an organisational unit 
in the Ministry of Health to manage the Integral Health Information System. 

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On  tobacco  control,  national  legislation  is  partly  aligned  with  the  EU  acquis.  The  Health 
Promotion Centre of the Public Health Institute collected data to contribute to the 2018 Global 
Youth  Tobacco  Survey  (GYTS).  A  smoking  ban  in  public  places  exists  but  it  is  not 
implemented. The retail price of tobacco products was reduced again following an increase in 
early 2018 which led to a large increase in undeclared sales. 

On blood, tissues, cells and organs, Montenegro has adopted legislation designed to achieve 
alignment  to  some  of  the  EU  acquis  on  tissues,  blood,  and  organs.  The  national  Blood 
Transfusion  Institute has received two ISO certifications (ISO 9001:2015 for quality system 
and  ISO  27001:2013  for  information  security).  Several  awareness  raising  activities  on  the 
need for voluntary blood donations were conducted  throughout 2018. However, the planned 
action plan on substances of human origin is yet to be finalised. 

In  the  field  of  serious  cross-border  health  threats,  including  communicable  diseases, 
national legislation on healthcare is partly aligned with the EU acquis. The 2018 programme 
for  mandatory  immunisation  against  certain  communicable  diseases  continued,  but  citizen 
non-compliance  remains  a  concern.  In  early  2018,  Montenegro  adopted  a  2017-2022  action 
plan  on  communicable  diseases,  and  nominated  a  focal  point  to  participate  in  the  health 
security meetings  (i.e. on serious cross-border health threats). The  Law  on the protection of 
population  against  communicable  diseases  was  adopted  in  March  2018,  completed  by 
secondary  legislation  adopted  in  August  2018.  Epidemiological  information  is  gathered  and 
exchanged with EU Member States. A national laboratory for influenza was established and 
accredited during the reporting period.  

Regarding  patients’  rights  in  cross-border  healthcare,  the  Health  Insurance  Act  is  partly 
aligned  with  the EU  acquis. This  act  ensures that  insured individuals may  use healthcare in 
EU Member States and third countries and that the costs are covered by the health insurance. 
However,  the  engagement  of  patient  organisation  in  decision-making  needs  to  be 
strengthened. The Institute for Public Health is responsible for eHealth issues. In addition to 
eAppointments,  ePrescription  and  eTest  results,  a  new  electronic  ePharmacy  service  was 
introduced in November 2018. 

National cancer screening programmes (targeting colon, cervical and breast cancer) are being 
implemented. However, insufficient efforts are made to guarantee that children are screened 
and/or treated with due respect for their rights. Cancer registries need to be developed.  

Iimplementation of the 2017-2018 action plan for the mental health strategy for is ongoing. 
There  is  still  no  national  data  regarding  the  proportion  of  mental  health  care  provided  by 
institutions compared to community-based care. The psychiatric hospital in Kotor recruited a 
number of specialists in 2018.  

On  preventive  measures,  data  remains  unavailable  for  both  nutrition  and  physical  activity. 
There were no reported activities to reduce  alcoholism and prevention of alcohol-induced 
disorders. Specialist organisations report that sales of alcohol to minors are common and that 
communication on this is insufficient.  

On  drug  abuse  prevention  and  harm  reduction,  the  2017-2018  action  plan  of  the  drug 
abuse  prevention  strategy  is  being  implemented.  The  involvement  of  civil  society  in  the 
National Council for the Prevention of Drug Abuse and in the National Commission on Drugs 
needs to be strengthened and encouraged.  

On health inequalities, access to healthcare services needs to be ensured and made available 
for  all  vulnerable  groups,  particularly  people  with  disabilities,  people  living  with  HIV, 
children  and  adults  who  use  drugs,  prisoners,  women  in  prostitution,  LGBTI  people, 
internally  displaced  persons  and  Roma.  The  2017  World  Bank/UNDP/EC  Regional  Roma 

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Survey  found  that  80  %  of  the  Roma  and  Egyptian  population  have  a  health  insurance 
coverage. Three Roma ‘mediators’ operate in  three cities  as community  liaison officers and 
conducting  outreach  activities.  Two  gender  reassignment  surgeries  were  performed  in  the 
reporting period, financed by the Health Insurance Fund.  

5.29  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 and made some progress during the 
reporting period, partially fulfilling last year's recommendations.  

In the coming year, Montenegro should in particular:  

  further  advance  preparations  for  accession  to  the  Convention  on  a  common  transit 
procedure,  by  establishing  an  EU-compatible  computerised  transit  system  and  ensuring 
adequate staffing levels for its implementation;  

  start  implementing  trade  facilitation  measures  in  order  to  reduce  administrative 
inefficiencies and the time needed for customs clearance, and enhance capacity building in 
the customs administration 

