Pytheas Montenegro Report 2011

Investing in Montenegro,
the pearl of the Adriatic.

July 2011

Version 04

Copyright © 2011 Pytheas Limited July 2011 1

“At the moment of the creation of our planet, the most beautiful
merging of land and sea occurred at the Montenegrin seaside...
when the pearls of nature were sworn, an abundance of them were
strewn all over this area…”
Lord Byron

From the top of Mount Lovćen: “Am I in Paradise or on the Moon?!”
Bernard Shaw


Map of Montenegro


Location & National Symbols

Flag

Coat of Arms


It is Pytheas opinion that Montenegro could become the business
bridge of Europe across the Adriatic, both a business hub and an
economic gateway; an exclusive destination for Europeans and
other nationals that seek to invest in a holiday, a retirement home or
an investment home!


Why Montenegro

■ At the borders of the old and new ■ Liberal trade regime;
Europe; ■ Customs exemptions for
■ An EU candidate state; investments in goods imported as
■ The Euro (€) has been its official investors’ deposits;
currency since 2001; ■ Free access to EU markets;
■ Political stability; ■ FTA zones and also to the
■ Reformed according to the EU Russian market (only 1% of the
legal framework for investment; custom evidence);
■ Relatively developed ■ The quality and diversity of its
telecommunication infrastructure; natural and anthropological
■ One of the most competitive values, makes it a most attractive
corporate tax regimes in Europe; tourist and permanent living
destination;
■ No restrictions on profit, dividend ■ Land laws that give foreign
or interest; investors equal status with local
■ Significant tax reliefs and ones, i.e. with full deeds and titles
concessions; to land and real estate.


Slide(s)
About Montenegro
 Geography 9 - 10
 Demographics 11 - 12
 Government 13 - 14
 Climate 15
 Ports 16
 Yachting Marinas 17
 Nature beyond conception 18 - 33
 History and culture 34 - 42


Geography

■ Montenegro is a smaller,
predominantly mountainous state
in southwest Balkans
(Southeastern Europe).
■ It borders Croatia and Bosnia
and Herzegovina to the
northwest, Serbia to the
northeast, Albania to the south
and the Adriatic Sea (across
Italy) to the west.
■ The length of its borders are 614
km; with, Croatia 14 km, Bosnia
and Herzegovina 225 km, Serbia
203 km and Albania 172 km.
■ The length of the coastline is
293,5 km with 56.9 km of
beaches and 16.1 km of island
coast.


Geography (continued)

■ Its surface area is 13,812 km²
(Sicily is 25,460 km² and Cyprus
is 9,251 km²).
■ By its geographical position, it
belongs to Southern Europe.
■ The two furthermost points of the
country are only 190 km apart in
a straight line, but between them
the northbound air streams of
Africa meet the southbound from
the Polar circle.
■ The distance between capital
Podgorica and Rome is around
500 km by air, from Paris and
Berlin it is around 1,500 km, from
Moscow almost 2,000 km, and
7,500 km from New York.
Hotel Sveti Stefan, Sveti Stefan


Demographics

■ The population of Montenegro is
620,029 (2011 census).
■ The capital is Podgorica
(formerly Titograd) with 185,937
inhabitants, Nikšić 72,443, Bijelo
Polje 46,051, Bar 42,048,
Berane 33,970, Pljevlia 30,786,
Herceg Novi 30,864 (2011
census) .
■ Ethnic groups: Montenegrin
45%, Serbian 29%, Bosniak 9%,
Albanian 5%, other (Muslims,
Croats, Roma) 12% (2011
census).
■ Population growth rate: - 0.777%
(2010 est.)
Montenegrins in national costumes
■ Birth rate: 11.09 births/1,000
population (2010 est.)


Demographics (continued)

■ Urban population: 63% of total
population (2011).
■ Rate of urbanization: - 0.8%
annual rate of change (2005-10
est.).
■ The official language of
Montenegro is Montenegrin. It
became the official language in
October of 2007.
■ Standard Serbian, Bosnian,
Albanian, and Croatian are also
spoken and are officially
recognized languages.
■ It is a multi-ethnic and multi-
confessional community (vast
majority Christian orthodox, the
rest are Islamic, Roman Catholic, Majorettes in the old city of Kotor
Jewish, Protestant and other).
.


Government

■ Montenegro is a parliamentary representative democratic republic
whereby the Prime Minister is the head of the government.
■ Executive Power
 Government;
 The Government is appointed by majority vote of the Parliament;
 The Prime Minister submits to the Parliament the Government's Program
including a list of proposed ministers – the resignation of the Prime Minister
will cause the fall of the Government.
■ Legislative Power
 Parliament (4-year term) and Government.
■ Judicial Power
 Independent of Executive and Legislative;
 It includes a constitutional court composed of five judges with nine-year
terms and a supreme court with justices that have life terms.
■ The President (5-year term) is the head of state.
 The President performs some executive and legislative functions in addition
to ceremonial duties.


Government (continued)

■ Igor Lukšić is the current Prime
Minister of Montenegro and
Head of Government. The
current members of the cabinet
were elected on 29 December
2010; and supported by a ruling
coalition of DPS, SDP, DUA,
HGI and BS.
■ Montenegro’s local government
has 21 municipalities.
 The municipal authorities are the
Municipal Assembly and the
Mayor;
 The Municipal Assembly (4-year
tem) is the representative body
of the citizens of the Municipality;
 The Mayor (4-year term) is the
Map of Montenegro municipalities
executive body of the
municipality.


Climate

■ Montenegro has a rather diverse
climate,
 The South part is characterized
by Mediterranean climate with
long, hot and dry summers, and
gentle rainy winters.
 The Central and northern part is
characterized by mountain
climate, and
 The utmost North part by
continental climate, with small,
considerably equilibrated
quantities of rainfalls, and great
daily and yearly amplitudes of
temperature.
■ Average temperature of the air is
27.4°C in the summer and
13.4°C in the winter; 180
average sunny days per year. At Rafailovići, Budva


Ports

■ International Seaports
 Bar;
 Kotor;
 Herceg Novi;
 Tivat;
 Zelenika.
■ International Airports
 Podgorica;
 Tivat.

Port of Bar, a view


Yachting Marinas

■ Yachting Marinas
 Ulcinj;
 Sveti Nikola, Bar;
 Budva;
 Herceg Novi;
 Kaliman, Tivat;
 Kotor;
 Meljine;
 Kordić, Prčanj;
 Risan;
 Zelenika.

