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Goran Ðurović, Montenegrin Minister Of Economic Development

We’re Optimistic, But Cautious

I’m an optimist and believe that our country, as a small system, where sometimes just one important investment or policy can yield a major result, has a chance to overcome all obstacles and quickly become a member of the European Union, which is what we’re striving towards

We spoke with Goran Đurović, Minister of Economic Development in the Government of Montenegro, during a moment when many governments, including Montenegro’s, have been considering not only short-term measures in response to the global crisis that’s rocking the domestic economy, but also the long-term directions of development for the country. That’s why this interview addresses current topics like the upcoming tourist season, but also other economic sectors that have the potential to contribute to the country’s long-term economic growth.

How satisfied are you with the outcomes of the current winter tourist season and what does it say about possible tourism revenue during 2023?

– The winter tourist season symbolically opened at the end of December and will continue for a couple more months, so it’s too early to discuss its results and possible revenue. I can say that 2023 began with great numbers of tourists arriving in Montenegro during the New Year and Christmas holidays. The performances of top regional music stars in coastal cities gathered record numbers of visitors, estimated at around 80,000. When it comes to the north, as you know, we’re witnessing extremely warm and unseasonal weather, while the situation has been similar at ski resorts across the region and at numerous European ski centres. We welcomed the first snows in the second half of January, and in recent days we’re recording large visitor numbers.

I would remind you that we also had a slight shift in peak season during last year’s summer season, which ultimately had no impact on the number of tourists or the revenue generated from tourism. According to the latest data of the Central Bank of Montenegro, as of the end of the third quarter of 2022, revenues generated last year from foreign tourists totalled 916 million euros, which is at the level of 90% compared to the same period of the record-breaking year of 2019. I have repeatedly expressed my expectation that total revenues will exceed a billion euros. Our aim is for Montenegro to become a year-round destination, to narrow the sharp line drawn between the summer and winter seasons, and for them to start being viewed as a whole. We look to the year ahead with optimism and hoping for success.

Given predictions that economic growth will be hit by a slowdown in 2023, how long can tourism remain Montenegro’s growth engine; which other branches have growth potential?

– With the projections and plans for this year, we are optimistic, but also cautious. Good results achieved in 2022 provide us with grounds to expect the economy to recover further, but, unfortunately, not everything depends on us.

As you stated yourself, global trends are such that some negative trends will continue in 2023. We are, nonetheless, as a responsible government, taking all the steps necessary to get to grips with all challenges and to protect citizens’ living standards and the functioning of the economy. When it comes to tourism, a branch that – together with the service sector – accounts for almost a third of the country’s gross domestic product, we are working on extensive preparations for the upcoming summer season, improving the quality of our offer and promoting the country on foreign markets. We do not, however, rely solely on tourism. We are recording great interest among investors in the field of energy, while the IT industry’s influence is also growing in Montenegro, and great efforts are also being exerted to strengthen agriculture and increase domestic production. These areas, alongside tourism and foreign direct investments related to projects in these sectors, will be motors of the country’s economic development – not only during this year, but also, I believe, in subsequent years.

How are FDI totals and to what extent is that money intended for the tourism sector?

– Total inflows of foreign direct investments at the end of November amounted to 1.04 billion euros, which represents growth of 36.6% compared to the same period of 2021. In terms of net FDI inflow, it amounts to 733.8 million euros, which is up 61% on the same period of the previous year.

The energy field, IT industry and domestic agriculture and production will, alongside tourism and foreign direct investments related to projects in these sectors, be motors of the country’s economic development – not only during this year, but also, I believe, in subsequent years

When it comes to investors, they come from Serbia, Russia, Germany, Switzerland, Turkey, the United Arab Emirates and Italy. No precise data are yet available as to which part of investments relates to tourism, but a significant share is linked to the real estate market.

Your portfolio also includes the Železara steel mill, which has long been a major problem for the government, and the island of Sveti Stefan, which was once symbolised the flourishing of Montenegrin tourism. What fate awaits these two very different entities?

– I’ve discussed the topic of Željezara Nikšić steel plant on multiple occasions. The situation found at that factory by the 43rd Government was pretty bad. Led by a desire to resolve the situation, firstly for the welfare of employees, and then also for industrial production, which isn’t large in Montenegro, I tried from the very start to help as much as possible, because this is a private company. Following numerous negotiations with the Ministry of Finance, Elektroprivreda Crne Gore [power distribution company EPCG] and the Tosyali Group, the owner of Željezara Nikšić, a solution was adopted at the level of the government that stipulates EPCG’s takeover of the steel plant.

