By its geographical position, Montenegro belongs to the central Mediterranean, that is Southern Europe. The north border of the Republic of Montenegro is with the Republic of Serbia. On the southeast, it borders with Albania. On the south, it is separated from Italy by the Adriatic Sea, whereas its western neighbors are the former Yugoslav republics of Croatia and Bosnia and Herzegovina.

Montenegro is a democratic, welfare and ecological state. Montenegro is a republic and is a constituent state of the Federal Republic of Yugoslavia.
Montenegro is sovereign in all matters which it has not transferred to the jurisdiction of the Federal Republic of Yugoslavia. Sovereignty is vested in the citizens, who exercise their sovereignty directly and through their freely elected representatives. Any change in the status of the state, a change of the form of government and/or any change of frontiers is decided upon exclusively by the citizens in referendums.
No authority shall be either established or recognized which does not result from the freely expressed will of the citizens.
The state is founded on the rule of law. The exercise of authority shall be in conformity with the Constitution and Law.
The government of Montenegro is organized according to the principle of the division of powers into legislative, executive and judicial. Legislative power is vested in the Assembly, the executive power in the Government, and the judicial in the courts of law.
Montenegro is represented by the President of the Republic.


13 812 km2

Largest city and capital:


Prijestonica (former capital/seat of king/government):


Population (estimate mid 1998):

650 575


Geographic extreme points


43° 32’ SGS
18° 58’ IGD


41° 52’ SGS 
19° 22’ IGD


42° 53’ SGS 
20° 21’ IGD



293,5 km

Land borders:

614 km

With Hrvatska:

14 km

With Bosna i Hercegovina

225 km

With Srbija:

203 km

With Albanija:

172 km

Longest beach:

Velika plaza(Long Beach)Ulcinj-13,000m

Highest peak:

Bobotov kuk(Mt.  Durmitor)-2.522 m

Largest lake:

Lake Skadar - 391 km2

Deepest canyon:

The Tara River - 1.300 m

Largest bay:

Boka Kotorska(The Bay of Kotor)

National parks:



- Durmitor - 39.000 ha
- Lovcen - 6.400 ha
- Biogradska gora - 5.400 ha
- Lake Skadar - 40.000 ha

World heritage under the UNESCO protection:

- Mt. Durmitor with the Tara canyon
- Kotor - the old City



Until several years ago, Montenegro was the country whose economy was based on the public (socially-owned) property. Since such a concept of ownership has proved to be inefficient, the process of privatization of economy was initiated. Despite the very difficult and in many instances specific conditions in which the process was taking place, the results gained fully justify the efforts. The necessary legislation was adopted and The Privatization Council founded as the Government's body responsible for managing the process of privatization. The intention is to carry out the process in two ways:
1. The sale of shares to strategic investors- Selling shares by means of international tenders is one of the strategic moves to accelerate the entire process of privatization. It is planned to offer the shares of some thirty Montenegrin companies for sale through the international tendering procedure.
2. Mass voucherisation (MVP) as a privatization model, which, besides accelerating the process of privatizing economy, stimulates the development of the capital market and financial institutions. The Act Of Modifications Of And Supplements To The Act Of Privatization Of Economy provides that all the citizens of age of the Republic of Montenegro be entitled to vouchers. For the MVP process, around 2.3 billion DEM was apportioned from the Development Fund and from the shares of the state capital.

Potentials by sector

1. Industry
Over the last 50 years, industry has been the chief carrier of the economic development of Montenegro. In that period, the growth of the power industry, metallurgy (steel and aluminum), and transport infrastructure were making the basis for the overall development. The industrial facilities had been sized to the needs of the previous Yugoslavia so that 90% of the produce of Montenegro was marketed outside the Republic.
Thus, Montenegro presently has at its disposal the facilities for producing 400,000 tons of crude steel; 1,000,000 tons of bauxite; 280,000 tones of alumna; 100,000 tons of aluminum; 75,000 tons of sea salt; 2,700,000 tons of coal; while the power plants (hydro-electric power plants of Perucica and Piva, and the thermoelectric power plant of Pljevlja) produce around 3 bn KWh per year.
Such a basic economic structure is supplemented with a variety of industries - metal-processing, engineering, wood-processing, textile, chemical, leather and footwear, ready-made clothes, household appliances, construction and forestry machines - as well as with significant capacities of the building trade.
Moreover, there are considerable capacities of industrial processing and finishing of agricultural products: abattoirs; fish-processing plants; flour mills with grain silos; dairies; bakeries; breweries and juice factories; fruit processing factories; grape processing plants and wine cellars; medicinal herbs processing plants; tobacco/cigarettes industry; confectioners, etc.
Due to isolation of FRY and the war waged in its neighborhood, the state in this sector of economy is poorer than before, but with adequate investments and modernization of the production programs the outputs can within a relatively short period of time again become competitive in the world market.