Mega-yacht marina (under construction), Tivat


Nature beyond conception
■ Although small in area, nature
has produced here unique
contrasts that is truly beyond
conception.
■ The diversity of its, geological
background, areas, climate and
landscape, as well as the
position of Montenegro in the
Balkans and on the Adriatic,
provide conditions of very high
biological diversity, making
Montenegro one of the hot spots
of European and world
biodiversity.
■ The Parliament of Montenegro,
in 1991, adopted the Declaration
whereby Montenegro got
Ada Bojana beach, Ulcinj
proclaimed the first ecological
state in the world.


Nature beyond conception (continued)

■ Over a span of only 100 km in a
straight line, three natural
environments are
distinguishable: the seaside, the
Karstic field zone and the high
mountain region.
■ A most attractive resource is the
313 km long coastline with 117
natural sandy and rocky beaches
and 8 small islands – The
longest beach is at Ulcinj (12 km)
also the longest natural sandy
beach on the Mediterranean.
■ The seaside is a very narrow
strip of land (2 to 10 km wide),
separated from the inland by
high and steep dolomite
mountains of Rumija, Sutorman, Mogren beach, Budva
Orjen, and Lovćen.



■ The abundance of underwater
caves, shipwrecks, cliffs and rich
marine life make Montenegro a
scuba diving heaven.
■ The fauna of the Montenegro sea
(although not yet fully
investigated) includes over 300
species of algae, 40 species of
sponges, 150 species of
crustaceans, 340 species of
mollusks, and almost 400
species of fish, with 3 species of
marine turtles and 4 species of
dolphins, the economically
important Norway lobster and
petrified sponge. Several species
of whales are also occasional
visitors. Shipwreck at the area of Ţanijce



■ With the longest fiord of South
Europe, Fiord Kotor (Boka
Kotorska), which is 28 km long
and 30 meters deep, surrounded
by mountains which are 1.900
meters above sea level – a
stunning dolomite rock walled
chasm with its entrance in the
town of Herceg Novi, decorated
with small fishing shelters,
picturesque villages and islands
all the way to Kotor, one of the
prettiest, unspoiled existing
medieval towns; founded by the
ancient Greeks (named Kattaro),
fortified by the Byzantines
(named Askrivion), later ruled by
Fiord Kotor, a view
the Venetians and today a
UNESCO world heritage site.



■ Numerous caves and sinkholes,
some of which are particularly
beautiful (cave Lipska, cave
Đalovića), while others are
among the deepest in the
Balkans (sink holes at Vjetrena
brda in Durmitor, Duboki do in
Lovćen) – characterized by an
exceptionally complex and rich
fauna, with many endemic and
relict forms.
■ There are 40 lakes in
Montenegro and its rivers have
still remained the purest of
Europe's.
■ Lake Skadar, (also called Lake
Scutari) can vary between 370
km2 and 530 km2, of which 2/3 is Cave Lipska, Cetinje
in Montenegro and 1/3 in



Albania. Declared a national
park in 1983, is one of the
largest bird reserves in Europe,
having 271 bird species, among
which are some of the last curly
pelicans in Europe.
■ The Tara is the longest river in
Montenegro (150 km). The
canyon of the river is about 80
km long cut between the
mountains of Sinjajevina and
Durmitor, the average depth is
about 1,000 meters, and reaches
a maximum depth of 1,600
meters which makes it the
deepest and longest canyon of
the world after the Grand
Canyon. Lake Skadar, a view



■ Additional canyons include that
of Morača and Cijevna rivers,
Piva, Mrtvica and Komarnica and
gorges such are Ibarska,
Tifranska and Đalovića.
■ Eighty percent of the territory of
Montenegro is comprised of
forests, natural pasturelands and
meadows. Notably there are
more than 54 peaks higher than
1,900 meters (two at 2,522 m).
■ A total of 2,833 plant species
(3,650 including subspecies),
many of them unique, grow in
Montenegro which makes up
nearly a quarter of the entire
European flora! All that in a mere
Edraianthus montenegrinus, Durmitor 0.14% of the continents territory.



■ Characteristic flora includes, the
Alpine flower Edelweiss, the
endemic Edraianthus
montenegrinus, Edraianthus
glisichi, Edraianthus pulevici,
Wulfenia blecicii, Durmitor
mullein, Potentilla montenegrina,
Draba betriscea, and many relict
glacial species.
■ There are 305 protected bird
species in Montenegro. Some of
the rarest nesting birds include
the Dalmatian Pelican,
Ferruginous Duck , White Eyed
Pochard, Scops owl, the Black
Crowned Night Heron and the
European nightjar.
Potentilla montenegrina, Durmitor



■ Other characteristic bird fauna
includes, Pyrhocorax graculus,
Antus pratensis, Prunella
collaris, Phoenicurus ochruros,
Golden Eagle, Griffon Vulture,
Wall Creeper. There are also a
number of glacial relicts among
the bird fauna, including Snow
Finch, Horned Lark and Alpine
Accentor.
■ With its 271 bird species, Lake
Skadar is a real attraction for
birdwatchers and nature lovers –
since 1995 it has been a
designated Wetland of
International Importance by the
Ramsar Convention as a habitat
for water birds. Grey Heron, Lake Skadar



■ Especially interesting bird
species at Lake Skadar are the,
Dalmatian Pelican colonies,
Pygmy Cormorant (the biggest
world colony of approximately
2,000 bird pairs), Whiskered
Tern, Great Cormorant,
Ferruginous Duck, White-tailed
Eagle, Grey Heron.
■ There are five ornithological
reserves at Lake Skadar (at,
Manastirska tapija, Grmozur,
Omerova gorica, Crni zar,
Pančevo oko), four bird-watching
towers (at, Stanaj, Radus,
Plavnica and Zabljacke) and
several organized bird-watching
tours offered by the Lake Skadar Pygmy Cormorants at Lake Skadar
National Park.



■ Mountain forests occupy 54% of
the territory, with natural forests
covering about 45% of the land,
making Montenegro one of the
most forested countries in
Europe.
■ Fir Abies alba, Spruce Picea
excelsa and Mugho Pine Pinus
mugo, Abieto-Picetum, Picetum
abieti montenegrinum, Heldreich
(Whitebark) Pine, Pine Pinus
peuce are some of the
coniferous species.
■ Beech Fagetum forests,
Chestnut forests, Macquis and
Evergreen Oak, Mountain Maple
Acer heldreichii are only some of
At Mrtvica Canyon the species.



■ There is maybe no other country
in Europe where the nature lover
can enjoy so many activities
(rafting, freshwater and deep sea
fishing, climbing, hunting, hiking,
caving, skiing, etc.) within a most
diverse morphological
environment, in an easily
accessible area in terms of
distance; four national parks and
a number of other places of
unique flora and fauna, some of
which protected by UNESCO.
■ The five national parks are Lake
Skadar National Park, Lovćen
National Park, Durmitor National
Park, Biogradska Gora National
Park and National Park
Tara Canyon, a view
Prokletije.



