A STRUGGLE FOR BARE SURVIVAL
Montenegro:By Zoran Radulovic (Podgorica)
According to basic indicators, Montenegro entered the fist year of the 21st century at least one-third poorer that in was in 1991. Not one of the important (and costly) tasks from a comprehensive package of economic and political transition has been successfully accomplished, and neither has the issue of the status of Montenegro been resolved.
The former smallest federal unit of the Socialist Federal Republic of Yugoslavia used to belong to the club of underdeveloped republics and provinces. According to the 1991 census, it had 615,000 inhabitants. Sources at the Montenegrin Bureau of Statistics estimate the republic has some 660,000 people, and the exact number will be determined during a census planned for the spring of 2001.
Montenegro's economic indicators dating from the times when the lengthy political crisis escalated into the violent and bloody clashes that marked the breakup of the former federation, from this perspective appear more than good, even hardly attainable.
Far from a Golden Age
Strongly involved in the war that raged in Croatia, in 1991 in economic terms Montenegro still enjoyed the consequences of the last SFRY prime minister, Ante Markovic's Golden Age: the GDP was 10.5 percent lower than in 1990, but it still exceeded US$1 billion. More precisely, measured using the economic balance sheet model, the 1991 Montenegrin GDP amounted to US$1.12 billion, and using the national accounts model, it amounted to US$1.40 billion. Thus in the first year of the 1990s, Montenegro's per capita GDP was between US$1,826 and US$2,283.
The latest official data for 1999 show the GDP was at US$727.1 million (or US$908.9 million), resulting in a per capita amount of US$1,110. Based on official estimates of trends in the January-September period of 2000, the GDP will grow 9 percent compared with 1999.
The current situation in Montenegro's financial market is far from favorable. To this testifies the recently revealed deep crisis faced by the largest Montenegrin bank -- Montenegrobanka. Its liquidity is seriously questioned due to DM73 billion in bad loans to the largest companies in the republic.
The introduction of the German mark as legal tender (in mid November last year) revealed various financial problems created over the years. "Inflation money has developed a strong incentive to base the efficiency of production on differences in the exchange rate, that is, on inflation. You borrow a lot and return a little," explains director of Montenegrobank Bozidar Gazivoda. At the same time it became evident that in addition to overindebtedness, there is no adequate information on what companies owe to each other. Namely, experts believe that in 90 percent of cases creditors and debtors have documents showing different figures, or have no documentation at all.
Simultaneously, the trend of relatively high inflation continued. Although transactions in 2000 were mostly in German marks, Montenegro registered 19.8 percent inflation.
One of the most significant indicators of the current state of affairs is the persistently growing unemployment rate. As opposed to 61,415 job-seekers in 1991 (annual average), in September, 2000, according to the Employment Bureau, 85,657 were unemployed. Almost 2,500 of them have university degrees, and 650 have been searching for a job over three years. Simultaneously, the number of employed is constantly dropping. In 1991, 143,000 people had a permanent job, whereas in 2000, this number was 114,749.
The average salary in Montenegro at the end of 2000 was DM205. This was a significant improvement compared with the beginning of the year, when the amount was DM149. The average September 2000 pension was DM188. Over 18,500 pensioners, of a total of 85,000, received less than DM110, and more than 48,000 got less than the average.
In September, 2000, the four-member average family needed DM566 to buy a reduced consumer basket in Podgorica, and some DM100-DM150 less in municipalities in northern Montenegro. The reduced basket contains articles needed for survival.
Privatization only starting
At the beginning of 1999, the Montenegrin Legislature passed a new privatization bill. It promotes the principle of mass voucher privatization and the sale of large state-run companies through international tenders. But no advancement was made and the start was postponed for "next year," three times in a row. Attracting foreign investors did not go any better either. Except for several, mostly disputed, deals (the Trebjesa Brewery, part of the Simo Milosevic Medical Institute), nothing has changed in the last two years. All deals are awaiting better times, that is the denouement of the political crisis in the region.
So far only 5 percent of the former socially-owned companies have been privatized. The private sector made it through by forming new companies. Thousands of trade companies were founded overnight, and many were closed shortly afterwards. Some of them, however, managed to find their place under the sun, and today private companies top the list of major Montenegrin exporters and importers. True, the shadow of war profiteering and enormous wealth owed to illegal deals, carried out under international sanctions and with assistance and approval from the ruling establishment, still lingers above many of the biggest. But this story is still covered by a veil of secrecy.
For years corruption has been one of the greatest Montenegrin flaws. According to the Montenegrin judiciary, however, only five such cases have been discovered and prosecuted so far.
Less intriguing but more reliable is data according to which in the January-September period of this year goods worth US$258 million were imported into Montenegro. The republic's exports totaled US$125 million (plus US$55.5 million from trade with Kosovo). In addition, the export of services (transport, tourism) brought in another US$53.6 million, with imports of US$25.8 million. In comparison, in 1990 the value of goods and services exported by Montenegro (between US$500-550 million) was almost two times that of the value of its imports (US$250-280 million). Last year, the ratio was reverse. This year it will be more or less the same, or slightly better.