Montenegro: Volatile Municipal Revenues

Abstract

More than a decade after the process of fiscal decentralisation began aimed at increasing the efficiency of public finances at the local level, municipalities in Montenegro are in a challenging financial situation, facing high debts and arrears. This chapter presents the administrative-territorial structure of Montenegro and describes the evolution of the political and fiscal decentralisation processes in the country since the beginning of the 1990s. The chapter includes an analysis of the key legislative changes that have occurred, as well as an empirical analysis of the fiscal impact of these changes on municipal budgets.