■ National Park Biogradska Gora,
a 5,650 ha area reserve, in the
municipality of Kolašin, contains
26 different habitats of plants
with 220 different plants, 150
kinds of birds and 10 kinds of
mammals and 86 kinds of trees
some more that 500 years old. In
the waters of the Park exist three
kinds of trout and 350 kinds of
insects. Also large mountain
slopes and tops, glacier lakes at
altitude of 1,820 meters, forests,
all in a most unique and complex
geological and morphological
environment.

Biogradsko Lake, National Park Biogradska Gora



■ National Park Durmitor is in the
Northwest of Montenegro, in the
municipality of Ţabljak, limited by
rivers Piva and Tara between
which there are 23 mountain
tops over 2,300 meters of
altitude; a 39,00 ha area reserve.
It includes part of Tara Canyon
which is 1,600 meters above
river level, dense forests, 17
glacier lakes and the highest
peak in the country, Bobotov Kuk
at 2,522 m. Durmitor National
Park boasts 1,500 kinds of flora,
314 protected animals including
163 kinds of birds.

Crno Jezero (Black Lake), Durmitor



■ National Park Lovćen is in the
Southwest of Montenegro in the
cliff area of Dinara Alps, a 6,220
ha area reserve. Due to the
influence of two extreme climatic
zones in a rather small area,
Mediterranean and Continental,
nature here formed a unique
habitat. There are 1,158 plant
species out of which four are
endemic and 200 bird species.
The park is dominated by
mountain Lovćen and by the
mausoleum of Petar II Petrović
Njegoš. It has two mountain
peaks, Štirovnik (1,749 m) and
Jezerski Vrh (1,657 m).
View of the Bay of Kotor from National Park Lovćen



■ National Park Prokletije is in the
Southeast of Montenegro. Most
of the 1,052 ha reserve is within
the territories of Plav and Roţaje
with glacial lakes (Hridsko,
Visitorsko, Ropojansko,
Tatarijsko, Bjelajsko, the Vizier),
larger and smaller streams,
springs and rivers, underground
aquifers and mountain ponds
(Treskavac, Koljindarsko). There
are also numerous hills, ravines,
steep slopes, river valleys, alpine
type and numerous peaks over
2,000 meters above sea level (at
Carnation-Bjelički).

Lake Hridsko, National Park Prokletije


History and culture
■ Montenegrins have accumulated
a rich cultural and historical
heritage, which dates from the
pre-Romanesque, Gothic and
Baroque periods.
■ Montenegro has been influenced
by both eastern and western
civilizations – whether these
were Greeks, Illyrians, or
Romans, Byzantines, Venetian,
Slavs, Austro-Hungarians or
Ottomans, they all left their mark
forming a most interesting
multicultural society.
■ The historical roots of
Montenegro lie long before the
arrival of the Slavs in the
Balkans in the 6th and 7th century Ancient city of Dioclea, Podgorica
AD.


History and culture (continued)

■ The first recorded settlers of
present-day Montenegro were
Illyrians; the Illyrian Kingdom
emerged during the 3rd century
BC with its capital at Skadar,
named Docleata.
■ Prior, during the 6th and 7th
centuries BC substantial Greek
colonies were established on the
Montenegrin coast (Apollonia,
Epidamnus, Lissus, Kattaro).
■ Celts are also known to have
settled there in the 4th century
BC.
■ In 9 AD the Romans (and
Byzantines) conquered the
region.
Roman mosaics (4th century BC), Risan



■ Slavs colonized the area after
the 6th century AD, forming a
semi-independent principality
called Doclea, that was involved
in Balkan medieval politics with
ties to Rascia (Raška) and
Byzantium and to a lesser extent
Bulgaria.
■ Doclea (or Duklja) gained its
independence from the
Byzantine Empire in 1042 – the
Byzantine influence in art and
architecture is especially felt in
continental part of Montenegro.
■ Over the next few decades, it
expanded its territory to
neighboring Rascia and Bosnia
and also became recognized as Reţevići Monastery, Petrovac
a kingdom.



■ Its power started declining at the
end of the 11th century and by
1186, it was conquered by
Stefan Nemanja and
incorporated into Serbian realm.
■ The newly acquired land, then
called Zeta, was governed by the
Serbian Nemanjić dynasty.
■ After the Serbian Empire
collapsed in the second half of
the 14th century, another family,
the Balšićs, came to
prominence.
■ Coastal Montenegro from 1420
to 1797 was a province of the
Venetian Republic. The Venetian
territory was then centered
around the area of the Bay of Ostrog Monastery, Nikšić
Kotor, and included the towns of



Kotor, Risan, Perast, Tivat,
Herceg Novi, Budva, and
Sutomore.
■ The Montenegrin coastal region
is especially known for its
cultural monuments, such as the
Cathedral of St. Tryphon, the
basilica of St. Lucas (over 800
years), Our Lady of the Rock
(Scrpjelo), the Savina Monastery
and many others.
■ The name "Montenegro"
meaning Black Mountain was
first mentioned in the 15th
century.
■ Montenegro's resistance to
Ottoman attacks (15th century),
which in the end resulted in Kotor Venetian Walls, a view



strengthening its statehood,
marks this time period.
■ Renowned about their bravery
Montenegrins forced Giuseppe
Garibaldi to state: “Montenegro
undoubtedly takes one of the first
places; the legendary heroism of
its people brings honor to
mankind”.
■ The printed word in Montenegro
goes way back in history. Thirty-
eight years after the Gutenberg's
Bible, in 1494 the first book was
printed in the Crnojević printing
press in Cetinje – “Oktoih”, a
precondition for the future
development of literature in
Montenegro. First book published in the Balkans,
Cetinje (1494)



■ In the 15th century it remained
the only officially unconquered
and free oasis, surrounded by
the powerful Ottoman empire
and the Venetians.
■ Montenegro was internationally
recognized as a state in 1878. Its
capital at the time was Cetinje.
■ On 1 August 1910 during the
reign of King Nikola I of the
Petrović Dynasty was declared a
Kingdom.
■ From 1918 to 1941 it was part of
the Kingdom of Yugoslavia.
■ After World War II, it became one
of the six republics of the
Socialist Federal Republic of Hussein Pasha Mosque, Pljevlja
Yugoslavia.



■ In 1992, after the breakup of
Communist Yugoslavia and the
introduction of a multi-party
political system, it became part
of the Federal Republic of
Yugoslavia (FRY).
■ In 2003 the FRY was renamed to
Serbia and Montenegro and
officially reconstituted as a loose
union.
■ At a referendum held on 21 May
2006, the majority of its citizens
voted for its independence.
■ Today it is an independent state
internationally recognized.
■ UN received Montenegro as the
192nd country member on 27 July Church Gospa od Skrpjela, Perast
2006.



