Montenegro is witnessing bold initiatives coming from the highest institutions — showing a deep commitment to the social economy. Moves toward regulating interest rates by the Central Bank represent an example of progressive economic policy aimed at the welfare of citizens.
Positive Measures, but an Open Question
Beyond easing the financial burden on consumers, the measures increase transparency in the banking sector. We should also mention other measures aimed at improving citizens’ lives:
- Limiting margins
- Increasing minimum pensions
This points to a targeted inclusive approach.
Can the Economy Withstand It?
While greater consumption may look like a way to “pump” money into the economy — so the economy will pump money into the state through taxes — the question must be asked: is the economy fundamentally capable of sustaining the growing costs of the state?
A sustainable strengthening of the economy requires a holistic approach based on revenues from real economic activity.
The Problem: Productive Workers Are Moving to the Public Sector
Beyond various levies, rules and obligations, the economy faces a trend of a decreasing number of productive workers. Operational staff and middle management have better job offers from the state — economic dynamics slow down, creating additional challenges for new revenue and taxes.
The increasingly large state administration, de facto paid by a weakening private sector, will take advantage of the interest rate cut and consider new borrowing. The problem: will the economy be able to follow suit and pay enough taxes?
A Concrete Example — Business vs. Real Estate
Imagine you are considering buying a 60 m² apartment:
- Total value with interest, furniture and other costs: ~EUR 150,000
- Renting it out at EUR 600 per month
- It takes about 20 years to recover the initial investment (not counting maintenance and vacant periods)
Alternative: Investing the Same Amount in a Business
If your business generates 1% per month on invested capital = EUR 1,500 per month:
- Over the same period you would recover the initial investment
- And generate a stable monthly income of around EUR 900
- The potential for growth and development of the business further increases revenue
So why do most people still decide to buy an apartment?
Financial Literacy as the Key
These two paths offer different kinds of security and risk. The decision between:
- The instant “security” of owning real estate (which is not yours for 20 years while you pay it off), and
- Potential stability and growth through business
highlights the importance of financial literacy in making informed decisions.
Finance Plus’s recommendation is starting a business first, then buying real estate from the profit.
Conclusion
Previous and announced future initiatives and programs are indeed good for citizens. But measures to support business and attract foreign investment are equally important — to ensure the sustainability of the economy.
We hope real and sustainable business initiatives will soon emerge — because that is the only path to sustainable growth and long-term development of our country.
