Leading economist Professor Inna Steinbuka delivered a stark warning to Montenegrin policymakers during the Podgorica Fiscal Forum on October 20, 2026, cautioning that optimism surrounding EU membership negotiations must not delay critical fiscal consolidation. With Montenegro’s public debt approaching 75% of GDP and the fiscal deficit projected at 4.2% for 2026, Steinbuka emphasized that convergence criteria require deficit reduction below 3% and debt trajectory below 60%. She highlighted that EU accession will eliminate access to preferential financing and impose strict Stability and Growth Pact discipline, requiring immediate tax administration reform, broadening of the VAT base, and reduction of informal economy estimated at 30% of GDP.
Key Takeaways
- Tax Base Erosion Risk: Current reliance on consumption taxes (VAT and excises) creates vulnerability; experts recommend introducing progressive property taxation and digital services taxes to diversify revenue streams ahead of EU fiscal rules enforcement.
- Informal Economy Crackdown: The Tax Administration’s new e-Fiscalization 2.0 platform, launching Q1 2027, will mandate real-time transaction reporting for all B2C sales, targeting the shadow economy that costs Montenegro an estimated €400 million annually in lost VAT and income tax.
- Pension System Sustainability: With the dependency ratio worsening, parametric reforms including gradual retirement age increase to 67 and indexing pensions to wages rather than inflation are deemed essential to avoid post-accession austerity measures mandated by the EU’s Excessive Deficit Procedure.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement