Montenegro Aims for EU and Euro Zone Membership by 2028

Montenegro’s Prime Minister, Milojko Spajic, announced on July 25, 2023, the country’s ambitious goal to join the European Union and the euro zone by 2028. This announcement comes as Montenegro, a small Balkan nation, seeks to solidify its economic standing and enhance its political ties with Europe.

During a meeting with German businessmen and politicians, Spajic highlighted that Montenegro’s economy has nearly doubled over the past five years. The Prime Minister also revealed plans to sell fresh government bonds, targeting both institutional and retail investors to further support the nation’s financial growth.

The EU has intensified its efforts to expand its membership since Russia’s invasion of Ukraine in 2022. European officials believe that the conflict has underscored the risks of having “grey zones” on the continent—territories that are not firmly integrated into the Western bloc. In this context, Montenegro’s accession is seen as a critical step toward enhancing regional stability.

To achieve its goal, Montenegro aims to meet the European Commission’s remaining criteria, particularly in strengthening its institutions, by the end of 2024. Spajic expressed optimism that if all 27 existing EU member states support Montenegro’s candidacy, formal accession talks could commence in 2027. He said, “If we have 27 hands supporting our candidacy, we are hoping to see ourselves in the EU in 2028.”

Montenegro adopted the euro prior to gaining full independence from Serbia in 2006, and Spajic hopes this will facilitate its entry into the euro area, which currently consists of 20 nations that participate in the European Central Bank. For Montenegro to be accepted into this monetary union, it must adhere to EU regulations regarding inflation and long-term interest rates, ensuring they remain within a specified range of the euro area’s strongest-performing economies.

Recent data indicates that inflation in Montenegro averaged 3.1 percent for the year ending in July 2023, which exceeds both the euro area and EU averages. Despite these challenges, the country’s economic output saw a significant increase, rising from 4.2 billion euros in 2020 to 7.8 billion euros in 2022. Additionally, net salaries have doubled, climbing from 500 euros in early 2022 to 1,000 euros this year, largely due to tax cuts.

Nevertheless, the Montenegrin central bank has raised concerns regarding the government’s revenue and debt forecasts. In response, Spajic, a former credit analyst at Goldman Sachs, defended his administration’s performance and emphasized the importance of the central bank’s independence. He stated, “Our deficit is around one percent for the first eight months of the year.”

Looking ahead, the Montenegrin government is considering new debt sales targeted at institutional investors in major financial hubs such as London, Frankfurt, or Tokyo. Additionally, they are exploring the possibility of issuing a retail bond aimed at domestic investors, further demonstrating Montenegro’s commitment to enhancing its financial landscape as it pursues EU and euro zone membership.