An International Monetary Fund (IMF) mission visited Podgorica, Montenegro from September 15 to 26, 2025, as part of the regular Article IV consultations. The delegation, led by Srikant Seshadri and including Serhan Cevik, Amit Kara, and Jiaxiong Yao, met with President Jakov Milatović, Minister of Finance Novica Vukovic, Central Bank Governor Irena Radovic, members of the Prime Minister’s office and Parliament, government officials, private sector representatives, academia, and diplomats.
The IMF mission noted that Montenegro's economic recovery following the pandemic has slowed. Between 2021 and 2023, growth averaged about 9 percent due to a rebound in tourism and fiscal stimulus. However, growth moderated to 3.2 percent in 2024 and remains at this level in early 2025. Inflation trends have shifted; after falling from a peak of 13 percent in 2022 to just 1 percent by September 2024, headline inflation rose again to 4.6 percent as of August 2025.
The IMF projects that economic growth will stay around current levels over the medium term while inflation is expected to gradually decrease. “According to our baseline forecast, economic growth is projected at 3.2 percent in 2025, largely based on preliminary indications of a moderate summer tourist season,” the statement reads.
Fiscal challenges are mounting for Montenegro. The general government fiscal deficit is expected to rise from 2.9 percent of GDP in 2024 to between 3.5 and 3.7 percent in 2025. Without new measures to control spending or increase revenue, deficits could exceed four percent of GDP by the end of the decade. Long-term social expenditures such as healthcare and pensions are likely to grow due to an aging population alongside increased military spending commitments.
The country’s public debt-to-GDP ratio is projected to reach about 65 percent by 2030 if fiscal deficits continue rising.
External imbalances are also increasing: the current account deficit is expected to widen sharply to around eighteen percent of GDP in 2025 because of lower electricity exports and weaker tourism revenues combined with higher imports. This deficit may moderate slightly if electricity exports recover but will remain above recent averages unless there are significant capital inflows through foreign direct investment (FDI).
On fiscal policy recommendations for authorities, the IMF stated: “We recommend that the authorities target a balanced primary budget.” The mission suggested constraining public wage bill growth, eliminating unproductive tax exemptions, saving revenues from airport concessions modernization efforts, reforming civil service structures and retirement policies, improving healthcare efficiency through better procurement practices and possible facility mergers, targeting social benefits more effectively via means-testing mechanisms, and strengthening public investment management.
The IMF called for improvements in Montenegro’s fiscal responsibility law—including clearer definitions for exceptional circumstances under which it can be suspended—and prompt operationalization of an independent fiscal council for better monitoring.
Regarding climate change policy commitments by Montenegro—such as reducing greenhouse gas emissions by fifty-five percent by 2030 compared with levels from three decades ago—the IMF noted these would eventually raise domestic electricity costs as carbon prices converge with those set by the European Union.
Montenegro’s banking sector remains broadly healthy according to the IMF assessment; capital adequacy ratios are strong despite rapid credit expansion and rising real estate prices prompting tighter central bank regulations on capital requirements.
“We welcome Montenegro’s integration into SEPA and TIPS Clone,” said the statement regarding payment system upgrades intended to reduce transaction costs.
The IMF advised caution against expanding activities at the Development Bank of Montenegro beyond its traditional focus on supporting underserved sectors or regions through access-to-credit initiatives: “To avoid potential fiscal and financial stability risks we urge extreme caution regarding proposed expansion.”
The report emphasized that operational independence for the Central Bank should be maintained—especially ahead of any future eurozone accession—by ensuring senior positions are filled promptly with qualified personnel per legal requirements.
Structural reforms were encouraged aimed at diversifying economic activity away from heavy reliance on tourism toward renewable energy development and creating a favorable environment for small businesses and FDI outside real estate or construction sectors.
A key point was made about linking productivity gains more closely with wage increases: “It is important to ensure that future wage growth is matched by productivity growth,” said the statement.
Finally, improvements were recommended for statistical methods used in compiling tourism data so they better distinguish between tourists’ spending patterns versus those of migrants—a process requiring inter-agency coordination over time.
“The IMF team thanks the authorities and other counterparts for their warm hospitality and for constructive discussions,” concluded the statement.