So far, Montenegro has withdrawn just over one third of the funds that were available for the successful implementation of the Reform Agenda. Reports by the European Commission point to unreliable reporting and slow progress in meeting targets, while measures “on hold” continue to accumulate.
Although the disbursement of the first and second tranches of the Reform Agenda has been proclaimed a success by our officials, European Commission reports highlight worrying problems regarding the accuracy of government reporting, the accumulation of unimplemented reform steps, and the fact that we have so far managed to draw only slightly more than one third of the available funds, the payment of which is conditional on the implementation of reforms.
Out of 25 reform steps from the Reform Agenda that were supposed to be implemented by June this year, the Government claims that 17 have been fully implemented, while the European Commission states that only 12 steps have been completed.
This also affects the funds withdrawn – out of the full amount that would have been available had all 25 reform steps been implemented – a total of €52.14 million – €19.70 million gross has been paid, or €18.26 million net after deductions for pre-financing. This represents only about 38% of the available funds.
Particularly worrying are cases where the European Commission’s assessment does not align with the Government’s evaluation of the level of reform implementation.A good example of the disagreement between the Government and the European Commission is the reform step related to connecting the Special State Prosecutor’s Office (SSPO) and granting access to the databases of institutions it cooperates with, the completion of which would bring €2.1 million. The Government lists this measure as fully completed, while the European Commission assesses that the measure has not been implemented because three key databases are still not directly accessible to the SSPO: the Tax Administration’s records of issued and received invoices of legal entities; data from the Central Bank on indebtedness, transactions, and account blockages; as well as transaction data available to the Central Bank and historical cadastral data from the Real Estate Administration.
In other words, the Government officially claims that full compliance has been achieved, while the European Commission, through its detailed review, refutes the Government’s claims and, accordingly, only partially approves the disbursement of funds. A similar pattern appears in steps related to energy, digitalization, the rule of law, and corporate governance. In the same way, disagreements have arisen regarding the assessment of the fulfillment of measures for a total of 13 reform steps (out of 25 in total), for which the Government claims full or partial implementation, while the European Commission, through analysis of the submitted evidence and its assessment, concludes that they have not been achieved.The discrepancy comes down to the same rule – the European Commission requires thoroughly proven functionality and maintains the assessment “not achieved,” resulting in partial payments that are significantly below the available amount. These cases precisely explain why only part of the funds from the Growth Plan has been withdrawn so far.
The funds that have not yet been paid are not lost, as there is a one-year “grace period” during which they can still be withdrawn if the reforms are implemented. However, it should be borne in mind that by December of this year an additional 32 steps must be implemented, potentially bringing €83.4 million. Therefore, in addition to the unfinished obligations carried over since December last year (a total of 13 measures), by the end of the year we also have 32 new measures for which we will have to report to the European Commission on what has been done. The accumulation of obligations in the first year of implementing the Reform Agenda testifies to a lack of capacity and insufficient commitment of the competent institutions to implement the reforms they themselves proposed within the defined deadlines.
Marko Sošić
Below, see an overview of the status of due reform steps:
