Russians and Ukrainians have a positive impact on strengthening Montenegro’s budget revenue
The Ministry of Finance said, that the growth in private consumption and the results achieved in tourism led to a significant increase in revenues collected by the state on the basis of VAT, which for the period from January to September were higher by 171.6 million euros, or 34.8%, compared to the same period in 2021, i.e. 127.7 million euros, or 23.8%, compared to the planned revenues.
“If we take into account that overall economic growth is driven, among other things, by domestic demand, private consumption and investments, it becomes clear that the increase in the presence of foreign citizens is a positive signal for strengthening the budget revenue side,” the ministry notes.
Recently, the Ministry of Interior announced that for temporary or permanent residence in Montenegro, just over 13,500 Russian citizens, and Ukrainians in the country on the basis of temporary protection or permitted residence, there are almost 11,100 people.
Since the start of the war in Ukraine, as of the end of February, 112,755 Russian citizens and 50,614 Ukrainians applied to stay in Montenegro for up to 90 days.
“Since the start of the war in Ukraine, from February 24 to October 10 of this year, 119,619 citizens of the Russian Federation entered Montenegro, while 103,406 people were registered on exit,” the Ministry of Interior said.
The Ministry of Finance emphasizes that we are witnessing how, despite the crisis caused by the war in Ukraine, Montenegro’s economy is recovering strongly compared to the pre-pandemic level and is experiencing dynamic growth, which in the second quarter of the year amounted to 12.7%, making it officially the highest in Europe. According to them, growth above expectations, along with favorable macroeconomic indicators, is positively assessed by relevant international organizations, which have revised their forecasts for Montenegro’s growth upward for the current year.
“In addition to the significant increase in imports and recorded inflation in this period, there is no doubt that the increase in the number of foreign citizens who obtained residence permits in Montenegro due to the war in Ukraine, through increased private consumption, also contributed to higher revenues. Thus, it is obvious that the increase in the influx of foreign citizens, caused by the war in Ukraine, contributed to positive trends and, according to the Government’s assessment, primarily reflected stronger private consumption and positive results in tourism, trade and related activities, as they were mentioned, people transferred their capital to our country and are gradually starting private businesses and expressing interest in further investments. Additional benefits can also be expected in the coming period in terms of creating new jobs and increasing revenues across all tax categories,” the ministry said in its response.
Highly valuing the great interest and seriousness in the work of newly formed companies, the Government and the Ministry of Finance are developing a set of measures that, in various areas, create conditions to ease the civil and labor legal status of residents, in order to provide them with optimal conditions for life and work, which would at the same time create new value both for their business and for the overall economic picture of Montenegro.
“Confirmation that such measures are producing results is precisely the increase in the number of foreign citizens who are starting and successfully developing their business in Montenegro’s business environment. Therefore, the strong influx of non-residents is also influenced by the strong growth of newly established companies, which, according to unofficial data, is more than 40% higher than last year, with a large percentage of companies founded by foreign citizens,” the ministry said.
“The type of activity of newly created companies is also encouraging, a large number of which belong to the IT sector, which could potentially affect the restructuring of the Montenegrin economy and a faster transition to a highly competitive economy and stimulate digitalization trends in the private sector. In addition, the financial impact of the influx of non-residents is reflected in increased activity in the real estate market, a strong inflow of foreign direct investment and the expansion of the banking sector due to stronger domestic demand. So far, 2022 trends show that the risks of the war in Ukraine affecting Montenegro in the short term have been mitigated, while the prospects for the next period remain extremely uncertain due to further challenges in the geopolitical situation, which, in combination with internal factors, may slow down the planned economic growth,” the Ministry of Finance notes.
Russians and Ukrainians founded more than 1,200 companies.
The Tax and Customs Administration said that from February 1 to June 9, 1,100 companies were registered in Montenegro, founded by natural persons from Russia. Of these, 229 companies are engaged in computer programming, 81 companies in data processing, hosting of applications and provision of application services. In third place are consulting activities related to business and other management (65 companies) and consulting activities in the field of information technology (63 companies).
During the same period, 104 companies were registered and founded by natural persons from Ukraine, with computer programming being the most represented activity, carried out by 13 of these companies.
According to these data, for citizens of both countries, affected by the horrors of war, Montenegro leads the entire Western Balkans region.