 |
 |
|
South East Europe
Montenegro |
|
|
Local Government
The Republic of Montenegro has 21 municipalities (opstini): Andrijevica, Bar, Berane, Bijelo Polje, Budva, Cetinje, Danilovgrad, Herceg Novi, Kolasin, Kotor, Mojkovac, Niksic, Plav, Pluzine, Pljevlja, Podgorica, Rozaje, Savnik, Tivat, Ulcinj, Zabljak
Since the 2004 Inter-ministerial meeting in Zagreb the Law on Financing Local Autonomy has come into effect. The country report indicates substantial teething problems. The 2002 Law on Local Self Government envisaged delegation of competences and resources to local government in the fields of education, primary health care, social welfare and employment. The country report (by the Union of Municipalities) argues that the sectoral legislation has not enhanced municipal competence in these fields, or where it has done so, as in the case of pre-school and primary education, has not transferred equivalent resources. The absence of legislation recognizing municipal property rights also inhibits development of municipal utilities.
The 2004 Law allocated taxes on property, property consumption and beverage consumption to municipalities, and shares of 10% in PIT by residence and 50% in property transfer tax, together with fees, charges and the right to impose a surcharge of up to 13% on personal income tax, (15% in two cities). Administrative difficulties have delayed introduction of the PIT surtax and the beverage consumption taxes. A new Law on Fees and Charges will abolish some current fees from 2008, (although the description suggests that these cover subjects in which local government is no longer really involved and the fee is effectively a tax).
Government provides direct capital funding for some municipal services such as roads, lighting, water and sanitation, culture and sports. The Union argues that the allocation of these funds does not comply with municipal priorities. Investment grants are available also to municipal budgets but requiring 50 to 70% matching which many municipalities cannot afford.
Municipal expenditure has declined slightly since 2003 from 15% to 13.7% of public expenditure and from 6% to 5.3% of GDP. This presumably reflects the problems already discussed. The inadequate implementation of the Local Government and Local Government Finance legislation makes it difficult to assess the potential adequacy of the new intergovernmental fiscal framework.
The 2004 Law set aside 10% of PIT for a horizontal equalization fund. No information has been received on its distribution or effectiveness. This Law gave reasonable discretion to municipalities over tax and fee rates. This is somewhat reduced in practice by delay in implementing PIT surcharging. Fee setting powers have actually been reduced, but this may be justified in at least some cases. Municipalities have discretion over the expenditure of local revenues, tax shares and equalization funds. Major weaknesses lie in their lack of influence over government investment in local infrastructure.
Local Government Financing
In the former communal system, the financing of government expenditures in the Republic of Montenegro was significantly decentralized, so that there were almost 3 independent subsystems:
a) The subsystem through which general needs were financed (the budget of the Republic and the budgets of the municipalities):
b) The subsystem through which mutual needs were financed (social activities, child and health care, and social protection)
c) The subsystem for financing the needs of general interest in the areas such as material production, water resources, forests, roads, geological research, etc.
This system of financing needed a number of centers of fiscal decision-making. There were about 140 holders of fiscal decision-making in Montenegro: the Republic, 20 municipalities, 119 republican funds as well as municipality funds and 432 fiscal instruments (different kinds of taxes, etc.)
These are the characteristics of the former fiscal system: over-decentralized; not united; inefficient; not sufficiently distinct from the monetary system. All of this required that a new system. The financing of local self-government is defined by the Local Self-Government Act and by specific material laws which define the area of governmental revenues. Also, the System of Governmental Revenues Act of 1996 carries out the codification of local governmental revenues. Also, this Act defines the types and the amounts of revenues belonging to local units.
The sources of financing local units are provided from:
a) Own revenues (local communal tax, local administrative tax, compensations for the use of communal property of general interest, compensations for the use of land, revenues collected by the administrative bodies, the fees, etc.)
b) Renounced revenues within the municipality, collected out of different kinds of taxes
c) Additional resources (municipalities which cannot provide the resources necessary for their activities receive extra resources from the republican budget, the so-called "Governmental Support".
Official homepage
|
|
|
|
|
|
1 Government background |
|
The use of the name Montenegro began in the 15th century when the Crnojevic dynasty began to rule the Serbian principality of Zeta; over subsequent centuries Montenegro was able to maintain its independence from the Ottoman Empire. From the 16th to 19th centuries, Montenegro became a theocracy ruled by a series of bishop princes; in 1852, it was transformed into a secular principality. After World War I, Montenegro was absorbed by the Kingdom of Serbs, Croats, and Slovenes, which became the Kingdom of Yugoslavia in 1929; at the conclusion of World War II, it became a constituent republic of the Socialist Federal Republic of Yugoslavia. When the latter dissolved in 1992, Montenegro federated with Serbia, first as the Federal Republic of Yugoslavia and, after 2003, in a looser union of Serbia and Montenegro. In May 2006, Montenegro invoked its right under the Constitutional Charter of Serbia and Montenegro to hold a referendum on independence from the state union. The vote for severing ties with Serbia exceeded 55% - the threshold set by the EU - allowing Montenegro to formally declare its independence on 3 June 2006.