■ The culture of present-day
Montenegro is as pluralistic and
diverse as its history and
geographical position would
suggest.
■ A very important dimension of
Montenegrin culture is the ethical
ideal of “Čojstvo i Junaštvo”,
roughly translated as "Humanity
and Bravery“ – another result of
its centuries long warrior history,
it is the unwritten code of chivalry
that stipulates what is required to
deserve a true respect of the
people. Amongst other, in the old
days of battle, it resulted in
Montenegrins fighting to the
death as being captured was Montenegrins in national costumes, Cetinje
considered the greatest shame.


Slide(s) Slide(s)
The Economy –
 General 44 - 57
The Economy – Sectors & Bodies
 Banking 58 - 66  Minerals & Mining 113 - 119
 Insurance 67 - 71  Agriculture & Forestry 120 - 123
 Capital Market 72 - 75  Transport &
 Foreign Trade 76 - 82 Communications 124 - 129
 Hospitality & Tourism 83 - 94  Education 130 - 133
 Real Estate & Construction 95 - 104  Healthcare 134 - 137
 Industrial 105 - 112  Environment 138 - 141


The Economy – General

■ Montenegro is a small, open,
middle-income economy.
Despite a medium level of
wealth, the country's economic
strength is limited by the small
size and concentrated nature of
its economy.
■ Notably, Montenegro does not
issue its own currency, but has
been using the Euro as legal
tender since 2002 and maintains
an exchange system free of
restrictions on the making of
payments and transfers for
current international
transactions.
■ As with other smaller economies,
River Tara, a view the crisis reached the country


The Economy – General (continued)

with a lag, only starting to be felt
in the last quarter of 2008.
Officially the crisis fully hit
Montenegro during 2009. As a Montenegro Real GDP Growth
result the GDP growth rate in Year %
2009 was -5.7%.
2005 4.2
■ Previously, in 2006 and 2007 the
country achieved GDP growth 2006 8.6
rates of 8.6% and 10.7% 2007 10.7
respectively which continued
strongly into 2008 with 6.9% 2008 6.9
growth. 2009 -5.7
■ In 2007, Montenegro achieved a 2010 1.1
record fiscal surplus of more
2011 2.0*
than 6% of GDP, which
remained at 1% of GDP in 2008 Source: IMF, Pytheas Emerging Markets Research
– positioning it at the time as one * Estimate

of the fastest growing European
countries.



■ Since its independence in 2006,
Montenegro has experienced an
economic and financial roller
coaster ride. The country’s
abundant potential attracted
large capital inflows, an
increasing share of which were
debt creating.
■ Wealth effects made real estate
lending and absorption booms
mutually reinforcing, and
overstretched the nascent
financial sector’s ability to guard
against risks. The economy
began to overheat and then, as
elsewhere, the inflows juddered
to a halt. The result was a sharp
decline in output. Šareni Pasovi, National Park Durmitor



# Montenegro Macroeconomic Indicators, selected 2009 2010 2011
1 Nominal GDP (€ million) 2,981 3,023 3,111
2 GDP real growth rate (%) -5.7 1.1 2.0
3 Inflation (%) 3.4 0.5 4.0
4 Unemployment rate (%) 11.5 12.2 12.0
5 Current account balance (€ million) -896 -775 -761
6 Current account balance as % of GDP (%) -26.2 -25.6 -24.5
7 External debt (€ million) 2,781 3,000 3,089
8 External debt as % of GDP (%) 93.3 98.9 99.3
9 Net FDI, in current prices as % of GDP (%) 35.8 17.9 15.4
10 Net FDI, in current prices (€ million) 1,066 542 480
11 Gross domestic savings as % of GDP (%) -6.2 -6.7 -4.7
12 Gross national savings as % of GDP (%) -3.1 -3.6 -2.5
Source: Montenegro Ministry of Finance, CBME, MONSTAT, IMF, EUROSTAT, Pytheas Emerging Markets Research
2010 = Estimate 2011 = Projections



■ Huge vulnerabilities were accumulated during the boom when the
authorities did not take the opportunity to sufficiently strengthen policy
buffers. With policy space exhausted at the beginning of the crisis, the
authorities were forced to adopt unconventional policies to mitigate its
effects.
■ During the boom the Central Bank of Montenegro raised the cost of
credit through higher reserve requirements and tightened supervisory
and prudential standards, but credit growth was hardly dented. In the
Fall of 2008, banks suffered from a simultaneous run on deposits, loss
of access to financing, and deterioration in asset quality.
■ The early surpluses largely reflected temporarily buoyant tax
collections from high imports. Initially, they were placed in the domestic
banking system, thereby enabling further credit extension. Then at the
peak of the boom period, the fiscal stance relaxed (through tax cuts
and public sector wage increases), leading to a structural fiscal deficit
of some 6% of GDP in 2008.
■ The remaining fiscal buffers were quickly exhausted in the crisis, while
large loan guarantees to the aluminum and steel companies created



substantial new contingent
liabilities. By 2009 public and
publicly guaranteed debt had
risen to nearly 55% of GDP.
■ Excessively restrictive
employment protections and an
unduly rigid centralized collective
bargaining system remained in
place contributing to fast wage
growth, limiting the flexibility of
the corporate sector, and stifling
new hiring, thus raising
unemployment.
■ Privatization occurred later than
elsewhere in Eastern Europe,
and in consequence the interest
of bidders was more limited.
Katun Gudţaljine on Bjelasica mountain



■ Privatization – The responsible body to manage, control and supply the
privatization process implementation as well as to propose and
coordinate all activities necessary for the capital projects application in
Montenegro is the Montenegro Privatization and Capital Investment
Council. Progress in large-scale privatization has been so far mixed:
 The tender for the sale of a 54% stake and a 30-year concession in the port
operator, Marina Bar, was concluded successfully in early 2010.
 A tender for acquiring a long-term concession on the Bijela port
infrastructure and the area surrounding the Bijela shipyard was launched in
June 2010.
 The government has also issued a tender for the privatization of the
Railways Cargo Company (MonteCargo).
 However, the tender for the sale of the majority stake in the port operator,
Kontejnerski Terminal, failed.
 Furthermore, the partial re-nationalization of the aluminum conglomerate
KAP became effective in November 2009 with the state acquiring a 29%
stake in the plant and a 31% stake in the related Nikšić Bauxite mine in
exchange for a guarantee worth €135 million.



