How much do pre-election promises cost?

Whoever wins the elections this week, we will hardly recognize Montenegro if the future government – whoever its constituents may be – fulfils even a part of the election promises. Let’s start with infrastructure and so-called capital projects.

The leader of the Europe Now (PES) movement promises the construction of two highways and two fast freeways. And all of that by 2030. Let us recall that the construction of the existing section Smokovac – Mateševo lasted for seven years, and that access roads from Podgorica and Kolašin have still not been completed. A slightly more extensive and expensive project was announced.

The remaining 120 kilometres of the Bar – Boljare highway should be built (investment value of at least 1.3 billion euros as estimated in 2022). The Montenegrin section of the Adriatic-Ionian highway would go from the border with Bosnia and Herzegovina, from the direction of Trebinje, through Podgorica (Smokovac interchange), and north of Tuzi to the border with Albania. „That investment is worth more than one billion euros“, announced Milojko Spajić in December 2021. Today, the price is, without a doubt, significantly higher as cement, oil, iron, labour .. are more expensive.

The planned fast freeway with four lanes along the Adriatic coast, from Ulcinj to Herceg Novi and the border with Croatia (toward Dubrovnik) is about 110 kilometres long and could also cost more than one billion euros. In fact, the documents from 2021 mention the amount of 1.4 billion euros, but that calculation referred to the construction of the highway along the same route.

Finally, Spajić also announces the construction of a fast freeway from the border with Bosnia and Herzegovina (from the direction of Sarajevo) through Pljevlja to Bijelo Polje. However, he did not offer many details about the project. “That plan was supported by Turkish President Recep Tayyip Erdogan. He said that Turkish construction companies can lead the project, and that Qatar would finance it (should be read – credit it, as noted by the author). However, all that was stopped with the fall of the 42nd Government“, said Spajić, expecting that he will soon get a second chance. That’s why we can only estimate how much that road of app. 85 kilometres could cost. Undoubtedly, we are talking about hundreds of millions.

To conclude – the four infrastructure projects that Europe now promises us weigh close to four billion (4,000,000,000) euros. Which we don’t have. Or more than 500 million euros per year until 2030. Is it not enough?

However, this is not nearly all of that what we were promised when it comes to large infrastructure projects.

Bosniak party (BS) has serious expectations from the future Government, which, they say, will be impossible to form without their support. Another international road is on their list of promises/wishes – a new road between Rožaje and Peć with a seven-kilometre long tunnel. According to the conceptual project from 2018, the tunnel would cost 108, and the complete road about 280 million euros, and it would shorten the road between Rožaje and Peć from the current 47 to 23.5 kilometres.

The pre-election programme of the BS also includes airports in Berane and Ulcinj. These ideas are almost 50 years old, but to this day the public has not been informed about the cost of those projects, although they have been discussed again since the formation of the Government of Zdravko Krivokapić. Allegedly, there are also interested investors (concessionaires) from Germany, but the story has not gone beyond political PR. For a rough estimate, the fact that the Government of Serbia, three years ago, started the story of the construction of the Trebinje airport with the calculation that this investment will cost around 50 million euros (statement of the former Minister of Construction, Zorana Mihajlović). Despite the optimistic announcements, the work is still not done.

All together, the three big BS projects are worth at least 400 million. And “countless” smaller ones at least half of that amount – kindergartens, primary and secondary schools, cultural centres, religious institutions, homes for the elderly in Rožaje and Plav (the one in Nikšić cost 5.5 million and in Podgorica more than 12 million), health centres in Gusinje and Petnjica, school sports halls “in larger village centres“, a large sports hall in Tuzi, centres for the purchase and processing of fruits and vegetables, a fish pond in the water area of the Solana Ulcinj… until the “completion of all works on the boulevard Podgorica – Tuzi” (it was recently officially put into operation, even though unfinished!).

There is more. The construction of solar power plants has become a “commonplace” of the pre-election offer, but some, are also thinking about larger energy projects.

Hence, the Movement for Change (PzP) proposes the preparation of a feasibility study for the construction of reversible hydroelectric power plants in Komarnica, Piva II and Kruševo, which would work in sync with HPP Piva I and produce peak energy. “The study will consider variants with and without sinking Šavnik during the construction of HPP Komarnica and the construction of HPP Kruševo on part of the territory of the Republic of Srpska and the territory of Montenegro,” states the pre-election programme of Nebojša Medojević’s party.

It is difficult to estimate the total value of that project, but we have a spring calculation according to which the construction of Komarnica HPP alone (without sinking Šavnik) would cost between 260 and 290 million.