On  customs  legislation,  the  degree  of  alignment  with  the  EU  acquis  is  high.  In  July  2018, 
Montenegro adopted secondary legislation introducing amendments to the customs tariffs for 
products  covered  by  the  World  Trade  Organisation  (WTO)  Information  Technology 
Agreement, in line with the country’s  protocol of accession to the WTO and the Combined 
Nomenclature  of  the  EU.  Amendments  were  adopted  in  December  to  the  secondary 
legislation  concerning  transit,  classification  and  origin  of  goods,  as  well  as  non-preferential 
origin, aimed at alignment with Union Customs Code. The amendments will apply as of July 
2021. Legislation on the customs tariff for 2019 was adopted in January 2019. Amendments 
have  been  prepared  to  secondary  legislation  on  conditions  for  granting  the  status  of 
Authorised  Economic  Operator  (AEO),  aimed  at  alignment  with  the  Union  Customs  Code. 
Adoption  is  pending  of  the  secondary  legislation  to  the  Law  on  customs  service  on 
monitoring,  intercepting  and  examining  vehicles,  passengers  and  baggage,  and  on  issuing 
warnings and warrants by authorised customs officers.  

The  Regional  Convention  on  Pan-Euro-Mediterranean  preferential  rules  of  origin  is  applied 
by  Montenegro.  Following  the  entry  into  force  of  Additional  Protocol  5  of  the  CEFTA 
agreement  on  trade  facilitation,  the  customs  administration  is  in  the  process  of  signing 
agreements  with  relevant  administrative  bodies  to  ensure  effective  information  sharing  and 
mutual  assistance on customs-related processes.  The CEFTA protocol of origin,  introducing 
full  cumulation  and  prohibition  of  duty  drawback,  entered  into  force  with  application  as  of 
July 2019.  

Further legislative alignments are needed on drug precursors, security aspects, and on export 
control  for  cultural  goods.  A  number  of  customs  exemptions,  not  laid  down  in  the  Union 
Customs Code are still applied. Fees are still charged to  lorries in  inland  customs terminals 
located in privately owned facilities, which is not in line with EU acquis.  

On  administrative  and  operational  capacity,  the  customs  administration  adopted  its 
2019-2021  business  strategy  and  accompanying  action  plan.  With  the  adoption  of  the  new 
national  legislation  on  the  organisation  and  working  methods  of  the  State  administration  in 
December 2018, the customs administration ceased to be an authority within the Ministry of 
Finance and gained the status of an independent administrative body.  

90 

 
 
Further  progress  was  made  towards  accession  to  the  Transit  Convention  and  establishing  a 
new  computerised  transit  system  (NCTS).  The  technical  capacities  of  customs  enforcement 
teams  have  been  significantly  enhanced.  A  training  centre  for  customs  officers  has  been 
established and become operational. Simplified procedures for customs clearance of express 
consignments  have  been  completed,  pending  necessary  authorisations  for  implementation. 
However, preparation for the accreditation of the customs laboratory has stalled and needs to 
resume. Staffing of the IT department remains a challenge which, if not addressed adequately, 
risks jeopardising the implementation of NCTS and related projects.  

The  customs  administration  is  a  member  of  the  Intellectual  Property  Rights  Coordination 
Team  and  participates  in  joint  actions  of  the  working  group  aimed  at  suppression  and 
prevention of intellectual property rights infringements. Revenue collection in 2018 shows an 
11% increase compared to 2017; however, further efforts need to be invested in the collection 
of  customs  debt,  in  line  with  the  recommendations  of  the  State  Audit  Institution.  The 
country’s   Trade Facilitation Strategy,  adopted in March 2018, envisages  a reduction of the 
average time for customs clearance by 50% and of the transaction costs by 20% by the end of 
2022. 

Despite  improvements  to  the  control  facilities  at  the  free  zone  in  the  port  of  Bar  and  some 
recent  successes  in  anti-smuggling  operations,  the  customs  authorities  still  need  to  address 
significant  challenges  in  controlling  the  illicit  tobacco  trade  and  should  further  strengthen 
international cooperation on this matter. In this respect, Montenegro is a Party to the Protocol 
to Eliminate Illicit Trade in Tobacco Products since 2017 and should be encouraged to focus 
on its implementation. 

5.29  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  in  this  area.  Some  progress  on  the 
2018  recommendations  was  made  by  adopting  the  legislative  and  institutional  set-up  for 
international  development  cooperation  and  humanitarian  aid.  Montenegro  also  ratified  the 
CEFTA Additional Protocol 5 on Trade Facilitation.  

In the coming year; Montenegro should in particular:  

  adopt legislation, in line with the EU acquis, on export controls of dual-use goods; 

  implement  actions  under  the  multiannual  action  plan  for  the  development  of  a  Regional 
Economic  Area,  in  particular  implement  CEFTA  additional  protocol  (AP)  5  on  trade 
facilitation,  adopt  and  implement  the  pending  CEFTA  AP  6  on  trade  in  services,  and 
negotiate and ensure a swift adoption of CEFTA AP 7 on dispute settlement. 

As  regards  the  common  commercial  policy,  Montenegro  continued  to  coordinate  its 
positions and align its policies closely with those of the EU, including within the WTO. With 
the  aim  of  fully  implementing  the  WTO  Trade  Facilitation  Agreement,  the  government 
adopted in April 2018 an ambitious trade facilitation strategy and action plan for 2018-2022. 
Their  timely  implementation  and  appropriate  monitoring  should  be  ensured,  along  with  a 
dedicated website for tracking developments. Montenegro has yet to submit the notifications 
required under Articles 1.4, 10.6.2 and 12.2.2 of the WTO Trade Facilitation Agreement. The 
first WTO review of Montenegro's trade policies and practices was successfully concluded in 
May 2018. 

