Montenegro's Euro Model Sparks Inflation Fears

Montenegro's proposed Euro model has sparked concerns over its fiscal cost and potential impact on inflation. The plan, which aims to raise salaries and reduce tax burdens, could see minimum net wages increase to €1,000 for jobs requiring basic education, €1,250 for secondary-level qualifications, and €1,400 for higher education positions.

Economist Mladen Grgic has estimated the model's cost to be around €1 billion, although this figure is not officially confirmed. Employers have expressed concerns that higher wage costs could lead to increased prices, job cuts, or business closures, particularly among small and medium-sized enterprises.

The government hopes to offset these costs by reducing labor taxes, but economists warn that stronger consumer demand and higher business costs could fuel inflation, potentially offsetting some of the benefits from higher wages. Municipalities may also face reduced revenues, raising concerns over their ability to fund public services and investment.