This report covers the key macroeconomic and financial releases as well as the political events from Montenegro for the period of July 6-August 5, 2016. Montenegro’s opposition Reform Action (URA) decided to cancel its power sharing agreement between the ruling Democratic Party of Socialists (DPS) and three opposition parties, and to exit the government. Montenegro will need to invest around €1.5bn by 2020 to meet the criteria of the European Union in terms of environment protection and climate change. Montenegro’s government approved a draft agreement with Czech company Skoda Praga on the construction of the second unit at the Pljevlja thermal power plant at a session on July 11. Qatari CDC International was the sole company to file a bid in the tender for the sale of 4.9 square kilometres of land in the Buljarica municipality. CEAC Holding, owned by Russian businessman Oleg Deripaska, has lost an arbitration with the International Centre for Settlement of Investment Disputes (ICSID) against Montenegro on the bankruptcy of the country’s aluminium smelter KAP. Key points: • The budget deficit shrank 57.4% y/y to €112.8mn in the first five months of 2016 • The number of foreign tourists visiting Montenegro increased by 5% y/y to 171,412 in June • Industrial output increased by 6.1% y/y in June • Bank assets rose 8.5% y/y to €3.51bn at the end of June