At the same time, the coalition list Justice for all, led by Vladimir Leposavić, lawyer and former minister of justice in the Government of Zdravko Krivokapić, is reviving the story of the construction of hydroelectric power plants on Morača in its fight for voters. They propose the construction of one or more cascade hydropower plants. The idea is not new, just like the resistance to its implementation. And according to calculations from 2010, the then value of the project for the construction of energy facilities on Morača was estimated at 550 million euros. Today, that amount would have to be multiplied at least by two.

Democratic Party of Socialists (DPS) has also its infrastructural (pre-election) trump cards. With the announcement of an “investment cycle worth a billion euros“, which we should take “at his word“, the party led by Danijel Živković in the upcoming elections promises a new emergency centre, a general hospital and primary health centres in Podgorica, a general hospital in Bar, a sanatorium in Žabljak, “expansion and improvement of capacities” of general hospitals in Pljevlja, Kotor, Cetinje and special hospital in Risan. “We will allocate 10 million per year for the opening of new schools and kindergartens,” said DPS. And it sounds like they are promising their own money.

The Turnaround led by Srđan Perić “pushed” the story of building apartments for social housing for quite some time. Since in Montenegro, according to data from the Subtenants’ Association, nearly 20,000 families provide a “roof over their heads” by renting other people’s real estate, and the prices have soared in the sky, the topic has become interesting to their political opponents as well. That is how we got a wide variety of pre-election promises.

In the pre-election programme of the Social-Democratic Party (SDP) we read: “The state will provide a programme for the construction of apartments for young married couples and subtenants and for this purpose provide 25 million euros and the construction of 1000 apartments per year. The rent cannot be higher than 150 euros, and the user of the apartment will receive the right of ownership of the apartment after 25 years at the latest. All the money that the state will collect based on the rent of these apartments will be directed to an additional subtenant rent subsidy programme.”

Also, PZP promises to build apartments owned by the state and municipalities, which would be rented out to subtenants until their housing issue is resolved. It is necessary to prepare “a special plan for the construction of state and municipal apartments that would be rented to pensioners who do not have a settled status, and whose right of residence could not be transferred to other family members“, as stated in their promises.

DPS announces support for subtenants through monthly subsidies of 50 euros and the creation of a special state housing fund.

And the ruling URA, which runs for elections in a coalition with the Democrats, states that the Government (this one or another?) will allocate 20 million for the establishment of the Fund Apartment for everyone. That money would be used to finance the construction of apartments that would be sold at the cost of construction – from 800 to 1,000 euros per square meter. “In the case of cheaper construction, the price will be lower,” said the Minister of Economic Development, Goran Đurović, noting that the state loses up to 30 million euros annually due to non-taxation of apartment leases. Just so you know, if someone finds those millions. When the state can’t.

Bidding is also done with the amount of rent – from 60 (Turnover) to 150 euros per month (SDP). It is up to us to choose the model and the acceptable cost – 20 million on a one-time basis, or 25 million per year.

For these investments, even if they remain just promises, new institutions should be provided. There are plenty of suggestions. In addition to the Fund for the construction of social housing, Turnover also announces the creation of a youth fund (hub) to help create businesses. To begin with, a million euros to help the development of 50 companies. Similar is planned in the DPS. People’s Coalition led by Dejan Vukšić will advocate for the formation of the Ministry for Family Care and the Fund for Social Care and Solidarity of the Elderly. The PzP would establish an Institute for development, a Development bank, an Agrobank, a State business system, a Fund for Montenegro, Telecommunications of Montenegro, and Insurance, while in Europe now they are announcing the renewal of Montenegro works, as an umbrella company that will take care of the operations of state-owned companies. The costs of establishing and operating the announced institutions and organizations have not been presented to the public.

Just like those regarding promised increases in wages, pensions and social benefits. And the parties and their candidates played really well.

A little less than 250,000 currently employed in Montenegro enjoy bidding on the future minimum and average salary. Later we will calculate whether the promise is possible and how sustainable it is. Although the math is not complicated.

Since they focused their campaign on traditional pre-election topics, the MPs of the NOVA-DNP-Labour party coalition made the most modest economic promises. Their list holder, Milan Knežević, announced a 13 per cent increase in the minimum salary (around 60 euros), a proportional increase of pensions and two factories in the north (it is not known of what) that would be opened “in agreement with Serbia with the involvement of Chinese companies“. It is not clear what exactly this means – whether Serbia guarantees for the Chinese or vice versa, who invests, who gives subsidies, who makes a profit… So, let’s get back to what we live on.