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In May 2018, Montenegro aligned its national control list of dual-use goods with the 2017 EU 
regime on exports, transfer, brokering and transit of these items. Montenegro is in the process 
of  finalising  the  new  Law  on  export  control  of  dual-use  goods,  aimed  at  further  alignment 
with  the EU acquis, and should continue upgrading administrative and  control capacity. No 
decision was taken yet on Montenegro's application to the Wassenaar Arrangement. 

To ensure implementation of the Law on foreign trade of goods and services, the government 
adopted  a  decision  in  October  2018  on  goods  prohibited  for  export  that  are  aimed  at  the 
deprivation of life, capital punishment or torture. Montenegro has legislation in place aimed at 
implementing  the  Kimberley  Process  certification  procedure,  including  provisions  on 
sanctions. 

Following  adoption  of  the  amendments  to  the  Law  on  investment  and  development  fund  to 
regulate the issuing and financing of  export credits, Montenegro should adopt the necessary 
secondary legislation in line with the EU acquis.  

Montenegro continued its active participation in CEFTA. The law on ratification of AP 5 on 
trade facilitation within CEFTA entered into force in 2018. AP 6 on trade in services is yet to 
be  adopted,  while  for  AP  7  the  government  adopted  the  platform  for  negotiation  and 
established  a  negotiation  team  in  September  2018.  The  Directorate  for  Multilateral  and 
Regional Trade Cooperation and Foreign Economic Relations, in charge of CEFTA and WTO 
matters, should continue to strengthen its administrative capacities to enable implementation 
of its trade commitments.  

Montenegro finalised negotiations on amendments (concerning concessions in agriculture and 
trade  in  services)  to  the  free  trade  agreement  with  Turkey  in  October  2018;  ratification  is 
pending.  The  government  adopted  information  on  the  status  of  bilateral  agreements  with 
third countries in July 2018 and established a working group to analyse existing agreements 
and develop a new model in line with EU and international standards.  

On  development  policy  and  humanitarian  aid,  the  Law  on  international  development 
cooperation  and  international  humanitarian  assistance,  adopted  in  April  2018,  is  partially 
aligned  with  the  EU  acquis  and  funds  were  allocated  towards  Montenegro’s  first  strategic 
development  activities.  Relevant  secondary  legislation  should  be  adopted  to  ensure  further 
alignment in this area, and a database of donor support projects needs to be developed, using 
the OECD Development Assistance Committee methodology. Montenegro became a member 
of the International Aid Transparency Initiative in May 2018.  

Montenegro needs  to  continue its preparations in  this chapter in  accordance with  its overall 
action plan on external relations. 

5.31  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 further amendments to the Law on international restrictive measures, introducing stronger 
and more dissuasive sanctions. 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. A political dialogue between the EU and Montenegro on UN issues 
took  place  in  October  2018.  Montenegro's  foreign  affairs  and  defence  ministries  have 
sufficient  structures  in  place  to  be  able  to  participate  in  the  common  foreign  and  security 

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policy and the common security and defence policy. (For more information on developments 
in  bilateral  relations  with  other  enlargement  countries  and  EU  Member  States,  see  section 
Regional issues and international obligations.) 

On  the  common  foreign  and  security  policy  (CFSP),  Montenegro  supports  the  global 
strategy for the European Union’s foreign and security policy. Montenegro continued to align 
with all relevant High Representative declarations on behalf of the EU and Council decisions 
(100%  alignment).  The  Law  on  international  restrictive  measures  was  amended  in  July 
2018, to provide for the freezing of assets of persons from the national list of legal and natural 
persons designated as terrorists (and their financiers), as well as stronger and more dissuasive 
sanctions.  

The country still maintains a bilateral immunity agreement with the United States, granting 
U.S. citizens exemptions 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  is  participating  in  some  international  export  control  arrangements  and 
instruments  on  non-proliferation,  but  still  not  in  all  of  them.  The  strategy  for  non-
proliferation of weapons of mass destruction and the body for monitoring its implementation 
are in place. The first report of the realisation plan is still pending.   

A  new  strategy  and  action  plan  (2019-2025)  to  combat  the  illegal  possession,  misuse  and 
trafficking  in  small  arms  and  light  weapons  (SALW)  and  ammunition  was  adopted  in 
December 2018.  A related national registration system and database are in place.  

Regarding  cooperation  with  international  organisations,  the  process  of  adaptation  to 
NATO standards is ongoing in Montenegro (the 29th NATO Member State).  

On  security  measures,  the  EU-Montenegro  security  agreement  on  the  exchange  and 
protection of classified information continued to be implemented mostly through exchange of 
classified data regarding the EU military and civilian missions and operations and for issuing 
personnel security clearances (PSC).  