 HTP “Budvanska Riviera“ AD Budva, In September 2009 the Government
transferred an 18.3% stake in EPCG, the state-owned vertically integrated
power utility, to Italy’s AZA. The Government also signed a €720 million
agreement for the construction of an undersea power transmission line with
Italy. The project, which is expected to make Montenegro an important node
in the regional power market, will be implemented jointly by the Italian
company Terna and the recently unbundled Montenegrin transmission
system operator, Prenos.
 The concession agreement to construct the Bar-Boljare motorway, signed in
2009, has not yet closed and construction has been severely delayed,
mainly attributed to the failure of the first-ranked bidder to provide all the
required documents and the length of the negotiations.
■ As per the relevant Government plan, the following companies are to
be privatized within 2011:
 “Montepranzo“ Boka – Produkt AD Tivat,
 “Montenegro Airlines” AD Podgorica, and
 “Institute Dr. Simo Milošević” AD Igalo .



■ Additional tenders (date has not yet been defined) shall be also
published for:
 Railway Transport of Montenegro AD Podgorica,
 Railway infrastructure of Montenegro AD Podgorica,
 Adriatic Shipyard AD Bijela,
 Port of Bar AD Bar,
 “Pobjeda“ AD,
 “Zora” AD Berane,
 HTP “Ulcinjska Riviera” AD Ulcinj,
 Ferrous Metallurgy Institute AD Nikšić,
 “Barska plovidba” AD Bar, and
 Montenegrobonus LLC Cetinje.
■ Also within the privatization process through Public Private Partnership,
investors shall be selected for the following tourism and hospitality
projects: (a) Ada Bojana, (b) Velika Plaţa, (c) Njivice, (d) Utjeha, (e)
Buljarica, and (f) Jaz. The same with the real property belonged to the
military: (a) “Mediteran” Zabljak, (b) “Bigovo – Traste” Kotor, (c)
Mamula, (d) Rakite, and (e) Kumbor.



■ The large industrial sector legacy
enterprises were sold to smaller
investors who lost access to new
financing during the global crisis,
forcing the government to retake
a significant equity stake in the
aluminum plant in exchange for
extending loan guarantees.
■ In addition to the deposit run, the
sudden stop in capital inflows
also dried up financing for
corporates just as the prices of
their key export products began
to fall sharply. With the very
large contractions in industry, the
decline in GDP (6%) would have
been even worse but for the
The old town of Budva ability of the tourism sector to
mostly withstand the downturn.



■ A tentative recovery is taking hold, following the global crisis that
exerted heavy blows upon the economy. In 2010, a good tourism
season was followed by resumed metal production, while heavy rains
in the region boosted electricity production and exports. After
contracting for almost two years, industry began to grow again in the
second half of 2010. Nevertheless, industrial production at end-2010
was still considerably below its pre-crisis peak. Expected large-scale
infrastructure foreign direct investment has so far not materialized and
construction activity remains depressed. Overall 2010 GDP growth is
estimated at 1.1%, keeping output below its 2008 level.
■ The needed rebalancing of the economy has begun. Inflation and wage
growth decelerated sharply and the current account deficit halved to
around 26% of GDP in 2010. While most of the improvement was due
to a weather related boost in electricity exports and rebounding metals
production, the nascent adjustment in costs has also improved
competitiveness. The improved fundamentals have also contributed to
the September 2010 debut Eurobond issuance of €200 million,
subsequent spread tightening, and a further €180 million issuance in
April 2011.



■ Fiscal consolidation has commenced. Reflecting mainly significant
capital expenditure cuts, the 2010 fiscal deficit is estimated to have
declined by 1.5% of GDP to 3.9%, though, loan guarantees of 3.6%
were extended to industrial companies. Going forward, the authorities
aim at balancing the budget in 2012 and achieving a sizeable surplus
thereafter in order to bolster sustainability, lower financing risk, and
boost the economy’s resilience to shocks. A durable fiscal adjustment
should encompass both revenue and expenditure measures, especially
steps to curb the public sector wage bill. An early implementation of
pension reform would also strengthen the public finances, as would
further efforts to avoid expenditure arrears and direct budget support to
private companies.
■ In the banking sector, confidence has begun to return, as evidenced by
increasing deposits, though they are still below their levels in the third
quarter of 2007. However, non-performing loans have not yet leveled
off – stagnant lending at the current juncture primarily reflects the
dearth of creditworthy projects.



■ In an effort to prevent and
mitigate systemic risks in the
financial system in the future and
to ensure its preservation,
improvement, control and
stability but also for better
promotion of coordination and
exchange of information between
authorities in the financial sector,
amongst other, the Montenegrin
Government established the
Financial Stability Board and the
European Systemic Risk Board.
Along the same lines the
Financial Stability Council Law
was adopted.

At Rijeka Crnojevića



■ Although the recovery is gaining momentum, limited policy space and
incomplete reforms pose risks to the outlook. Montenegro must step up
efforts to reconstitute fiscal, external, and financial buffers and to
address rigidities in product and labor markets.
■ Noting the importance of strengthened competitiveness for securing
external stability, structural reforms remain a top policy priority.
■ Greater flexibility in wage setting and employment protection would
support job creation in the private sector, while addressing
unemployment and poverty traps would boost labor participation and
market attachment.
■ Improvements in the business environment and investment climate are
also part of the unfinished agenda.


Banking
■ The banking system comprises
of the Central Bank of
Montenegro (Centralna Banke
Crne Gora), which is the
regulatory and supervisory
authority for the banking
institutions – the banks, and the
Micro-Credit Financial
Institutions (MFIs).
■ According to the relevant law the
main objective of the Central
Bank of Montenegro is to
establish and maintain a sound
banking system and monetary
policy, including safe and
efficient payment systems.

The Millenium Bridge, Podgorica


Banking (continued)

■ The Banking sector in
Montenegro Banks – Ranking by Total Assets (2009) Montenegro is completely
# Name
Total
% privatized. There are eleven
Assets
banks operating in the country,
1 Crnogorska Komercijalna Banka 840,732 27.8
and all of them are in private
2 NLB Montenegrobanka 515,213 17.0 ownership with the share of
3 Hypo-Alpe Adria Bank 507,189 16.8 foreign capital exceeding 80%;
4 Prva Banka Crne Gora 367,222 12.1 three are locally-owned while the
5 Podgorička Banka 240,234 7.9 other eight are part of
6 Erste Bank 181,911 6.0
international banks and other
entities, corporate and private.
7 Atlas Banka 160,123 5.3
8 Hipotekarna Banka 100,103 3.3
■ The Montenegrin banking sector
was severely hit by the global
9 Komercijalna Banka 71,799 2.4
financial crisis. As a result non-
10 Invest Banka Montenegro 24,250 0.8 performing loans as a percent of
11 First Financial Bank 16,457 0.5 gross loans increased from 3.2%
Total 3,025,233 100.0 at end-2007 to 21% at end-2010.
Source: Central Bank of Montenegro, Pytheas Emerging Markets


