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Montenegro country profile

27 August 2006
by eub2 -- last modified 04 January 2008

Montenegro is a potential candidate country for membership of the European Union.



Political profile

Official name Republic of Montenegro
Capital City Podgorica
Population 620,145
Area 13,812 km²
Density 44.9 inhabitants per km²
Distribution 60 % urban population, 40 % rural population
Neighbours Albania (172 km), Croatia (14 km), Bosnia and Herzegovina (225 km), Serbia (203 km).
Population profile Montenegrins (43.2%), Serbs (32%), Bosnians (7.8%), Albanians (5 %), Muslims (4%), Croats (1.1%), Undeclared (4.3%), etc.
Language(s) Montenegrin, Serbian, Albanian, Bosnian, Croatian etc.
Religion Orthodox, Muslim, Catholic
Life expectancy Women: 74 years, Men: 71 years
Sources: 2003 census by MONSTAT.

Political History

On 21 May 2006 Montenegro organised a referendum on independence, in line with the provisions of Article 60 of the Constitutional Charter of Serbia and Montenegro. The modalities for referendum were agreed by political parties following a mediation mission of Mr Miroslav Lajčak, the personal representative of the High Representative for CFSP Javier Solana. The referendum was conducted in line with OSCE and Council of Europe commitments. On 31 May 2006 the Republic Referendum Commission confirmed the results, according to which 55.5% of voters expressed their support for independence. On 3 June 2006 the Montenegrin Parliament adopted the “Declaration of Independence”.

Recognising legitimacy of the whole process the EU Council adopted on 12 June 2006 Conclusions where the EU and its Member States decided to develop further their relations with the Republic of Montenegro as a sovereign, independent state.

In the Declaration of Independence, Montenegro confirmed that it applies and adheres to international treaties and agreements to which the State Union of Serbia and Montenegro was a party and which are relevant for Montenegro. Montenegro started the process of joining international organisations. In June 2006 it became a member of the UN and of the OSCE. In July and August it acceded to a number of organisations including ILO, ITU, ICRC et al. Since May 2007, Montenegro is also a member of the Council of Europe.

Bilateral discussions on settling pending issues between Serbia and Montenegro are being held in a constructive atmosphere and agreements have been reached on key issues, notably on financial assets and membership in IFIs.

Since independence Montenegro has been putting in place the legal and institutional set-up required by its new competences as an independent state.  On 19 October 2007 Montenegro adopted a Constitution that is broadly in line with international standards and the recommendations of the Council of Europe and its Venice Commission. The Constitution was adopted by the Parliament with the required qualified majority.

Economic profile

GDP per capita EUR 3,142
Economic growth% 6.5%
Inflation rate (RPI) 3.0%
Unemployment rate 14.7%
Currency EUR
Government budget balance 1.1% of GDP
Current a/c balance -23.7% of GDP
Foreign debt 25.6% of GDP
Trade with EU Imports from EU (27) 501 million EUR
Exports to EU (27) 287 million EUR
Sources: International Monetary Fund, national sources, EUROSTAT (Comext, Statistical regime 4)

Economic situation

In Montenegro, real GDP rose by 6.5% in 2006 despite the weak annual industrial production (1%), notably due to problems in the coal mine, the thermoelectric power plant and the steelworks. Tourism, construction and financial sectors were the most dynamic factors of the economic growth. The consolidated budget recorded a surplus of 1.1% of GDP, while public debt decreased to 35.6% of GDP and the external debt reached 25.6% of GDP.

The current account deficit widened in 2006 to EUR 512 million (23.7% of GDP). The major factor for the gap widening was the significant and growing trade deficit, fuelled by the low competitiveness of the economy, and the increased demand for imported products consequence of the strong investment activity and rapid credit growth. Net foreign direct investment (FDI) reached EUR 466.7 million, reflecting the surge of investments, notably on tourism and real estate.

The WTO accession process will require further reforms. To that end the Montenegrin authorities established new centres for metrology, standardisation and intellectual property, which should also serve the purpose of alignment of Montenegro's foreign trade regime and customs policy with the EU requirements.

Relations with International Financial Institutions

Montenegro does not have any outstanding debts with commercial creditors (London Club). The main lenders are the World Bank institutions, with a total share of 43.8 %. In January 2007 Montenegro became member of the International Monetary Fund (IMF) and the World Bank (WB).

More details on the economic situation can be found in the Candidate and Pre-Accession Countries' Economies Quarterly (CCEQ) published by the European Commission.

Map of Montenegro

Source: European Commission, CIA World Factbook
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