{
  "title": "IMF Executive Board Concludes 2025 Article IV Consultation with Montenegro",
  "publication": "IMF News, November 19, 2025",
  "sourceUrl": "https://www.imf.org/en/news/articles/2025/11/19/pr-25381-montenegro-imf-executive-board-concludes-2025-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Montenegro on November 18, 2025. The authorities have consented to the publication of the Staff Report prepared for this consultation.",
  "publishDate": "2025-11-19",
  "sections": [
    {
      "heading": "Economic performance and outlook",
      "content": "- Growth history and near-term outlook:\n  - Growth averaged around 9 percent annually between 2021 and 2023.\n  - Real GDP growth moderated to 3.2 percent in 2024 and the first half of 2025.\n  - Real GDP growth is currently projected at 3.2 percent in 2025 and is expected to remain at similar levels over the forecast horizon.\n- Tourism and external drivers:\n  - The rebound was largely supported by the global recovery in tourism and substantial inflows of affluent migrants.\n  - Deceleration in international tourism contributed to the 2024 moderation in growth.\n- Projections:\n  - Average headline inflation is forecast to remain elevated at around 4 percent in 2025, before gradually converging toward 2 percent over the medium term.\n  - The current account balance is expected to weaken to some 18 percent of GDP in 2025 but improve partially as temporary factors subside.\n  - It is unlikely to return to levels observed during 2021–2023 unless the economy diversifies and rebalances away from consumption."
    },
    {
      "heading": "Inflation and labor-market dynamics",
      "content": "- Inflation developments:\n  - Headline inflation fell from a peak of 13 percent in 2022 to just 1 percent by September 2024, then rose again to 4.9 percent by September 2025.\n  - Core inflation (excluding food and energy) reached 3.2 percent by September 2025.\n  - Average headline inflation forecast: around 4 percent in 2025, converging toward 2 percent over the medium term.\n- Wages and policy effects:\n  - Inflationary pressures have been rising, partly driven by increasing wages.\n  - The government’s Europe Now initiatives have reduced labor market informality and enhanced financial inclusion; their effects on revenue collection and future wage dynamics need careful management."
    },
    {
      "heading": "Fiscal position, public debt, and risks",
      "content": "- Recent fiscal trajectory:\n  - The sharp post-pandemic decline in public debt from end 2020–24—by approximately 48 percentage points of GDP—was largely driven by strong growth and inflation.\n  - The general government deficit is projected to widen from 2.9 percent of GDP in 2024 to 3.6 percent in 2025.\n  - Without measures, the deficit is expected to exceed 4 percent of GDP by 2030 in baseline forecasts.\n  - The public debt-to-GDP ratio is projected to rise gradually to around 65 percent by 2030.\n- Fiscal recommendations:\n  - Over the short-term, the weakening fiscal position can be reversed with active fiscal management measures.\n  - Longer-term challenges (aging, health, defense expenditures) call for deeper fiscal structural reforms.\n  - Suggested reforms include: improving civil service and healthcare efficiency; better targeting of social benefits; linking retirement age to life expectancy; enhancing public investment management.\n  - Directors recommended strengthening the Fiscal Responsibility Law and operationalizing the independent Fiscal Council to guide fiscal policy.\n- Selected fiscal figures (percent of GDP, unless otherwise noted):\n  - General government gross debt: 2020: 108.4; 2024: 59.6; 2025: 60.8; 2030: 64.9.\n  - General government gross debt (authorities' definition): 2020: 106.5; 2024: 58.5; 2025: 59.7; 2030: 64.2.\n  - General government debt, including loan guarantees: 2020: 113.7; 2024: 62.1; 2025: 63.1; 2030: 66.6.\n  - Overall fiscal balance: 2020: -10.9; 2023: 0.4; 2024: -3.4; 2025: -3.6; 2030: -4.3.\n  - Primary balance: 2020: -8.2; 2023: -1.5; 2024: -1.3; 2025: -1.6."
    },
    {
      "heading": "External sector and rebalancing needs",
      "content": "- External vulnerabilities:\n  - The external position is weakening, partly driven by temporary factors.\n  - Montenegro remains exposed to global shocks that affect tourism and relies on external financing to meet substantial public and external funding needs.\n- External metrics:\n  - Current account balance (percent of GDP): 2020: -26.3; 2024: -17.1; 2025: -18.1; 2030: -15.5.\n  - Foreign direct investment, net: 2020: 11.8; 2024: 7.4.\n  - External debt (end of period, stock): 2020: 223.5; 2024: 126.6; 2025: 142.0; 2030: 174.6.\n- Policy direction:\n  - The economy needs to rebalance away from consumption through diversification to attract higher FDI to a broader range of sectors, reduce external imbalances, and increase resilience."