Montenegro continued to actively participate in military crisis management missions under 
the common security and defence policy (CSDP),  notably EUTM Mali and EU NAVFOR 
Atalanta.  Montenegro  continues  to  take  part  in  UN  operations  UNFICYP  and  MINURSO. 
Since  the  mandate  of  the  International  Security  Assistance  Force  mission  in  Afghanistan 
expired  in  2014,  members  of  the  Montenegrin  Army  continue  to  serve  in  the  NATO-led 
resolute support mission. In July 2018, the Parliament decided to send two staff officers to the 
KFOR mission in Kosovo; the first officer was deployed in October 2018. 

Montenegro officially applied in January 2019 to participate in the EU Hybrid Risk Survey in 
order  to  identify  key  vulnerabilities  and  get  assistance  through  EU  instruments  to  build 
capacities, thus strengthening resilience against hybrid threats. The survey was launched with 
the Ministry of Defence in February 2019. 

5.32.  Chapter 32: Financial control  

The  EU  promotes  the  reform  of  national  governance  systems  to  enhance  managerial 
accountability, sound financial management of income and expenditure and external audit of 
public funds. 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.  Some progress was made in  the 
reporting  period  with  the  adoption  of  the  Law  on  governance  and  internal  control  and 

93 

 
 
secondary legislation on the protection of the euro against counterfeiting. Further efforts are 
needed  to  address  managerial  accountability  and  to  strengthen  the  functioning  of  internal 
control  and  internal  audit.  High-level  political  support  will  remain  instrumental  for 
implementing public internal financial control reforms at all levels of the administration and 
in  state-owned  companies.  Since  only  partial  progress  was  made  on  implementing  of  the 
Commission’s 2018 recommendations, they remain largely valid.  

In the coming year, Montenegro should in particular:  

  adopt  and  start  implementing  a  strategy  on  improving  governance  and  public  internal 

financial control (PIFC Policy paper); 

  ensure  adoption  of  an  external  audit  methodology  that  fully  complies  with  the 

International Standards of Supreme Audit Institutions (ISSAIs);  

  strengthen the coordination capacity of the National Anti-fraud Coordination Service. 

Public internal financial control (PIFC) 

A  strategic  framework  for  PIFC  is  partially  in  place.  In  order  to  ensure  a  specific  policy 
approach  for  managerial  accountability,  the  planned  strategy  for  the  improvement  of 
governance and internal control in the public sector 2019-2023 should be adopted. A number 
of enabling conditions for PIFC implementation have been included in the 2016-2020 public 
administration  reform  strategy  and  in  the  2016-2020  public  financial  management  (PFM) 
reform  programme.  The  development  of  the  draft  managerial  accountability  paper  has  been 
coordinated with other reforms, and the monitoring and reporting is foreseen upon adoption. 

Managerial  accountability  within  institutions  has  been  defined  under  the  Law  on 
Governance  and  Internal  Control,  which  was  adopted  in  November  2018.  Accountability 
mechanisms  between  ministries  and  subordinated  bodies  have  been  improved  with  the  new 
Law  on  state  administration.  However,  the  practical  implementation  of  managerial 
accountability within institutions still needs to be specifically defined in the planned strategy 
for  improvement  of  governance  and  internal  controls  in  the  public  sector  and  then 
implemented  in  practice.  The  managerial  culture  within  public  institutions  appears  highly 
centralised  with  little  delegation  of  budget  authority  or  decision-making  powers  to  middle 
management. Managerial accountability is further limited by a primary focus on compliance, 
rather than on performance. (See Public Administration Reform). 

Internal  control  is  regulated in  line with  international  standards in  the  Law on  governance 
and internal control. A Financial Management and Control manual is in place. However, the 
proper and effective functioning of internal control, in particular of risk management, is not 
yet  consistently  applied  across  all  budget  entities.  A  system  for  the  detection  and  acting  on 
information  about  financial  irregularities  still  has  to  be  developed.  The  centralised  budget 
inspection function in the Ministry of Finance is not fully operational.  

Internal  audit  practice  is  regulated  in  line  with  international  standards.  However,  not  all 
institutions  that  are  required  to  establish  an  internal  audit  unit  have  done  so.  Many  internal 
audit units that are in place are not yet sufficiently staffed. The timely rate of implementation 
of internal audit recommendations needs to be improved. Montenegro has in place a national 
internal audit training and development plan. 

The  Central  Harmonisation  Unit  (CHU)  in  the  Ministry  of  Finance  is  responsible  for 
developing and disseminating methodological  guidance on PIFC, as well  as monitoring  and 
reporting on PIFC implementation. It has started to conduct internal control quality reviews. 
The  CHU  prepared  an  annual  report  on  PIFC  implementation  that  contains  conclusions  for 

94 

 
 
adoption by government, and it follows up on the state of implementation of these conclusions 
and reports on this in the subsequent annual report. 

External audit 

Montenegro’s  constitutional  and  legal  framework  provides  for  independence  of  the  State 
Audit Institution (SAI) in line with the standards of the International Organisation of Supreme 
Audit Institutions (INTOSAI). Although seven additional staff were hired during the reporting 
period, the SAI still faces institutional capacity issues. The SAI continues to implement its 
2018-2022 strategic development plan,  

To  improve  the  quality  of  audit  work,  in  September  2018  the  SAI  adopted  guidelines  on 
auditing  the  final  statement  of  accounts,  in  accordance  with  its  strategic  development  plan 
2018–2022. SAI still needs to adopt an external  audit methodology that fully complies with 
INTOSAI Standards. In order to improve performance audit work, the SAI has established a 
dedicated performance audit department. In 2018, the SAI conducted four performance audits, 
the same as in 2017. 

