Montenegro : Beyond the Peak, Growth Policies and Fiscal Constraints, Public Expenditure and Institutional Review

In 2007, Montenegro was one of the world's fastest growing non-oil economies. The country reaped the benefits from its comprehensive, pre-independence reform program. After the international recognition of statehood had removed the lingering uncertainty over Montenegro's political status, investors reassessed the country's relative attractiveness as a site for business, responding positively to (i) the implementation of the privatization and structural-reform agenda; (ii) the provision of a low-tax, pro-business environment; and (iii) a clearly defined European perspective. In response, investment surged. Capital inflows from foreign direct investment (FDI), largely absent during the first half of this decade, reached a level of 30 percent of Gross Domestic Product (GDP) in 2006 and 40 percent in 2007, fueling domestic demand and stimulating economic growth. Real GDP grew at double-digit rates in 2007, an outcome that stands in stark contrast to the period of economic anemia characterizing Montenegro's pre-independence years. In this buoyant environment, commercial banks supported private-sector activities with very large increases in credit to the economy. These helped to finance higher imports of goods and services, leading to a rapid widening in the current-account deficit from 8.5 percent of GDP in 2005 to 40 percent in 2007. The economic dynamism, exceeding all (published) projections, resulted in an unexpected abundance of fiscal revenues and with generally effective control over public expenditures in 2007, a very substantial overall surplus.