2. Agriculture
Agricultural lands and water resources are well preserved from the industrial pollution and thus provide for the production of healthy (organic) foods, particularly meat (poultry, lamb, goat, veal/beef); then milk and dairy produce; honey; fish; vegetables (tomato, pepper, cucumber, and other); fruits (plum, apple, grapes, citrus fruits, olive); high quality wines (Vranac, Krstac, and others); as well as naturally pure potable water of superior quality (tested to the highest world's standards). Growing on the Montenegrin soil are some specific herbs such as "forest fruits" (blueberries, edible mushrooms) and wild medicinal herbs, especially sage (Salvia officinalis), whose exceptional properties are known throughout the world.
Forests and woodlands cover the area of 720,000 ha, thus making 54% of the total surface area of the Republic; of these, the major part (572,000 ha) is in the north-east.

3. Maritime economy and transport
Montenegro has a fleet of more than 40 ships, with the total carrying capacity of 1,000,000 tons. The Port of Bar, at the entrance to the Adriatic, is equipped for handling the cargo of around 5 million tons annually. In the immediate hinterland of the Port is the Free Trade Zone, offering broad possibilities for the development of manufacturing and service activities and for the construction of warehouses, from which the goods can be easily transported by sea or by Bar-Belgrade railroad and further to the Central Europe. The road network of Montenegro is 5,227 km, of which 1,729 km are modern arterial and regional roads while the rest are local. The total length of the normal-gauge railroads is 250 km, electrified on their most part. The railway junction in Podgorica connects the inland with the Adriatic sea via (the Port of) Bar, whereas the railroad Podgorica-Bozaj connects Montenegro with the neighboring Albania.
Montenegro has two airports, in Podgorica and Tivat.

In recent years, the pace of economic reform has been slow and the rate of economic recovery has been gradual.
Montenegro achieved real GDP growth of over six per cent in the first half of 2006. Growth to varying degrees has occurred in all sectors of the economy: industrial production, tourism, forestry, construction and transportation. Industrial output growth has been low due to supply problems in the energy sector. However, excluding the energy sector, industrial output recorded almost five per cent growth in 2005. Tourism continues to be a significant and rapidly growing part of the Montenegrin economy. The number of tourists (domestic, Serbian and from other countries) visiting Montenegro in the first quarter 2006 increased by over 35 per cent in comparison to the same period in 2005.
Foreign direct investments (FDI) reached €228 million during first eight months of 2005. Portfolio investments in 2005 reached €5.8 million. The reform of the banking sector in 2005 is also starting to bring results in the form of greater lending ability and higher private and commercial savings.
Montenegro’s foreign trade deficit continues to be a problem, as the volume of imports is roughly twice the volume of exports. During the first eight months of 2005 the Montenegrin foreign trade deficit went up 13 per cent to €193 million. Imports fell to €389 million with exports dropping to €196 million. The majority of exports were raw materials and semi-finished products including aluminium, steel, alcohol beverages, tobacco, and processed lumber, while the largest category of imports were machinery and motor vehicles worth €86.4 million. Serbia was Montenegro’s largest trading partner in the first half of 2005, recording exports of €141 million and imports worth €71.2 million.
Montenegro uses the euro as legal tender. The inflation rate in 2005 reached 1.8 per cent and 3 per cent inflation is forecast for 2006.
The unemployment rate in 2005 in Montenegro was around 23 per cent, slightly lower than the previous year. There are currently 59,000 registered unemployed persons; however, there is a large shadow economy and a lot of hidden unemployment.