World Bank Proposes Results-based Financing to Increase Efficiency of Public Spending and Revenue Collection in Montenegro

March 26, 2014

PODGORICA, March 26, 2014 – World Bank Country Director for Southeast Europe, Ellen Goldstein, paid a visit here today to announce the preparation of two innovative programs.  Expert teams are in Montenegro for the next two weeks to prepare projects aimed at strengthening fiscal and debt management as well as tax administration in order to increase the efficiency of public spending and revenue collection.

In recent years, the World Bank Group has engaged in Montenegro to spur economic recovery following the Eurozone crisis, accelerate economic growth, expand employment opportunities and enhance prosperity for all Montenegrins.  Through a combination of economic and social analysis and external financing, the World Bank has supported Montenegro to achieve today clear signs of economic recovery and accelerating growth. This support has also helped bring Montenegrin policies and institutions further in line with European standards for future accession to the European Union. 

In the aftermath of the 2008 Eurozone crisis, the World Bank responded to Montenegro’s need for counter-cyclical stimulus by expanding development policy lending and guarantees.  Today, with economic recovery underway, the World Bank is promoting a wider range of instruments to support Montenegro, including results-based financing. 

“This visit is an opportunity to highlight the strength of the World Bank partnership with Montenegro, and to expand the use of innovative results-based financing in order to enhance growth and employment opportunities for Montenegrins” stated Goldstein. “This type of instrument disburses funds against measurable results achieved. Applied to tax administration and fiscal management, this will create greater incentives for government institutions to be efficient, transparent and responsive to citizens in delivering their services”.

The proposed fiscal management project would strengthen macroeconomic and fiscal planning, budget execution and the management of public debt. The proposed tax administration reform project would increase the effectiveness of revenue collection, make it easier for taxpayers to fulfill their obligations and increase the efficiency of administration in order to collect higher revenues with a lower burden on taxpayers.   

The World Bank’s portfolio of active projects in Montenegro includes four operations totaling approximately US$68 million.  Areas of support include agriculture, land administration, higher education, and energy.

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