Bibliographic Details

Main Author:	World Bank
Format:	Public Expenditure Review biblioteca
Language:	English en_US
Published:	Washington, DC 2008-11
Subjects:	ACCESS TO CREDIT, ARREARS, ASSET PRICES, AVERAGE WAGES, BALANCE SHEET, BALANCED BUDGET, BANK BORROWING, BANK CREDITS, BANK DEBT, BANK LENDING, BANKING INDUSTRY, BANKING SECTOR, BANKING SERVICES, BIG BANKS, BINDING CONSTRAINT, BOOM-BUST CYCLE, BOURSES, BROCHURES, BUDGET CONSTRAINTS, BUDGET DEFICIT, BUDGET DEFICITS, BUDGETARY ALLOCATIONS, BUSINESS CLIMATE, BUSINESS CYCLE, BUYERS, CALCULATION, CAPITAL EXPENDITURES, CAPITAL GAINS, CAPITAL INFLOW, CAPITAL INFLOWS, CENTRAL BANK, CENTRAL BANKS, COMMERCIAL BANKS, CONCESSION ARRANGEMENTS, CONSUMER, CONTINGENT LIABILITIES, CONTRIBUTIONS, COUNTRY RISK, CREDIT CRUNCH, CREDIT CRUNCHES, CREDIT GROWTH, CREDIT INCREASE, CREDIT LIMITS, CREDIT LINES, CREDIT MARKETS, CREDIT RATING AGENCIES, CREDIT REGISTRY, CREDIT RISK, CREDIT RISKS, CURRENCY, CURRENT ACCOUNT, CURRENT ACCOUNT DEFICIT, CURRENT INCOME, CURRENT PRICE, DEBT FINANCING, DEBT-SERVICE, DEBTS, DECENTRALIZATION, DEFAULT RATES, DEPOSIT, DEPOSITOR, DEPOSITS, DEPRECIATION, DEVALUATION, DIVERSIFICATION, DOMESTIC BANKING, DOMESTIC BANKS, DOMESTIC CREDIT, ECONOMIC ACTIVITIES, ECONOMIC COSTS, ECONOMIC CRISES, ECONOMIC DEVELOPMENT, ECONOMIC DEVELOPMENTS, ECONOMIC GROWTH, ECONOMIC POLICIES, ECONOMIC POLICY, ECONOMIC REFORM, EMPLOYEE PENSION, EMPLOYMENT AGENCY, ENVIRONMENTAL SUSTAINABILITY, EQUIPMENT, EXCHANGE RATE, EXPENDITURE, EXPENDITURES, EXTERNAL BORROWING, EXTERNAL CAPITAL, EXTERNAL INDEBTEDNESS, EXTERNAL SHOCKS, FINANCIAL CRISIS, FINANCIAL INSTITUTIONS, FINANCIAL PERFORMANCE, FINANCIAL POSITION, FINANCIAL SECTOR, FINANCIAL SITUATION, FISCAL CONSTRAINTS, FISCAL DEFICITS, FISCAL DISCIPLINE, FISCAL POLICIES, FISCAL POLICY, FISCAL SURPLUSES, FOREIGN BANKS, FOREIGN CAPITAL, FOREIGN DEBT, FOREIGN DIRECT INVESTMENT, FOREIGN DIRECT INVESTMENTS, FOREIGN INVESTORS, FOREIGN LOANS, FOREIGN MARKETS, GOVERNMENT SPENDING, GROSS DOMESTIC PRODUCT, HOMEOWNERS, HUMAN DEVELOPMENT, HUMAN RESOURCE, HUMAN RESOURCES, INCOME TAX, INCOME TAXES, INCOME-TAX, INEQUALITIES, INFLATION, INFLATION RATES, INFRASTRUCTURE INVESTMENTS, INSTITUTIONAL REFORM, INSTRUMENT, INSURANCE, INTEREST INCOME, INTEREST RATES, INTERNATIONAL CAPITAL, INTERNATIONAL CREDIT, INTERNATIONAL CREDIT RATING, INTERNATIONAL FINANCIAL CRISIS, INTERNATIONAL FINANCIAL MARKETS, INTERNATIONAL MARKETS, INVESTMENT PLAN, INVESTMENT PLANS, INVESTMENT PROGRAM, INVESTMENT PROJECTS, INVESTMENT VEHICLES, LABOR MARKET, LABOR MARKETS, LAND TITLES, LEGAL TENDER, LENDERS, LIQUIDITY, LOAN, LOAN PORTFOLIO, LOCAL GOVERNMENT, LOCAL GOVERNMENTS, LOW INCOME, MACROECONOMIC MANAGEMENT, MACROECONOMIC STABILITY, MACROECONOMIC STABILIZATION, MAINTENANCE COST, MARKET ECONOMY, MARKET INDICES, MARKET PRICES, MARKET SIZE, MATURITY, MONETARY AUTHORITY, MONETARY FUND, MORTGAGE, MORTGAGE LENDERS, MORTGAGES, OUTSTANDING CREDIT, OUTSTANDING CREDITS, PENSION, PERSONAL INCOME, PHYSICAL ASSETS, POLITICAL UNCERTAINTIES, PORTFOLIO, PORTFOLIO QUALITY, POVERTY RATE, POVERTY RATES, PRIVATE DEBT, PRIVATE INVESTMENT, PRIVATIZATION, PRIVATIZATIONS, PROBABILITY, PRODUCTIVITY, PUBLIC DEBT, PUBLIC EXPENDITURE, PUBLIC EXPENDITURES, PUBLIC FUNDS, PUBLIC INVESTMENT, PUBLIC INVESTMENTS, PUBLIC SPENDING, PUBLIC-PRIVATE PARTNERSHIPS, PURCHASES, RATES OF GROWTH, RATES OF RETURN, REAL ESTATE, RECEIPTS, RECESSIONS, RECURRENT EXPENDITURE, RECURRENT EXPENDITURES, REFERENDUM, REGULATORY FRAMEWORK, RESERVE, RESERVE REQUIREMENTS, RESERVES, RESOURCE MANAGEMENT, RESPONSIBILITIES, RISK ASSESSMENT, SALARIES, SALARY, SALE, SALES, SAVINGS, SOCIAL INSURANCE, SOCIAL WELFARE, SOLVENCY, SOVEREIGN RISK, STOCK EXCHANGE, STOCK EXCHANGES, STOCK MARKETS, STOCKS, SWAP, TAX, TAX OBLIGATIONS, TAX POLICY, TAX RATE, TAX RATES, TAX REGIME, TAX SYSTEM, TELECOMMUNICATIONS, TRANSITION ECONOMIES, UNEMPLOYMENT, UNION, UNIONS, VALUABLE, WAGE, WAGES, WEALTH EFFECT, WITHHOLDING TAX, WORTH,
Online Access:	http://documents.worldbank.org/curated/en/2008/11/10236001/montenegro-beyond-peak-growth-policies-fiscal-constraints-public-expenditure-institutional-review http://hdl.handle.net/10986/7831
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