To strengthen the impact of audit work, the Parliament and SAI put in place a memorandum 
of understanding in  May 2018, with  the aim  of  improving the follow-up of audit reports. A 
protocol with the Supreme State Prosecutor was agreed in 2018 on the handling of suspected 
illegal actions uncovered during the course of SAI audits. Parliament only makes limited use 
of the SAI reports; however, the SAI law calls on Parliament to decide on proposed measures 
and  time  limits  for  the  on  implementation  of  the  SAI  recommendations  regarding  the  Final 
Statement  of  Accounts.  The  SAI  undertakes  follow-up  audits  on  the  implementation  of  its 
recommendations.  

Protection of the EU’s financial interests 

Acquis alignment is already at a high level, but Montenegro still needs to pass a criminal law 
to  ensure  full  harmonisation  with  the  Directive  2017/1371  on  the  fight  against  fraud  to  the 
Union's  financial  interests.  A  2019-2021  national  anti-fraud  strategy  needs  to  be  adopted  to 
provide a strategic basis for improving the capacity of the national Anti-Fraud Coordination 
service  (AFCOS)  and  the  overall  functioning  of  the  AFCOS  network.  Montenegro  ensures 
cooperation  with  the  European  Commission  during  investigations  and  reports  to  the 
Commission on identified irregularities. Since 2012, Montenegro has reported 42 cases via an 
online irregularity management System, including six cases in 2018 and 27 cases in the first 
two months of 2019. Montenegro still needs to establish a solid track record on investigations 
and reporting on irregularities. 

Protection of the euro against counterfeiting 

Montenegro has ensured high level  of  acquis alignment.  In 2018, the central  bank  adopted 
several  pieces of  secondary legislation, notably  on medals  and tokens similar to  euro  coins, 
(ii) on handling of suspect euro notes and coins, and on authenticity and fitness-checking and 
recirculation of euro notes and coins. The central bank has the required capacity for technical 
analysis and it provides regular training to cash handlers, police and the Prosecutor’s Office. 
The central bank has concluded cooperation agreements with the European Commission and 
the  European  Central  Bank  and  it  cooperates  with  relevant  foreign  institutions.  Montenegro 
continues to participate in the actions of the Pericles 2020 programme. 

5.33  Chapter 33: Financial and budgetary provisions 

This  chapter  covers  the  rules  governing  the  funding  of  the  EU  budget  (‘own  resources’). 
These  resources  mainly  consist  of:  (i)  contributions  based  on  the  gross  national  income  of 
each  Member  State;  (ii)  customs  duties;  and  (iii)  a  resource  based  on  value-added  tax. 

95 

 
 
Member  States  must  have  the  appropriate  administrative  capacity  to  adequately  coordinate 
and ensure the correct calculation, collection, payment and control of own resources.  

Preparations in this area are at an early stage. There was limited progress in strengthening 
the administrative capacities for coordination and management of own resources, and further 
efforts  are  needed  to  ensure  a  solid  institutional  set-up  and  strong  inter-institutional 
cooperation among all the institutions and bodies involved in the application of own resources 
system. The 2018 recommendations remain valid. 

Therefore, in the coming year, Montenegro should in particular:  

  further  align  legal  framework  and  rules  of  administration  for  the  own  resources  system 
and  VAT  with  the  EU  acquis;  and  respect  commitments  made  in  the  framework  of  the 
technical assistance and own resources monitoring programme;  

  update and fully implement the own resources system action plan;  

  ensure  adequate  capacity  at  the  Directorate  for  Coordination  and  Management  of  EU 

resources and at all institutions involved in the own resources system. 

Montenegro’s  legal  framework  for the own resources system needs to  be  fully  aligned with 
the EU acquis.  

As regards traditional own resources, the previously planned action plan was not adopted. A 
revised own resources system action plan was adopted in spring 2019. Substantial efforts will 
be needed to ensure its full implementation.  

On  value  added  tax-based  resource,  the  amended  Law  on  VAT  is  partly  aligned  with  the 
EU acquis. Further alignment is needed on the supply of goods, taxpayers and the VAT base, 
VAT exemptions in the public interest and the issuing of invoices.  

On  gross  national  income-based  resources,  Montenegro’s  GPD  is  calculated  according  to 
the methodology of the European system of national and regional accounts (ESA 2010).  

On  administrative  infrastructure,  a  comprehensive  training  needs  plan  needs  to  be 
developed  and  capacity  building  provided  for  the  budget  directorate,  in  particular  for  the 
Directorate for Coordination and Management of Own Resources of the EU, as well as for all 
institutions involved in the own resources system. 

