2021 Index of Economic Freedom

Montenegro

OVERALL SCORE63.4
WORLD RANK80
Rule of Law

Property Rights57.8

Judicial Effectiveness56.2

Government Integrity51.0

Government Size

Tax Burden83.6

Government Spending35.3

Fiscal Health37.2

Regulatory Efficiency

Business Freedom73.5

Labor Freedom78.0

Monetary Freedom83.4

Open Markets

Trade Freedom79.4

Investment Freedom75.0

Financial Freedom50.0

Create a Comparison Chart

See how Montenegro compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 0.6 million
  • GDP (PPP):
    • $12.6 billion
    • 3.6% growth
    • 3.9% 5-year compound annual growth
    • $22,989 per capita
  • Unemployment:
    • 14.9%
  • Inflation (CPI):
    • 0.4%
  • FDI Inflow:
    • $452.8 million

Montenegro’s economic freedom score is 63.4, making its economy the 80th freest in the 2021 Index. Its overall score has increased by 1.9 points, primarily because of an improvement in fiscal health. Montenegro is ranked 39th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

The economy of Montenegro climbed in the ranks of the moderately free this year. High government spending and debt levels, which hamper the realization of greater economic freedom, would be alleviated by improved public-sector finance. The country also remains beset by corruption and weak rule of law, as well as by a complex and time-consuming regulatory environment.

IMPACT OF COVID-19: As of December 1, 2020, 504 deaths had been attributed to the pandemic in Montenegro, and the economy was forecast to contract by 12.0 percent for the year.

Close

Background

Montenegro declared independence from Serbia in 2006, introduced significant privatizations, and adopted the euro despite lack of membership in the eurozone. It joined NATO in 2017 and is an EU candidate country. Milo Ðukanovic won election to a second, nonconsecutive term as president in 2018. Ðukanovic has served as president or prime minister for nearly all of the past 25 years and has steered the country in a generally pro-Western direction. Although his Democratic Party of Socialists won the most seats in 2016 parliamentary elections, it failed to secure a majority, and Ðukanovic’s longtime ally Duško Markovic became prime minister in a coalition government. A controversial law regarding the ownership of property by religious communities has led to protests.

Rule of LawView Methodology

Property Rights 57.8 Create a Graph using this measurement

Judicial Effectiveness 56.2 Create a Graph using this measurement

Government Integrity 51.0 Create a Graph using this measurement

The law respects and protects property rights. The government has improved the property registration system, but more reforms are needed. Despite recently adopted legislative reforms aimed at improving the efficiency and effectiveness of court proceedings, judicial corruption and lack of transparency or accountability remain problems. Corruption and the perception of corruption are significant problems in the public and private sectors.

Government SizeView Methodology

The personal income and corporate tax rates are a flat 9 percent. Other taxes include value-added and inheritance taxes. The overall tax burden equals 38.4 percent of total domestic income. Government spending has amounted to 46.5 percent of total output (GDP) over the past three years, and budget deficits have averaged 5.7 percent of GDP. Public debt is equivalent to 74.8 percent of GDP.

Regulatory EfficiencyView Methodology

Starting a business and obtaining electricity have become less expensive, dealing with construction permits is less time-consuming, and the recovery rate when resolving insolvency has increased. The labor force participation rate has climbed. A wide range of government subsidies accounted for 1.57 percent of GDP in 2020 according to a government report.

Open MarketsView Methodology

Montenegro has five preferential trade agreements in force. The trade-weighted average tariff rate is 5.3 percent, and 16 nontariff measures are in effect. The regulatory and legal frameworks governing foreign investment generally facilitate the development of a growing private sector. The financial sector is small, but the level of foreign banks’ participation and investment is significant. The fully privatized banking sector functions under market terms.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Switzerland81.9-0.1
2Ireland81.40.5
3United Kingdom78.4-0.9
4Estonia78.20.5
5Denmark77.8-0.5
6Iceland77.40.3
7Georgia77.20.1
8Lithuania76.90.2
9Netherlands76.8-0.2
10Finland76.10.4
11Luxembourg760.2
12Sweden74.7-0.2
13Austria73.90.6
14Czech Republic73.8-1.0
15Norway73.40.0
16Germany72.5-1.0
17Latvia72.30.4
18Armenia71.91.3
19Cyprus71.41.3
20Bulgaria70.40.2
21Malta70.20.7
22Belgium70.11.2
23Azerbaijan70.10.8
24Spain69.93.0
25Poland69.70.6
26Romania69.5-0.2
27North Macedonia68.6-0.9
28Slovenia68.30.5
29Portugal67.50.5
30Serbia 67.21.2
31Hungary67.20.8
32Kosovo66.5-0.9
33Slovak Republic66.3-0.5
34France65.7-0.3
35Albania65.2-1.7
36Italy64.91.1
37Turkey64-0.4
38Croatia63.61.4
39Montenegro63.41.9
40Bosnia and Herzegovina62.90.3
41Moldova62.50.5
42Russia61.50.5
43Belarus61-0.7
44Greece60.91.0
45Ukraine56.21.3
See Entire Region List ›

View all countries ›

Back to Top