    },
    {
      "heading": "Financial sector health and safeguards",
      "content": "- Banking sector condition:\n  - Banking system is in good health with strong capitalization, ample liquidity, and low non-performing loan (NPL) ratios.\n  - Montenegro’s integration into the Single European Payment Area (SEPA) was welcomed.\n- Risks and supervisory guidance:\n  - Rapid growth in private-sector lending and rising real estate prices warrant continued close monitoring for early signs of stress—especially in cash loans and the real estate sector.\n  - Maintain robust supervision, including strong anti–money laundering (AML) enforcement.\n  - The development bank should focus on its historical mandate and avoid activities that could generate fiscal or financial stability risks.\n  - Safeguarding the operational independence of the central bank is essential; ensure it is staffed with individuals with appropriate skills and experience, in accordance with central bank law."
    },
    {
      "heading": "Executive Board assessment and policy priorities",
      "content": "- Overall assessment:\n  - Executive Directors commended Montenegro’s resilience and strong fundamentals but noted the post-pandemic recovery has matured.\n  - Montenegro must adapt to meet future challenges as a small, open economy vulnerable to tourism shocks and dependent on external financing.\n- Policy priorities highlighted by Directors:\n  - Strengthen the fiscal policy framework and align fiscal strategy with the cyclical position and the requirements of the Fiscal Responsibility Law.\n  - Recalibrate fiscal policy toward targeting a balanced primary budget.\n  - Implement structural reforms to diversify the economy within and beyond tourism and to develop a business climate conducive for small and large investors.\n  - Re-establish the link between wage and productivity growth.\n  - Align climate policy objectives with those of the EU.\n  - Operationalize the independent Fiscal Council and strengthen fiscal rules to guide adjustment."
    },
    {
      "heading": "Selected economic indicators (high-level picks from table)",
      "content": "- Nominal GDP (millions of €): 2020: 4,145; 2024: 7,645; 2025: 8,280; 2030: 10,720.\n- Real GDP growth (percent change): 2020: -15.0; 2021: 13.0; 2022: 7.7; 2023: 6.5; 2024: 3.2.\n- Consumer price inflation (period average): 2020: -0.3; 2021: 2.4; 2022: 3.3; 2023: 4.0; 2024: 2.2; 2025: 2.0.\n- Consumer price inflation (end of period): 2020: -0.9; 2022: 17.2; 2024: 2.1; 2025: 4.9.\n- Tourism—Foreign Arrivals (percent change): 2020: -86.0; 2021: 342.9; 2022: 31.1; 2023: 20.2; 2024: 0.0.\n- Bank credit to private sector (end of period): 2020: 3.4; 2021: 8.2; 2022: 6.9; 2023: 15.5; 2024: 19.3; 2025: 6.6.\n- Gross international reserves in millions of USD: 2020: 2,116; 2024: 1,748; 2025: 2,132; 2030: 2,129.\n- GDP per capita (USD): 2020: 7,549; 2024: 13,259.\n\nSource: IMF; Executive Board conclusion of the 2025 Article IV Consultation with Montenegro (Press Release No. 25/381, November 19, 2025).\n\n---\n\n\n References\n\n- Montenegro and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- www.imf.org/montenegro\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/11/19/pr-25381-montenegro-imf-executive-board-concludes-2025-article-iv-consultation"
    }
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    "Published: November 19, 2025",
    "Growth history and near-term outlook:",
    "Tourism and external drivers:",
    "Projections:",
    "Inflation developments:",
    "Wages and policy effects:",
    "Recent fiscal trajectory:",
    "Fiscal recommendations:",
    "Selected fiscal figures (percent of GDP, unless otherwise noted):",
    "External vulnerabilities:",
    "External metrics:",
    "Policy direction:",
    "Banking sector condition:",
    "Risks and supervisory guidance:",
    "Overall assessment:",
    "Policy priorities highlighted by Directors:",
    "Nominal GDP (millions of €): 2020: 4,145; 2024: 7,645; 2025: 8,280; 2030: 10,720.",
    "Real GDP growth (percent change): 2020: -15.0; 2021: 13.0; 2022: 7.7; 2023: 6.5; 2024: 3.2.",
    "Consumer price inflation (period average): 2020: -0.3; 2021: 2.4; 2022: 3.3; 2023: 4.0; 2024: 2.2; 2025: 2.0.",
    "Consumer price inflation (end of period): 2020: -0.9; 2022: 17.2; 2024: 2.1; 2025: 4.9.",
    "Tourism—Foreign Arrivals (percent change): 2020: -86.0; 2021: 342.9; 2022: 31.1; 2023: 20.2; 2024: 0.0.",
    "Bank credit to private sector (end of period): 2020: 3.4; 2021: 8.2; 2022: 6.9; 2023: 15.5; 2024: 19.3; 2025: 6.6.",
    "Gross international reserves in millions of USD: 2020: 2,116; 2024: 1,748; 2025: 2,132; 2030: 2,129.",
    "GDP per capita (USD): 2020: 7,549; 2024: 13,259.",
    "[Montenegro and the IMF](http://www.imf.org/external/country/MNE/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[www.imf.org/montenegro](http://www.imf.org/montenegro)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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