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ANNEX I - RELATIONS BETWEEN THE EU AND MONTENEGRO 

Within  the  framework  of  the  accession  negotiations,  by  May  2019,  32  chapters,  including 
chapters  23  and  24  on  the  rule  of  law,  had  been  opened,  three  of  which,  i.e.  science  and 
research, education and culture and external relations, 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 2018 and 
the  Stabilisation  and  Association  Committee  in  December  2018.  Regular  subcommittee 
meetings  have  been  held  throughout  the  period.  Two  meetings  of  the  Stabilisation  and 
Association Parliamentary Committee were held, in November 2018 and March 2019. 

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 17 May 2019, 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  the  European  Border  and 
Coast  Guard  Agency.  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. 

Montenegro  is  currently  benefitting  from  EU  financial  assistance  under  the  Instrument  for 
Pre-accession  Assistance  (IPA)  with  an  indicative  allocation  of  EUR 279.5  million  for  the 
period 2014-2020, out of which almost  EUR 197 million has been already programmed in the 
period  2014-2018  based  on  the  priorities  set  out  in  the  Indicative  Strategy  Paper.  The  2018 
action programme provided EUR 28.2 million for reforms and investments in the area of the 
rule of law and fundamental rights, agriculture and rural development. In 2018, Montenegro 
benefited  from  additional  EUR  8  million,  following  the  performance  reward  exercise 
undertaken in the framework of the mid-term review of the Indicative Strategy Paper. These 
additional funds were allocated to the social sectors, with a specific focus on the health sector. 

Montenegro  continues  to  benefit  from  support  under  the  IPA  multi-country  and  regional 
programmes.  It  continues  to  participate  in  four  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  benefit  from  participation  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).  Montenegro 
also participates with own funds in the EU Justice Programme.  

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ANNEX II – STATISTICAL ANNEX 

STATISTICAL DATA (as of 29.04.2019) 

Montenegro 

Basic data 

Population (thousand) 

Total area of the country (km²) 

Note 

2006 

2013 

613.1 

620.9 

2014 

621.5 

2015 

622.1 

2016 

622.2 

2017 

622.4 

13 812 

13 812 

13 812 

13 812 

13 812 

13 812 

National accounts 

Gross domestic product (GDP) (million euro) 

GDP (euro per capita) 

Note 

2006 

2 170 

3 500 

2013 

3 363 

5 400 

2014 

3 458 

5 600 

2015 

3 655 

5 900 

2016 

3 954 

6 400 

2017 

4 299 

6 900 

GDP per capita (in purchasing power standards (PPS)) 

8 500 

10 900 

11 300 

12 300 

13 000 

13 700 

GDP per capita (in PPS), relative to the EU average (EU-28 = 100) 

35 

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 (in volume) 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 (2010 = 100) 

: 

: 

: 

: 

: 

98 

41 

3.5 

41 

1.8 

42 

3.4 

45 

2.9 

46 

4.7 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
: 

: 

: 

: 

: 

: 

Labour productivity per person employed: GDP (in PPS) per 
person employed relative to EU average (EU-28 = 100) 

Gross value added by main sectors 

Agriculture, forestry and fisheries (%) 

Industry (%) 

Construction (%) 

Services (%) 

10.0 

17.3 

4.3 

68.4 

9.8 

14.3 

4.5 

71.4 

Final consumption expenditure, as a share of GDP (%) 

112.9 

100.5 

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 (%) 

22.8 

1.1 

40.6 

77.4 

: 

20.2 

-0.6 

41.3 

61.4 

: 

10.0 

13.5 

4.2 

72.3 

99.6 

19.0 

1.2 

40.1 

60.0 

: 

9.7 

12.8 

4.5 

73 

98.4 

20.1 

-0.1 

42.1 

60.6 

: 

9.0 

12.2 

6.7 

72.1 

96.4 

24.7 

1.4 

40.6 

63.1 

: 

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 (%) 

Note 

2006 

128.1 

: 

: 

: 

2013 

92.3s 

: 

2014 

81.8s 

: 

2015 

88.3s 

: 

2016 

84.4s 

: 

16.2 

14.5 

14.9 

13.1 

4.3 

9.1 

7.6 

6.1 

99 

8.4 

11.2 

8.2 

72.2 

93.2 

26.9 

3.3 

41.1 

64.5 

: 

2017 

81.8s 

: 

: 

: 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 

: 

: 

: 

: 

: 

: 

: 

: 

811 

869 

912 

1071 

1 220 

1 271 

1 308 

1 336 

1 530 

1780 

Inflation rate and house prices 

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

Note 

2006 

1) 

2.1 

2013 

1.8b 

2014 

-0.5 

2015 

1.4 

2016 

0.1 

2017 

2.8 

**Annual change in the deflated house price index (2010 = 100) 

: 

: 

: 

: 

: 

: 

Balance of payments 

Note 

2006 

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 balance for primary 
income (million euro) 

Balance of payments current account: net balance for secondary 
income (million euro) 

Net balance for primary and secondary income: of which 
government transfers (million euro) 

**3 year backward moving average of the current account balance 
relative to GDP (%) 

2) 

2) 

2) 

2) 

2) 

2) 

100 

2013 

-383 

2014 

-429 

2015 

-402 

2016 

-642 

2017 

-692 

-1 329 

-1 376 

-1 464 

-1 658 

-1 860 

653 

66 

690 

46 

789 

80 

769 

35 

852 

88 

-674 

-966 

166 

36 

90 

227 

211 

193 

212 

228 

7 

: 

