Montenegro: country overview

03 September 2012
by Ina Dimireva -- last modified 12 February 2013

Montenegro is one of Europe’s newest countries, created in 2006.

Montenegro

Member of Schengen area: No

Political system: Republic

Capital city: Podgorica

Total area: 14 026 km²

Population: 0.6 million

Currency: euro

Country overview

In 2006 Montenegro's parliament declared independence from the State Union of Serbia and Montenegro. In 2008, the new country applied for EU membership.

In 2010, the Commission issued a favourable opinion on Montenegro's application , identifying 7 key priorities that would need to be addressed for negotiations to begin, and the Council granted it candidate status.

In December 2011, the Council launched the accession process with a view to opening negotiations in June 2012.

The accession negotiations with Montenegro started on 29 June 2012.

Economy overview

Montenegro's economy is transitioning to a market system, but the state sector remains large and additional institutional changes are needed. The economy relies heavily on tourism and the export of refined metals. Unprofitable state-owned enterprises weigh on public finances. Montenegro severed its economy from federal control and from Serbia during the MILOSEVIC era and maintained its own central bank, adopted the deutsch mark, then the euro - rather than the Yugoslav dinar - as official currency, collected customs tariffs, and managed its own budget. The dissolution of the loose political union between Serbia and Montenegro in 2006 led to separate membership in several international financial institutions, such as the European Bank for Reconstruction and Development. In January 2007, Montenegro joined the World Bank and IMF. Montenegro became the 156th member of World Trade Organization in December 2011. The European Council (EC) granted candidate country status to Montenegro at the December 2010 session. Montenegro began negotiations to join the EC in June, 2012, having met the conditions set down by the European Council, which called on Montenegro to take steps to fight corruption and organized crime. Unemployment and regional disparities in development are key political and economic problems. Montenegro has privatized its large aluminum complex - the dominant industry - as well as most of its financial sector, and has begun to attract foreign direct investment in the tourism sector. The global financial crisis had a significant negative impact on the economy, due to the ongoing credit crunch, a decline in the real estate sector, and a fall in aluminum exports. In 2012, real GDP growth slipped to 0.2%, reflecting the general downturn in most of Europe.