I believe this decision will soon be fully implemented and that, with good management and the proper utilisation of all resources available to the steel plant, in terms of both personnel and infrastructure, it will start operating. When it comes to Sveti Stefan, which represents a gem of Montenegrin tourism, you are aware of the fact that arbitration proceedings are underway with the leaseholder of hotels “Sveti Stefan” and “Miločer”, company Adriatic Properties and hotel operator Aman. I have emphasised multiple times that I’m sorry that it came to the initiating of court proceedings, that the doors of the Ministry of Economic Development and Tourism are open, and that the willingness exists to compromise and reach a solution that’s in accordance with the laws and Constitution of Montenegro. I’m personally very sorry that this hotel complex has been closed for two years, but I’m hopeful we will welcome the next summer season in a different way.

On the other hand, does the basis exist to fulfil your wish to strengthen the national airline?

– Following the closure of Montenegro Airlines, as the first national carrier, a new company has been formed: To Montenegro [Air Montenegro], which had its inaugural flight in June 2021. My personal view is that a national airline is essential for Montenegro and we should work on increasing the number of aircraft so we can remain connected year-round to as many destinations as possible worldwide.

As a responsible government, we are taking all the steps necessary to get to grips with all challenges and to protect citizens’ living standards and the functioning of the economy, but, unfortunately, not everything depends on us

We can’t talk about our country as being an aviation destination if we lack adequate availability. From that aspect, Air Montenegro should, in my opinion, be strengthened with flights to Western Europe, Scandinavia and Middle Eastern countries. Still, as you know, the government is a collective body and I believe that, on the issue of the national airline, all aspects will be checked and the best decision will be made, for the benefit of all of us.

What has been brought by the crisis in Ukraine and could you consider Montenegro a country that has actually gained a net benefit from this crisis, due to the arrival of Russian and Ukrainian IT experts?

– Like many other countries of the region, during last year Montenegro became a haven for refugees from Ukraine, as well as a number of Russian citizens. Among them are a few thousand IT experts, but also several Western companies that have relocated their operations from Russia to our country. As such, it could be said that we’ve achieved a certain net benefit as a result of that conflict, but I consider it much more important that Montenegro stood with the ranks of countries that provided unequivocal support to Ukraine and opened their doors to the people in need who’ve been hit by the devastating war that continues to rage.

How much are ‘economic passports’ more than a tourist hit?

– I believe that some financial indicators best testify to this. The economic citizenship [Montenegro Citizenship by Investment] programme expired on 31st December 2022, with 16 projects in the field of tourism and one in the field of agriculture being under implementation on the day it concluded. These projects have a total amounting to close to 445 million euros, and the part related to hotel construction includes the planned construction of nearly 2,800 high-category accommodation units and the creation of more than 1,800 new jobs. I’m particularly glad that 10 of the 16 tourism projects are under construction in the north of the country – nine in Kolašin and one in Žabljak, with which more even regional development will be achieved.

The Government recently brought the decision to form the Coordination Body for analysing the economic citizenship programme, with the aim of monitoring its implementation and effects. The programme brought Montenegro numerous financial benefits, and analysis is currently being conducted on the possibility of a model for its continuation. On the other hand, as a European Union membership candidate country in the accession process, Montenegro also takes into consideration the shortcomings that are being pointed out continuously by the European Commission and, in that sense, will base its decisions on the best interests of the state.

What is your vision for Montenegro in the new economic reality in which we’re living?

Economic realities come and go. Today is a crisis. It could last – but not forever. I see an opportunity in every crisis, because crises compel us to be better and to progress. I strongly believe that Montenegro, with its natural beauty, geographical position and potential, can and should be a serious world tourist destination, with developed agriculture, industry and energy. A small, but developed, economic system, self-sustaining and prosperous. In order for us to achieve this, we need a vision, knowledge, devoted work and patience – not only from the government, but rather from every citizen of this country.

To what extent do the system’s current imbalances represent a serious obstacle to the realisation of that vision?

– The political crisis in Montenegro is typical of all countries that are undergoing democratic transition. The aggravating factor is that this crisis comes at a junction that coincides with a political and economic crisis around the world. Nevertheless, I’m an optimist and believe that our country, as a small system, where sometimes just one important investment or policy can yield a major result, has a chance to overcome all obstacles and quickly become a member of the European Union, which is what we’re striving towards.

SUPPORT

Montenegro stood with the ranks of countries that provided unequivocal support to Ukraine and opened their doors to the people in need who’ve been hit by the devastating war that continues to rage

ACCESSIBILITY

A national airline is essential for Montenegro and we should work on increasing the number of aircraft so we can remain connected year-round to as many destinations as possible worldwide

VISION

I strongly believe that Montenegro, with its natural beauty, geographical position and potential, can and should be a serious world tourist destination, with developed agriculture, industry and energy