Structural Adjustment Credit 2 (SAC 2) (Montenegro)

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The Second Structural Adjustment Credit (SAC) for Serbia and Montenegro aims to build on and consolidate a number of reforms supported under SAC 1 and under programs supported by other donors. SAC 2 also aims to launch initial reforms in the health sector. The operation proposes to cover four broad policy areas (i) consolidating reforms in the financial sector; (ii) implementing the restructuring of the energy sector; (iii) continuing the implementation of pension reforms and initiating health sector reforms; and (iv) strengthening the transparency, accountability, and effectiveness of public administration. The financial sector reforms would help to promote growth through increased (and increasingly efficient) financial intermediation. Pension, health and public administration reform would ultimately support ongoing fiscal consolidation. Energy sector reforms would support both growth and fiscal consolidation by overcoming episodes of supply shortfall and ensuring the financial self-sufficiency of energy utilities. Increased institutional transparency and accountability and increased focus on implementation capacity are themes thread through each of the five policy areas.