Banking (continued)

Montenegro Banks – General, Year 2009 (€000)
Total Total Net Est. Foreign Ownership
# Name Assets Liabilities Profit
1 Atlas Banka 160,123 131,319 1,161 2002 Local (IBM Atlas Group)
2 Crnogorska Komercijalna Banka 840,732 781, 637 -11,834 1997 OTP Bank (Hungary)
3 Erste Bank 181,911 159,074 195 2009 Erste Bank (Austria)
4 First Financial Bank 16,457 11,157 -1,706 2008 Restis Group (Greece)
5 Hipotekarna Banka 100,103 79,257 1,571 1991 Foreign & local entities
6 Hypo-Alpe Adria Bank 507,189 447,970 -18,315 2006 Bayern LB (Germany)
7 Invest Banka Montenegro 24,250 8,758 303 1961 Local (IMB Atlas Group)
8 Komercijalna Banka 71,799 50,642 1,159 2003 Komercijalna Banka (Serbia)
9 NLB Montenegrobanka 515,213 479,104 1,401 1995 NLB Group (Slovenia)
10 Podgorička Banka 240,234 209,525 -1,903 1906 Societe Generale (France)
11 Prva Banka Crne Gora 367,222 335,054 6,339 1901 Local

Source: Central Bank of Montenegro, Pytheas Emerging Markets Research


Banking (continued)

■ During the boom the Central
Bank of Montenegro raised the
Montenegro Banking Sector – Distribution of cost of credit through higher
Bank Credit by Borrower (%)
reserve requirements and
# Borrower 2007 2008 2009 2010 tightened supervisory and
1 Private companies 60.6 59.2 56.4 54.8 prudential standards, but credit
2 Citizens 34.5 35.8 36.6 37.1
growth was hardly dented. In the
Fall of 2008, banks suffered from
3 Government 1.4 1.0 1.3 2.1 a simultaneous run on deposits,
4 State-owned cos 1.0 1.0 1.9 2.7 loss of access to financing, and
5 Funds 0.6 0.4 1.2 0.1
deterioration in asset quality.
6 Banks 0.2 0.1 0.0 0.0
■ The authorities implemented
several measures to stabilize the
Financial
7 Institutions 0.9 0.8 0.3 0.4 banking system, including a law
8 Credit cards 0.9 1.3 1.7 2.2
authorizing the government to
provide direct support to banks in
9 Other 0.0 0.4 0.6 0.6 the form of credit lines and re-
capitalization.
Source: Central Bank of Montenegro, IMF


Banking (continued)

■ The government provided such
Montenegro Banking Sector – Distribution of
support in two cases:
Bank Credit by Economic Sector (%)  (a) a loan of €44 million for the
# Sector 2007 2008 2009 2010 financially troubled Prva Banka,
1 Households 35.1 36.4 38.3 39.3 and
2 Trade 26.1 22.6 22.8 22.9  (b) a guarantee of €150 million to
3 Construction 9.0 7.2 7.8 8.1
cover KfW Bankgruppe’s and
European Investment Bank’s.
4 Services, 8.6 7.7 5.9 7.4
Tourism, etc. loans to Montenegrin banks used
Agriculture, for providing finance to small and
5 Hunting, Fishing 1.0 0.6 0.3 0.4 medium-sized enterprises
6 Mining, Energy 1.0 1.6 2.2 2.5 (SMEs).
7 Transport, 3.6 3.1 2.6 3.0 ■ A package of laws in the
communications
8 Finance 2.8 2.5 2.4 1.7
financial sector was approved in
9 Real Estate 3.6 4.2 4.4 3.0
July 2010, including a new law
on the central bank and a new
10 Public services 2.9 2.0 2.6 3.1
deposit protection law.
11 Other 6.3 12.1 9.1 9.0



Banking (continued)

■ Stress testing results of the banking system sensitivity to crisis showed
that four banks needed to provide additional capital. Another two banks
performed recapitalization, although the diagnostic assessment findings
and stress testing results did not point to the recapitalization need.
■ Total non-performing assets of banks amounted to €509.3 million at
end-2010 and made up 17.3% of total assets; showed a year-on-year
increase of €164.6 million or 47.7%. Simultaneously, the share of non-
performing assets to total assets grew by 5.91%.
■ Liquidity of the banking sector in 2010 was satisfactory which was
largely contributed to the conservative lending policy.
■ Banks’ liquid assets amounted to €562.7 million at end-2010; showed
an increase in one year period of €101 million or 21.92%. Liquid assets
to total assets ratio amounted to 19.11% (15.26% at end-2009).
■ Liquid assets to short-term liabilities grew in 2010; attributed to a
significantly faster increase in liquid assets as compared to short-term
liabilities of banks. Simultaneously, short-term loans to short-term
liabilities ratio declined and it was 48.44% on aggregate level due to
decrease in loan portfolio in the previous year.


Banking (continued)

# Montenegro Banking Sector – Selected Financial Ratios (%) 2007 2008 2009 2010
CAPITAL ADEQUACY
1 Regulatory capital as % of risk-weighted assets 17.1 15.0 15.7 15.9
2 Capital as % of assets 8.0 8.4 11.0 10.6
ASSET QUALITY
3 NPLs in % of gross loans 3.2 7.2 13.5 21.0
4 Provisions, in % of NPLs 73.6 55.6 46.3 30.7
5 Provisions, in % of total loans 2.3 4.0 6.3 6.4
6 NPLs net of provisions, in % of capital 7.9 32.0 52.5 102.8
EARNINGS AND PROFITABILITY
7 Gross profits ROAA 0.8 -0.6 -0.6 -2.7
8 Gross profits ROAE 10.5 -6.6 -6.9 -27.0
9 Net interest margin 3.0 3.8 4.9 4.9
10 Gross income, in % of average assets 7.0 5.1 5.3 5.4
LIQUIDITY
11 Liquid assets, in % of total assets 18.1 11.2 15.3 19.1
12 Liquid assets, in % of short-term liabilities 32.0 20.9 25.8 32.9
13 Deposits, in % of assets 70.3 60.1 60.3 60.8
14 Loans, in % of deposits 107.4 140.5 131.4 122.9


Banking (continued)

■ Total MFIs assets and liabilities
amounted to €58.7 million in
December 2010 – same level as
it was at the beginning of 2008;
Montenegro Micro-Credit Financial Institutions –
General, Year 2009 (€000) annual decline in MFIs assets
amounted to 22.1%.
Total Total Net
# Name Assets Liabilities Profit ■ At 2010 year-end, total MFI loans
amounted to €43.5 million which
1 Agroinvest VFI 52,212 40,151 73
represented a year-on-year
decline of 33.9%.
2 Alter Modus 16,493 11,487 289
■ MFI granted loans for start-up of
3 Klikloan 1,745 598 -117 small entrepreneurial programs
but under very unfavorable
4 Montenegro 3,194 1,908 256 conditions – MFI average
Investments
weighted effective interest rates
5 Ozmont 1,786 1,192 143
reached 28.0% in December
2010, while nominal interest
Source: Central Bank of Montenegro
rates amounted to 19.2%.


