2017年-IMF国际货币组织全球_Montenegro_Selected_Issues_102页_2mb

Summary of Selected Issues Paper on Montenegro (September 2017)

Core Content

This document presents a comprehensive analysis of Montenegro's fiscal and macroeconomic challenges, with a focus on the Bar-Boljare Highway project, public expenditure efficiency, and fiscal adjustment strategies. It also touches upon financial development, external competitiveness, and pension reform.

Key Issues and Findings

A. The Bar-Boljare Highway

• Project Overview: The Bar-Boljare Highway is a three-phase project to connect Bar, Montenegro's main southern seaport, to Serbia's road network. The first phase, from 2015 to mid-2019, is the only one budgeted, contracted, and under implementation, costing around €1 billion (25% of 2017 GDP).
• Fiscal Impact: The first phase has used up most of Montenegro's fiscal space, potentially crowding out other productive spending. The second and third phases are likely to be financed only through concessional funds due to the risk of destabilizing debt sustainability.
• Economic Impact:
  • The project is expected to generate demand spillovers with a low-end demand multiplier of 0.2.
  • Once completed, it could boost GDP by about 1/3 of the output effects estimated in the 2014 WEO, with a total supply multiplier of 0.5 over five years.
  • The economic rate of return for the entire project is estimated at 6%, below the World Bank's benchmark of 12%, suggesting the need for careful prioritization of public investments.

B. Public Expenditure Efficiency

• Public Investment Efficiency Index: Montenegro ranks in the 2nd bottom quartile of public investment efficiency among rated countries, with an overall score of 1.6 (Table 1).
• Current Spending Trends:
  • Public spending has outpaced GDP growth since 2004.
  • In 2015, public spending was 47% of GDP, with current spending accounting for 90% of the budget.
  • Compensation of employees is the largest component of public spending, followed by social benefits and other current spending.
• Wage Bill:
  • The wage bill has remained relatively stable at around 11% of GDP since 2004.
  • It is higher than EM Europe averages and public employment is higher than private sector employment.
  • Reforms should focus on public employment rationalization and civil service reform to make the wage bill more fiscally sustainable.

C. Fiscal Adjustment and Spending Reforms

• Debt Sustainability:
  • Without the highway, Montenegro's debt would have been sustainable.
  • With the highway, debt is projected to rise to 88% of GDP by 2022, compared to 66% under a fiscal adjustment scenario.
  • The government needs to focus on high-return investments to reduce debt sustainability concerns.
• Fiscal Adjustment Strategy:
  • The government has started a medium-term fiscal consolidation plan to address debt sustainability.
  • The plan includes reforms to public expenditures, local government finances, and pension systems.
• Pension Reform:
  • Pension spending is a major component of public expenditure.
  • The current pension system is not sustainable, and reforms are necessary to improve its long-term viability.
  • The pension reform package is expected to reduce future pension liabilities and improve fiscal sustainability.

D. Other Financial and Economic Issues

• Financial Development:
  • Montenegro's financial system is underdeveloped, with limited access to financial services.
  • Financial inclusion is a key challenge, especially in rural areas.
• Private Sector Indebtedness:
  • Private sector indebtedness is a concern, with the credit environment affecting economic output.
  • Credit has a positive effect on output, but the interest rate spread analysis suggests a need for better monetary policy management.
• External Competitiveness:
  • Montenegro's current account and financial account are under pressure due to high public debt and low economic returns.
  • The real effective exchange rate is a concern for competitiveness.
  • Labor market and productivity issues are significant, with a need for reform to improve economic performance.
  • The business environment is not as favorable as in other countries, suggesting the need for structural reforms.

Main Views and Recommendations

• Highway Project: While the highway is crucial for connectivity, economic growth, and security, its high cost and low return raise concerns about fiscal sustainability. The government should consider grant financing for the remaining sections and prioritize high-return investments.
• Public Expenditure: Current spending is high and inefficient, with a heavy reliance on non-tradable goods and services. The government should rebalance current and development expenditure and rationalize public employment.
• Pension System: The pension system is not sustainable and requires structural reforms to reduce future liabilities and ensure long-term fiscal responsibility.
• Financial Sector: Montenegro needs to improve financial development and inclusion to support economic growth and stability.
• Fiscal Strategy: A comprehensive fiscal adjustment strategy is essential, including reforms to public spending, local government finances, and monetary policy improvements.

Conclusion

The document emphasizes the need for fiscal discipline, efficient public investment, and structural reforms in Montenegro to ensure debt sustainability, economic growth, and social development. It calls for a reassessment of public investment priorities, improved public financial management, and targeted reforms in the pension and labor markets to address long-term challenges.