22 

24 

4 

24 

21 

-13.8 

-13 

-11.6 

-13.2 

-14.4 

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

Net balance (inward - outward) of 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) 

: 

: 

: 

: 

: 

: 

469.7 

323.9 

353.9 

619.3 

371.6 

484.3 

26.1 

2.5 

13.0 

11.1 

20.7 

14.9 

11.1 

8.8 

-167.0 

-1.8 

10.1 

-4.3 

495.8 

336.9 

374.6 

630.3 

204.5 

494.4 

303.0 

79.8 

117.4 

411.8 

-27.4 

169.7 

**Net international investment position, relative to GDP (%) 

: 

Year on year rate of change in gross inflow of remittances (in 
national currency) from migrant workers (%) 

2) 

-43.6 

: 

2.1 

: 

-6.7 

: 

-2.3 

: 

-2.8 

: 

7.7 

Public finance 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

***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 (%) 

3.4 

32.3 

45.6 

42.3 

-5.2 

57.5 

42.6 

47.2 

-3.1 

59.9 

44.8 

47.7 

-7.4 

66.2 

41.7 

50.0 

-2.8 

64.4 

42.6 

46.2 

-5.6 

64.2 

41.5 

46.8 

Financial indicators 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

Gross external debt of the whole economy, relative to GDP (%) 

: 

: 

: 

: 

: 

: 

101 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross external 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) 

: 

484 

1 099 

3) 

4) 

Money supply: M3 (M2 plus marketable instruments, million euro)  5) 

1 587 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

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, 42 countries (2005 
= 100) 

**3 year change (T/T-3) in the trade-weighted effective exchange 
rate index, 42 countries (2005 = 100) 

6) 

843 

1 985 

1 929 

1 956 

2 075 

2 291 

7) 

7) 

: 

: 

: 

: 

10.34 

: 

1 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

9.36 

2.54 

9.22 

1.86 

8.53 

1.23 

7.45 

0.93 

6.81 

0.69 

1 

: 

: 

1 

: 

: 

1 

: 

: 

1 

: 

: 

1 

: 

: 

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

329 

424 

545 

674 

803 

898 

102 

 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
External trade in goods 

Value of imports: all goods, all partners (million euro) 

Value of exports: all goods, all partners (million euro) 

Note 

2006 

2013 

1 457 

1 773 

441 

376 

2014 

1 784 

333 

2015 

1 842 

317 

2016 

2 062 

326 

2017 

2 304 

371 

Trade balance: all goods, all partners (million euro) 

-1 016 

-1 398 

-1 451 

-1 524 

-1 736 

-1 932 

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 
(%) 

8) 

: 

102 

101 

101 

98 

105 

68.3 

51.8 

41.5 

44.2 

35.7 

45.8 

35.6 

41.3 

37.4 

48.2 

34.8 

47.4 

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) 

Note 

2006 

2.5 

2013 

2.5b 

2014 

2.4 

2015 

1.7 

2016 

1.8 

2017 

1.5 

11.0 

4.4 

4.9 

2.2 

3.4 

1.3 

Life expectancy at birth: male (years) 

Life expectancy at birth: female (years) 

71.4 

76.4 

74.1 

79.0 

74.1 

78.9 

74.4 

78.6 

74.1 

78.9 

73.9 

79.2 

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 (%) 

Note 

2006 

65.5 

2013 

65.1 

2014 

67.6 

2015 

68.5 

2016 

69.1 

2017 

69.3 

47.1 

52.6 

55.6 

56.7 

57.1 

58.2 

103 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 levels 0-2) (%) 

9) 

10) 

104 

55.0 

39.9 

23.1 

: 

: 

: 

: 

: 

: 

57.8 

47.5 

38.7 

4.5 

11.9 

5.9 

77.7 

36.0 

61.4 

49.4 

38.7 

5.7 

11.1 

6.5 

76.8 

32.8 

61.9 

51.5 

40.0 

7.7 

10.8 

6.6 

74.8 

32.4 

63.0 

51.3 

41.2 

7.7 

9.8 

7.7 

74.8 

31.2 

65.2 

51.4 

43.7 

7.9 

9.5 

7.6 

75.0 

32.6 

47.7 

48.2 

46.6 

47.0 

45.5 

29.6 

19.5 

18.0 

17.5 

17.8 

16.1 

29.1 

30.1 

59.5 

: 

: 

20.1 

18.8 

41.6 

17.8 

18.2 

35.8 

17.7 

17.3 

37.6 

18.3 

17.1 

35.9 

15.4 

16.9 

31.7 

16.0 

14.0 

13.6 

13.4 

12.4 

39.7 

32.8 

28.7 

22.1 

21.7 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unemployment rate for persons (aged 25–64) having completed 
tertiary education (ISCED levels 5-8) (%) 

: 

9.0 

9.0 

9.4 

11.5 

10.7 

Social cohesion 

Note 

2006 

2013 

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) (2010 = 100) 