Banking (continued)

■ Useful links (alphabetically):
► Association of Montenegrin Banks
► Chamber of Economy of Montenegro
► Central Bank of Montenegro
► MONSTAT
► Montenegrin Employers Federation
► Montenegro Deposit Protection Fund
► Montenegro Ministry of Economy
► Montenegro Ministry of Finance
► Securities & Exchange Commission
Montenegro

Fortress Lessendro, Lake Skadar National Park


Insurance
■ The institution responsible for
supervision and control of
insurance in the country is the
Insurance Supervision Agency of
Montenegro (ISA), which is
independent of any other
governmental body.
■ The ISA supervises performance
of affairs from the area of
insurance, aimed at encouraging
the insurance market
development and ensuring
adequate protection of the
insured. Its basic goals are to
protect the interests of the
insured and related
beneficiaries, and increase
Old town of Kotor, a view sustainability and reliability of the
insurance market.


Insurance (continued)

Montenegro Insurance Sector – Gross Premium by Company (May 2011)
Non Life Insurance Life Insurance Total
# Name Amount (€) % Amount (€) % Amount (€) %
1 Swiss Insurance 95,699.78 2.13 95,699.78 1.81
2 Lovćen Insurance 2,391,662.46 53.20 2,391,662.46 45.32
3 Sava Montenegro 847,464.76 18.85 847,464.76 16.06
4 Uniqa Non-Life Insurance 544,156.27 12.10 544,156.27 10.31
5 Delta Generali Insurance 616,665.87 13.72 616,665.87 11.68
6 Lovćen Life Insurance 99,291.67 12.70 99,291.67 1.88
7 Wiener Staedticshe Life Insurance 77,470.69 9.91 77,470.69 1.47
8 Uniqa Life Insurance 143,664.96 18.37 143,664.96 2.72
9 Merkur Insurance 49,655.12 6.35 49,655.12 0.94
10 Grawe Insurance 384,418.59 49.16 384,418.59 7.28
11 Atlas Life 9,444.76 1.21 9,444.76 0.18
12 Delta Generali Life Insurance 17,995.20 2.30 17,995.20 0.34
Total 4,495,649.14 100.00 781,941.99 100.00 5,277,591.13 100.00

Source: Insurance Supervision Agency of Montenegro



■ The insurance sector in 2010 in comparison with the previous year had
shrunk. However, liquidity and solvency of insurance companies are
characterized as satisfactory.
■ Gross insurance premium amounted to €62.8 million at end-2010 ; a
4.4% annual decline. Non-life insurance premiums were still dominant
(86.5%) with a declining trend, result of non-life insurance gross
premiums decline (5.4%).
■ Insurance companies faced the problem of aggravated collection during
this period resulting to, the reversal of a number of insurance policies,
an increase in requests for insurance surrenders and a decline in the
number of active insurance policies.
■ Moreover, increase in competition in the insurance market during 2010
influenced a decline in concentration. Notably, three insurance
companies with the highest insurance premiums had a market share of
77.5% at end-2010, a 1.4%dicline since the previous year.
■ Total share capital of insurance companies amounted to €39.2 million
at end-2010, an increase of 13.1% since end-2009.



■ There was an increase of foreign
capital share by 1% at end-2010
compared to the previous year.
■ At end-2010, the solvency
margin of insurance companies
amounted to €21.8 million and
guarantee reserves to €23.9
million. The guarantee reserve to
solvency margin ratio amounted
to 109.4% at end-2010 indicating
a satisfactory solvency
■ Liquidity ratio at end-2010 was to
3.5 and thus indicated that liquid
funds of insurance companies
were 3.5 times higher to their
short term liabilities.
Old town of Bar, a view



► Insurance Supervision Agency of
Montenegro
► MONSTAT
► National Bureau of Insurers of
Montenegro

Town of Cetinje, a view


Capital Market

■ The Montenegro Stock
Exchange or Montenegroberza
(MNSE) was founded in 1993,
and is a member of the WFE,
Capital Market – Indices Growth Rates (%) FESE and FEAS. It is the sole
stock exchange in Montenegro,
Year Moste Nex 20 Nex PIF
following the merger with the
2004 -12.3 106.9 42.9 NEX Stock Exchange.
2005 302.2 287.7 404.9 ■ Trading on the MNSE consists of
2006 98.4 84.5 119.4 short and long term securities,
2007 77.1 89.3 120.8 six investment funds, bonds, and
shares from government funds
2008 -71.2 -70.7 -85.1
portfolios. The MONEX20 nad
2009 36.1 45.9 20.1 MONEXPIF are the principal
2010 -18.0 -0.5 -3.5 stock indices of the Montenegro
Stock Exchange.
Source: Montenegro Stock Exchange


Capital Market (continued)

■ Year 2010 was characterized by a decline of indices; the Montenegro
Stock Exchange had its lowest turnover since 2004.
■ Privatization and recapitalization of the Montenegrin Electric Enterprise
(EPCG) led to a short-term recovery of the capital market. However,
negative trends were also evident in 2010 which reflected in a further
decline in the value of indices and significantly lower turnover and
number of transactions; indicating that negative effects of the crisis at
the Montenegrin capital market were still present.
■ In addition, the highest decline in turnover in the region in 2010 was
reported at the Montenegrin Stock Exchange.
■ During 2010, there was a turnover of €54.8 million by all Montenegrin
stock exchanges achieved through 19.8 thousand transactions.
Compared to end-2009, the turnover declined by 86.5% or €351 million,
while the number of deals performed declined by 66.3%.
■ The average monthly turnover at end-2010 amounted to a mere €4.6
million, a significant decline compared to €33.8 million at end-2009.
The largest portion of turnover was through secondary trade, while only
4.1% of turnover was reported through primary trade.



■ In trade structure, the highest
turnover in 2010 was from trade
with company shares (61.4%),
various types of bonds (25.2%),
while the participation of mutual
investment funds’ share in total
turnover was 13.5%.

