Montenegro Faces Crucial Reforms Ahead of EU Negotiation Deadline

Montenegro is at a pivotal juncture as it accelerates its reform efforts in anticipation of the European Union’s (EU) stringent evaluation criteria. According to Jana Repanshek, the Director of the Center of Excellence in Finance (CEF), the progress of a country towards EU membership is no longer measured merely by the number of laws passed. Instead, it hinges on the nation’s ability to implement, finance, and demonstrate the effectiveness of reforms.

In recent months, Montenegro has made notable strides in public financial management and external auditing, culminating in the successful closure of Chapter 32. This milestone underscores the country’s capability to advance significant reforms to their final stages. Nevertheless, as Ms. Repanshek points out, the more challenging aspect lies ahead—enhancing managerial accountability, aligning reform priorities with the budget, and consistently monitoring results. These factors will be crucial for maintaining the credibility of reforms and completing negotiations with the EU by the end of 2026.

Transitioning to a more detailed examination of Montenegro’s reform processes, Ms. Repanshek highlights recurring challenges in public financial management. The primary bottlenecks often stem from limited institutional capacities and coordination issues rather than a lack of ambition. One significant hurdle is ensuring that reform priorities align with realistic budgeting. While many reform measures are well-conceived, they often lack sufficient integration into annual and medium-term fiscal planning, creating risks during implementation.

Coordination among various institutions poses another challenge. Final benchmarks often require collaborative efforts across multiple ministries and agencies. Weak coordination mechanisms, staff turnover, and unclear delineation of responsibilities can hinder progress, even in the presence of political commitment. Furthermore, effective monitoring, reporting, and accountability are essential. Performance-based instruments, such as the Reform and Growth Instrument (RGF), demand reliable indicators, quality data, and timely reporting. Many administrations, including Montenegro’s, are still transitioning from activity-based reporting to results-based reporting.

Despite these challenges, Montenegro has made significant progress in addressing these issues, particularly within internal control and audit systems. However, these areas remain critical as reforms continue to be accelerated.

Support from the CEF has been instrumental in strengthening the role of the Ministry of Finance and the Ministry of European Integration as central coordinators and strategic partners in the reform process. Through projects like FISR 2, CEF has collaborated with reform teams on cost calculations, assessing fiscal and economic impacts, and aligning them with macro-fiscal frameworks. Another project, CEF Facility support in Montenegro, focuses on enhancing administrative capacities and ownership of the public financial management coordination structure led by the Ministry of Finance.

This structured dialogue with the European Commission has become more evidence-based. When reforms are supported by data, clear milestones, and realistic financing plans, discussions shift from broad commitments to specific implementation steps. For Montenegro, this has resulted in a more credible reform agenda, improved reporting mechanisms, and clearer communication with the Commission, particularly regarding chapters related to economic and monetary policy and public financial control.

Reflecting on the evolution of Montenegro’s administrative planning and reform processes, Ms. Repanshek notes a marked improvement compared to one or two years ago. Planning has become more disciplined and increasingly aligned with fiscal realities. Reforms are now more frequently embedded within official growth projections and medium-term plans, instead of treated as parallel policies.

Monitoring processes have also been enhanced. With the introduction of the RGF as a performance-based instrument, there is a greater awareness that progress must be demonstrable and measurable to facilitate increased absorption of EU funds. This is particularly crucial as Montenegro enters the phase of closing chapters, where credibility and consistency are paramount.

These advancements reflect ongoing institutional learning rather than one-off adjustments, aligning with the requirements of the enlargement process at this stage.

Political stability is undeniably beneficial for the success of reforms. However, as Ms. Repanshek points out, strong public administration can significantly mitigate political uncertainties. Professional, well-organized institutions guided by clear procedures can enable reforms to progress even during political transitions. The European Commission emphasizes the importance of administrative capacities and institutional maturity. In Montenegro, despite periods of political challenges, institutions responsible for European integration have remained functional, indicating that strengthening public administration is not merely an alternative to political consensus but a crucial stabilizing factor during complex political circumstances.

Addressing the effective use of EU funds remains a significant challenge across the region. The primary barriers are institutional rather than financial. EU funds are increasingly accessible, but their effective utilization depends on the ability to prepare mature projects, ensure coordination among institutions, and monitor implementation. Common challenges include project portfolios that often lack maturity and do not meet funding criteria, insufficient alignment of strategic priorities and budgets, and limited capacity for monitoring and reporting.

The FISR2 project, which brings together Western Balkan countries and Turkey, highlights the importance of regional experience sharing at this stage of the accession process. Countries face similar challenges, and learning from those slightly ahead or testing various solutions can accelerate progress. FISR2 has demonstrated that peer learning acts as a potent catalyst for change. Concrete examples, such as improved auditing systems in Montenegro or digital monitoring tools in North Macedonia, provide not only practical inspiration and confidence that reforms are achievable but also concrete knowledge and experience applicable in other countries.

Additionally, regional dialogue fosters a common language and understanding in discussions with the European Commission, bolstering the credibility of the overall enlargement process.

When asked if Montenegro could serve as a potential best practice example for other countries in the region, Ms. Repanshek affirmed, particularly regarding public financial control and external audit. Montenegro’s progress in aligning with EU standards under Chapter 32 is a strong example of sustainable institutional development. However, assessments from SIGMA indicate that Montenegro remains below average in internal controls while exceeding the average in internal audit. These findings align with the European Commission’s observations, which emphasize the need for Montenegro to improve managerial accountability and delineation of responsibilities between budget inspections and internal audit functions.

In terms of future challenges, the most demanding test for Montenegro will be maintaining reform momentum while simultaneously closing remaining chapters. This requires not only the adoption of legislation but also ensuring its effective implementation, particularly in areas of the rule of law, public financial management, and protection of EU financial interests. As reforms become more detailed and performance-based, institutional discipline, coordination, and monitoring will be crucial, alongside continuous investment in human and administrative capacities as essential prerequisites for long-term success. If Montenegro can maintain this focus and continue to strengthen its public administration, it is well-positioned to achieve its ambitious goal of concluding accession negotiations by the end of 2026.