In order for the average neto salary to increase from the current 780 to the 1,000 euros promised by Europe now, DPS and PzP (more than 1,000), employers must provide another 80 – 85 million euros per month, or approximately 1,000,000,000 euros per year, provided that the gross structure salaries and the number of employees remain unchanged. The alternative is for the future Government and the parliamentary majority to amend the existing regulations and possibly reduce the percentage allocated for pension insurance (the most frequently mentioned possibility). Then, as in the case of the tax reform known as Europe Now 1, the promised increases would be financed by the state. And the taxpayers, then, would pay the full price of that financial operation – through higher taxation, inflation and poorer quality, that is, the unavailability of the services we receive under the auspices of the state (health, education, security…). And again, we don’t know how long it will last.

Milojko Spajić announces that all this can be covered by additional savings and new revenues. And be sustainable. So, whoever believes – believes.

The math is similar to the guaranteed minimum salary of 700 euros promised by Spajić and PES. According to available data, around 60,000 people received a minimum wage of 450 euros this spring. If we increase their net salary by 250 euros, it will cost their employers about 370 euros per person, that is, more than 22.3 million per month. Or some 260 million per year.

Let’s forget the Government and the state budget for a moment. Let’s take for example the company V…, which, after the state, is the largest employer in Montenegro and operates in the trade sector where, traditionally, salaries are close to the minimum salary. Let’s assume (aware of the mistake) that all 2,200 employees in the company receive 450 euros. And that their salary, at some point during the mandate of the next Government, will be increased to 700 euros net. This will cost the company’s owners more than 800,000 euros per month, that is, almost 10 million per year. The total profit of the five largest retail chains in Montenegro last year was less than 20 million.

How will V… provide that money? Or will the state give up some of the current income from wages (taxes and contributions), or will we buy more food and other necessities in their stores, or will the prices in stores continue to rise? Choose the correct answer yourself.

Let’s go back to the state budget and the measures announced by the parties in the pre-election race.

PES again – From 1 January next year, a minimum pension will be 450 euros, promises Spajić. At least at that moment the minimum wage and pension will be equalized. Logical? Now, 40,000 pensioners receive the minimum pension of 253 euros. As many still have a pension lower than the announced minimum. All of them will receive a raise for which an additional 10 million will be needed from the budget every month (if we calculate “conservatively” that the pension of users who receive between 250 and 450 euros will increase, on average, by 50 euros – but it is realistic that it will be more). Another 120 million annually.

If, however, according to the PzP announcements, the average pension rises to 700, from the current 390 and something, then the state will need almost 400 million more per year (33 million per month) to pay them. In addition to the current 500 or so million. And then if contributions to pension insurance are reduced… The country could be missing one fast freeway every year. Or a hydroelectric plant.

We are coming to the social field. The current Government introduced a one-time aid to parents who receive a newborn of 900 euros. The People’s Coalition proposes to increase the amount – for the second child, 2,400 euros in 24 monthly instalments of 100 euros each. For the third child, 9,000 in 60 monthly instalments (150 per month), for the fourth and each subsequent child 12,000 (200 euros per month for the next five years). It is difficult to estimate this cost, but it can be reasonably assumed that it would not be less than five million per year.

The SNP-Demos coalition has a continuation of this story. They propose/demand that the child allowance (now 30 euros per month) will be increased to 50 euros for the first child and 100 euros for each subsequent child. If half of the children under the age of 18 who currently receive child benefits are singles, then about 6.5 million would go from the budget to increase the child benefit every month, or “only” 77 million per year. The same coalition also proposes extending the maternity leave to 18, or 24 months, from the current 12. And that would take millions from the state budget in the name of refunding the salaries of maternity leave.

The SDP follows up with the request that kindergartens should be free of charge and that all schools have an extended stay for pupils up to the 4th grade and a free snack, with the idea that all schools get kitchens for pupils. We cannot calculate the price of this, it should be noted, a justified request. But the fact that only 32 out of over 160 primary schools in Montenegro in 13 municipalities have an extended stay this school year can help. The rest, for the most part, do not have the spatial capacity for such a thing. And where there is room for accommodation – there are no pupils. And that is the essence of the Montenegrin story. Before and after the elections.

Note: The text can be freely used by all media outlets, with the author’s attribution, as well as being published through the programme of the Centre for Civic Education (CGO), supported by the Core Grant Regional Project SMART Balkan – Civil Society for a Connected Western Balkans, implemented by the Center for the Promotion of Civil Society (CPCD), the Center for Research and Public Policy (CRPM), and the Institute for Democracy and Mediation (IDM), and financially supported by the Ministry of Foreign Affairs of the Kingdom of Norway.

The content of the text is the sole responsibility of the author and does not necessarily reflect the views of CPCD, CRPM, IDM, and the Ministry of Foreign Affairs of the Kingdom of Norway.

Zoran Radulović, journalist of the weekly Monitor