Town of Ulcinj



► Central Depository Agency of
Montenegro
► MONSTAT
► Montenegro Stock Exchange
► NEX Montenegro
► Securities & Exchange Commission
Montenegro

Perast, a view


It is Pytheas opinion that Montenegro could become the trading
gateway of the Western Balkans; with duties lower than the regional
average and an economy which is amongst the most liberal of
Europe and Central Asia.


Foreign Trade
■ While continuing its pursuit of WTO accession, Montenegro retains an
open trade regime with low duties. Today, based on its 5% simple
average MFN applied tariff, Montenegro’s economy is among the more
liberal ones in Europe and Central Asia (ECA). Based on the latest
MFN applied tariff, it ranks 18th out of 181 countries (where 1st is least
restrictive). Similar to the majority of other countries in its comparator
groups, Montenegro is more protective of its agricultural goods (11.1%
tariff) than of its non-agricultural goods (4% tariff). Montenegro’s
maximum MFN applied tariff, excluding alcohol and tobacco, is 79.9%
which is much lower than the regional average of 159.7%. However,
only 5% of its tariff lines have zero MFN duties, which again it is much
lower than the regional average of 28.2%.
■ Based on Montenegro’s simple average overall rest of the world tariff
(including preferences) of 10.6%, the country’s exports face a less
favorable trading environment than the average ECA country (9.7%).
As is the case for most countries, Montenegro’s non-agricultural
exports have better access to international markets (9.7% tariff) than its
agricultural products (16.3% tariff).


Foreign Trade (continued)

■ Due to its undiversified export
structure (aluminum, steel, and
fuel products compromise about
60% of the country’s export
receipts with aluminum alone
accounting to about 1/3 of the
total, Montenegro is very
vulnerable to swings in
commodity prices.
■ It’s imports are more diversified
than its exports. However, oil
accounts for about 8% of total
imports, and machinery and
motor vehicles are also
significant items in the import bill.
Thus, due to high fuel prices and
the need to upgrade its capital
A view of Alipašini izvori, Plav stock, Montenegro has run a
high import bill in recent years.



■ Total foreign trade for 2010 was
€1,987.7 million, a 2.9%
increase from the previous year.
Montenegro – Main Trade Partners (2010) Exports corresponded to €330.4
million (a 19.3% increase
# Partners € million %
compared to 2009) and imports
World 978,6 100 to €1,657.3 million (a 0.2%
1 EU27 727,4 74,3 increase from the previous year).
2 China 61,1 6,2 Non-ferrous metals (€130.8
3 Brazil 54,2 5,5 million) and iron and steel (€19.4
4 Russia 50,9 5,2 million) together represented
5 Turkey 27,4 2,8 more than 45% of exports, while
6 USA 15,0 1,5 machinery and transport
7 Switzerland 11,0 1,1 equipment (€340.6 million) and
8 Egypt 8,7 0,9 food and live animals (€324.2
9 Albania 6,5 0,7 million) together represented
10 Japan 3,4 0,3 more than 40% of imports.
Source: MONSTAT



■ In exports, main foreign trade
partners were,
 Serbia (€74.9.million),
 Greece (€56.4 million), and
 Italy (€ 48.8 million).
■ In imports,
 Serbia (€432.6 million),
 Bosnia and Herzegovina (€432.6
million), and
 Germany (€117.1 million).
■ Main regional foreign trade
partners were countries
members of CEFTA and the EU.

Ţabljak in winter, a view



■ Montenegro has
 A CEFTA and a Free Trade
agreement with Russia;
 A Trade agreement with EU
countries under the Autonomous
Trade Preferences;
 A Stabilization and Association
agreement with the EU;
 A Trade agreement with EFTA
countries (Switzerland, Norway,
Iceland, Lichtenstein);
 Free Trade agreements with
Albania, Serbia, Bosnia and
Herzegovina, Bulgaria, Croatia,
F. Y. R. Macedonia, Moldova,
and Romania;
 An asymmetric Free Trade
agreement with Turkey.
Mausoleum of Petar II Petrović Njegoš, Lovćen



► MONSTAT
► Montenegro Chamber of Economy
► Montenegro Customs Administration
► Montenegro Investment Promotion
Agency
► Montenegro Ministry of Economy
► Union of Free Trade Unions of
Montenegro

Town of Herzeg Novi, a view


As per the latest economic impact research study from the World
Travel & Tourism Council and Oxford Economics, Montenegro will be
the fastest growing Hospitality & Tourism economy in the world over
the next ten years with regard to Hospitality & Tourism’s contribution
to GDP and employment.


Hospitality & Tourism

■ Hospitality and Tourism is
accorded the highest
development priority of all
industries and represents one of
the most important branches of
the Montenegrin economy,
generating multiple effects.
■ Montenegro is small in area, but
its comparative natural
advantages, its richness in
cultural and historical sights and
others features, make it one of
the most attractive receptive
tourist destinations.
■ Against a backdrop of global
tourism decline, Montenegro’s
tourism sector continued to
Old city of Kotor, a view expand in 2009 and 2010.


Hospitality & Tourism (continued)

■ Montenegro will be the fastest
growing Hospitality & Tourism
economy in the world over the
next ten years with regard to
Hospitality & Tourism’s
contribution to GDP and
employment, according to the
latest economic impact research
from the World Travel & Tourism
Council (WTTC) and Oxford
Economics.
■ The WTTC/ Oxford Economics
forecasts also rank Montenegro
as being the fastest growing
destination worldwide for
Hospitality & Tourism investment
growth, as well as placing
Winter sunset at Hotel Sveti Stefan, Sveti Stefan Montenegro in 2nd place (behind
Brazil) for visitor export growth.


Hospitality & Tourism (continued)

■ In 2010, Hospitality & Tourism’s total contribution to GDP, including its
indirect and induced impacts, was 15.7%. This share is projected to
rise to 17.2% in 2011 and to 36.3% by 2021 – an increase of 12.4% per
annum over the next ten years. This will take Travel & Tourism’s total
contribution to GDP to €1.9 billion a year by 2021 (a forecast based on
constant 2011 prices and exchange rates) – up from an estimated
€593.8 million in 2011.
■ The direct industry alone is projected to grow its share of GDP from
8.1% in 2011 to 14.8% in 2021 – an annual growth of 10.9% – with the
actual contribution rising to €782.1 million over the ten-year period from
278.3 million in 2011.
■ The trend is also expected to be similar for Hospitality & Tourism’s total
contribution to employment, estimated at 13.9% in 2010, and which is
set to increase to 15.1% this year – accounting for some 26,000 jobs
across the Montenegrin economy. By 2021, Travel & Tourism is
expected to be supporting as many as 62,000 jobs – one in every three
jobs – representing a growth of 9.4% a year over the coming decade


Pytheas Montenegro Report 2011

Pytheas Montenegro Report 2011

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Pytheas Montenegro Report 2011