GINI coefficient 

Poverty gap 

*Early leavers from education and training: proportion of the 
population aged 18–24 with at most lower secondary education 
who are not in further education or training (%) 

Standard of living 

Number of passenger cars relative to population size (number per 
thousand population) 

Number of mobile phone subscriptions relative to population size 
(number per thousand population) 

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) 

213 

69.2 

: 

: 

: 

487 

91.2 

38 

39.7 

5.8 

2014 

479 

91.4 

36 

32.8 

5.1 

2015 

480 

90.6 

36 

36.6 

5.7 

2016 

499 

94.4 

36 

35.6 

5.5 

2017 

510 

94.2 

37p 

34.0p 

5.4 

Note 

2006 

2013 

248.9 

288.3 

2014 

280.1 

2015 

282.8 

2016 

296.9 

2017 

310.5 

1 127.4  1 605.4b 

1 630.3 

1 620.1 

1 632.5 

1 636.7 

: 

: 

Note 

2006 

18.4 

0 

105 

13 

15 

2013 

18.4 

0 

10 

17 

2014 

18.4 

0 

9 

18 

2015 

18.4 

0 

9 

19 

2016 

18.4 

0 

11 

22 

2017 

18.4 

0 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Innovation and research 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

Public expenditure on education relative to GDP (%) 

: 

: 

: 

: 

: 

*Gross domestic expenditure on R&D relative to GDP (%) 

1.23 

0.37 

0.36 

0.37 

0.32 

Government budget appropriations or outlays on R&D 
(GBAORD), as a percentage of GDP (%) 

Percentage of households who have internet access at home (%) 

: 

: 

: 

: 

: 

: 

55.8e 

63.6e 

67.5e 

69.8e 

70.6e 

: 

: 

: 

Environment 

Note 

2006 

*Index of greenhouse gas emissions,  CO2 equivalent (1990 = 100) 

82.5 

2013 

56.3 

2014 

54.6 

2015 

57.6 

2016 

2017 

: 

: 

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 (%) 

: 

306.4 

294.7 

301.2 

280.6 

281.5p 

36.4 

72.3 

52.2 

43.1 

54.4 

31.6 

Road share of inland freight transport (based on tonne-km) (%) 

11) 

28.5 

100.0b 

100.0 

80.8 

58.5 

39.0 

Energy 

Note 

2006 

Primary production of all energy products (thousand TOE) 

Primary production of crude oil (thousand TOE) 

Primary production of solid fuels (thousand TOE) 

Primary production of gas (thousand TOE) 

Net imports of all energy products (thousand TOE) 

Gross inland energy consumption (thousand TOE) 

629 

0 

330 

0 

518 

1 152 

106 

2013 

762 

0 

372 

0 

234 

996 

2014 

692 

0 

364 

0 

291 

975 

2015 

716 

0 

390 

0 

306 

1 030 

2016 

660 

0 

308 

0 

343 

988 

2017 

631 

0 

324 

0 

418 

1 038 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross electricity generation (GWh) 

2 952 

3 945 

3 173 

3 003 

3 141 

2 483 

Agriculture 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

: 

: 

: 

: 

: 

: 

Agricultural production volume index of goods and services (at 
producer prices) (2010 = 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) 

12) 

13) 

13) 

13) 

517 

115 

13 

: 

Raw milk available on farms (thousand tonnes) 

14) 

178 

Harvested crop production: cereals (including rice) (thousand 
tonnes) 

Harvested crop production: sugar beet (thousand tonnes) 

Harvested crop production: vegetables (thousand tonnes) 

15) 

: 

: 

: 

223b 

89 

21 

220 

182 

8 

0 

42 

230 

94 

22 

237 

192 

8 

0 

44 

231 

92 

25 

224 

183 

7 

0 

51 

256p 

89p 

56p 

223p 

256p 

87p 

25p 

219p 

181p 

182p 

8p 

8p 

0 

43p 

0 

42p 

: = not available 
b = break in series 
e = estimate 
p = provisional 
s = Eurostat estimate 
u = low reliability 
* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 
*** = The government deficit and debt data of enlargement countries are published on 

107 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
an "as is" basis and without any assurance as regards their quality and adherence to 
ESA rules. 

Footnotes 

1)  2006: consumer price index. 
2)  2006: based on balance of payments manual edition 5 (BPM5). 
3)  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. 

4)  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. 

5)  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. 

6)  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). 

7)  Weighted average effective interest rate, outstanding amounts. 
8)  Calculated from indices with the previous year as the reference year (= 100). 

9)  Data of NGOs are excluded. Number of employees in the public sector as a share of 

the total number of persons employed. 

10)  Comprises data of private companies or enterprises, entrepreneurs and private 

households. Number of employees in the private sector as a share of the total number 
of persons employed. 

11)  2006: total freight traffic (national territory and international transport). 

12)  2006: based on the reports of agricultural organisations (agricultural enterprises and 
cooperatives) engaged in crop production and estimates for private agricultural 

108 

 
 
 
 
 
holdings. 

13)  Including livestock held by enterprises, cooperatives and households. 

14)  In million litres. Net quantity, from enterprises, cooperatives and households. 

15)  2013-2015: including the production of kitchen gardens. 

109