Capital: Podgorica (administrative capital)
Independence: 3 June 2006 (from Serbia and Montenegro)
National holiday: National Day, 13 July (1878).
Constitution: Adopted October 12, 1992 (a new Constitution is expected during summer 2007).
Executive branch: chief of state: President Filip VUJANOVIC (since 11 May 2003)
Head of government: Prime Minister Zeljko STURANOVIC (since 13 November 2006)
Cabinet: Ministries act as cabinet
Elections: president elected by direct vote for five-year term (eligible for a second term); election last held 11 May 2003 (next to be held in 2008); prime minister proposed by president, accepted by Assembly
Election results: Filip VUJANOVIC elected on the third round; Filip VUJANOVIC 63.3%, Miodrag ZIVKOVIC 30.8%.
Legislative branch: unicameral Assembly (81 seats; members elected by direct vote for four-year terms; changed from 74 seats in 2006) elections: last held 10 September 2006 (next to be held 2010)
election results: percent of vote by party - Coalition for European Montenegro 40.6%, Serbian List 15.3%, Coalition SNP-NS-DSS 14.8%, PZP 13.9%, Liberals and Bosniaks 3.8%, other (including Albanian minority parties) 11.6%; seats by party - Coalition for European Montenegro 39, Serbian List 12, Coalition SNP/NS/DSS 11, PZP 11, Liberals and Bosniaks 3, Albanian minority parties 5. |
|
|
|
2 Area |
|
Total: 14,026 sq km;
Land: 13,812 sq km;
Water: 214 sq km |
|
|
|
3 Geography |
|
Location: Southeastern Europe, between the Adriatic Sea and Serbia
Land boundaries: total: 625 km; border countries: Albania 172 km, Bosnia and Herzegovina 225 km, Croatia 25 km, Serbia 203 km
Terrain: highly indented coastline with narrow coastal plain backed by rugged high limestone mountains and plateaus.
Climate: Mediterranean climate, hot dry summers and autumns and relatively cold winters with heavy snowfalls inland.
Natural resources: bauxite, hydroelectricity. |
|
|
|
4 People |
|
Population: 684,736 (July 2007 est.)
Nationality: noun: Montenegrin(s); adjective: Montenegrin
Ethnic groups: Montenegrin 43%, Serbian 32%, Bosniak 8%, Albanian 5%, other (Muslims, Croats, Roma (Gypsy)) 12%.
Religions: Orthodox, Muslim, Roman Catholic
Languages: Serbian (official; Ijekavian dialect), Bosnian, Albanian, Croatian |
|
|
|
5 Economy |
|
The republic of Montenegro severed its economy from federal control and from Serbia during the MILOSEVIC era and maintained its own central bank, used the euro instead of the Yugoslav dinar as official currency, collected customs tariffs, and managed its own budget.
During the last few years, Montenegro has created a business-friendly investment climate. The Euro replaced the DM on March 31, 2002. Standard & Poors rates the republic\'s credit at BB+, and inflation in 2005 was only 1.8%. Almost all banks are privatized, as are 87% of the formerly state-owned businesses and property. Net foreign direct investment (FDI) in 2005 reached $450 million or four times higher than in 2004; investments per capita are $772, the highest in Europe.
The dissolution of the loose political union between Serbia and Montenegro in 2006 led to separate membership in several international financial institutions, such as the European Bank for Reconstruction and Development. On 18 January 2007, Montenegro joined the World Bank and IMF. Montenegro is pursuing its own membership in the World Trade Organization as well as negotiating a Stabilization and Association agreement with the European Union in anticipation of eventual membership. Severe unemployment remains a key political and economic problem for this entire region. Montenegro has privatized its large aluminum complex - the dominant industry - as well as most of its financial sector, and has begun to attract foreign direct investment in the tourism sector.
Unemployment rate: 27.7% (2005)
Inflation rate (consumer prices): 1.8% (2005)
Currency: euro (EUR) - from 2002.
GDP growth rate: 4.1%. |
|
|
|
6 Sources |
|
CIA Fact Book
Sarah Byrne, 2006. Fact Sheets on Fiscal Decentralization in the Western Balkans
Sleven Lekic, Local self-government in Montenegro
The official website of the Government of Montenegro
The US Department of State |
|
|
|
|
|
|
|
|
|
