Press Releases 2017 - July
28.07.2017 - Ambassador Kemp Meets Governor Žugić
11.07.2017 - Structural Reforms and Good Governance Leading to Faster Growth
07.07.2017 - ANNOUNCEMENT: Governor Žugić will participate at the international conference "Reaccelerating Convergence in Central, Eastern and Southeastern Europe - The Role of Governance and Institutions"
07.07.2017 - Financial Stability Council estimated the financial system as stable
03.07.2017 - Twelfth session of the CBCG Council held
CENTRAL BANK OF MONTENEGRO
Podgorica, 28 July 2017
Ambassador Kemp Meets Governor Žugić
The Governor of the Central Bank of Montenegro, Mr Radoje Žugić, PhD, received today the newly-appointed British ambassador to Montenegro, Ms Alison Kemp.
Welcoming Ambassador Kemp to Montenegro, the Governor expressed his gratitude for the previous support provided by Great Britain to our country in the process of joining the NATO, as well as for the cooperation between the Embassy of Great Britain and the Central Bank of Montenegro, expecting it to be successful and productive in the future as well.
Montenegro's joining the NATO has significantly expanded the scope of foreign investors' interest in investing in Montenegro, the two concluded, therefore it is realistic to expect further growth in foreign investments, which will contribute to the overall economic progress of our country.
Governor Žugić presented to the Ambassador Kemp the situation in the banking sector and the activities the CBCG implements for preserving the soundness of the banking system and strengthening financial stability.
Ambassador Kemp pointed out that Great Britain strongly supports the development of Montenegro and welcomes the commitment of domestic institutions to processes aimed at stabilizing public finances and strengthening financial stability.
The two agreed that Great Britain and Montenegro have very long and high quality bilateral cooperation and expressed their readiness to contribute, through their engagements, to strengthening these ties, especially in the field of economy.
CENTRAL BANK OF MONTENEGRO
Podgorica, 11 July 2017
Structural Reforms and Good Governance Leading to Faster Growth
The Central Bank of Montenegro Governor, Mr Radoje Žugić, PhD, participates at the international conference „Reaccelerating Convergence in Central, Eastern and Southeastern Europe – The Role of Governance and Institutions” being held in Dubrovnik, and organized by the International Monetary Fund and the Croatian National Bank.
The conference is attended by Ms Christine Lagarde, the Managing Director of IMF as well as a large number of other senior IMF, World Bank and European Commission officials, representatives of the governments of the regional countries and experts in the field of economic policy and institution management.
The participants discussed the current challenges of growth in the countries of Central, Eastern and Southeastern Europe as well as the ways to reduce the gap between these and the countries of Western Europe, at the round table at the highest level and on several thematic panels. It was concluded that good institution management, fight against corruption and the implementation of structural reforms are mechanisms for achieving more dynamic growth that will accelerate convergence and reduce the gap in the level of development of our countries and countries of Western Europe. In particular, the IMF insists on strengthening cooperation with the civil sector, the social responsibility of institutions, and the inclusion of a larger number of women in governance processes.
In his presentation, Governor Žugić showed gratitude to the IMF for its partnership and successful cooperation and pointed out that the business policy of the CBCG is based on the principles of social responsibility and gender equality. "Women make up 60% of the total number of employees in the CBCG, and they are also represented in management positions - in the middle management positions, women make up 45.8%, while at line management level, this percentage is even higher, amounting to 59%," said the Governor Žugić.
As the conference continued, the macroeconomic situation in the countries of the region was also discussed, as well as the measures that are being implemented in order to preserve the financial stability and sustainability of public finances.
CENTRAL BANK OF MONTENEGRO
Podgorica, 07 July 2017
ANNOUNCEMENT: Governor Žugić will participate at the international conference "Reaccelerating Convergence in Central, Eastern and Southeastern Europe - The Role of Governance and Institutions"
The Central Bank of Montenegro Governor, Mr Radoje Žugić, PhD, will participate at the international conference „Reaccelerating Convergence in Central, Eastern and Southeastern Europe – The Role of Governance and Institutions“ which will be held on 10 and 11 July in Dubrovnik.
The conference, organized by the International Monetary Fund and the Croatian National Bank, will also be attended by Ms Christine Lagarde, Managing Director of IMF, as well as a number of other senior IMF, the World Bank, the European Commission officials and representatives of governments of the regional countries, together with experts in the field of economic policy and institution management.
During the upcoming conference, the participants will discuss the current challenges of growth in the countries of Central, Eastern and Southeastern Europe as well as the ways to reduce the gap between these countries and countries of Western Europe. They will also exchange experiences on institutional development and discuss possible models for achieving long-term improvements in institution management.
CENTRAL BANK OF MONTENEGRO
Podgorica, 07 July 2017
Financial Stability Council estimated the financial system as stable
The 35th session of the Financial Stability Council was held today, chaired by Mr Radoje Žugić, Governor of the Central Bank and Chairman of the Council. Other members of the Council also attended the session, Mr Darko Radunović, Minister of Finance, and Mr Branko Vujović, President of the Insurance Supervision Agency Council. Upon invitation, Mr Predrag Marković, Director of Deposit Protection Fund, is present at the Council sessions.
At today's session, the financial stability condition for the first quarter of 2017 was considered. Within this analysis, impacts from the international and local macroeconomic environment, as well as from the financial sector, were considered, including risks and potential vulnerabilities that may have implications for systemic stability.
It was noted that moderate economic growth in the Eurozone countries continued in the first quarter of this year, which is the fourth year in a row that the quarterly growth rates of GDP were positive. As for other influential economies, the US and China are seeing stronger economic growth in the first quarter of this year, while Russia is emerging from a recession, achieving a growth of 0.3% in the last quarter of 2016, after seven consecutive quarters in which there was a decline. In line with these trends, the ECB kept the same level of interest rates, while the FED increased the reference interest rate, which in the future could affect the growth of the EURIBOR value, which is still in the negative zone.
Regarding the domestic macroeconomic environment, the Montenegrin economy achieved real economic growth of 3.2% in the first quarter of this year, according to MONSTAT estimates. It was concluded that the sectors of construction and tourism had a dominant positive impact on the achieved growth.
Also, the announced fiscal consolidation measures will have a strong impact on the expected growth by the year end, which the Council concluded as being adequately and carefully created, and that they achieve a balance between their positive impacts in reducing the fiscal risks in the system and the negative impact of the same aggregate demand and the living standard of the population. The fiscal consolidation burden is allocated to the economy, the population and the public administration, and the savings achieved in the amount of 2.1% of GDP in the next three-year period is positively assessed by the relevant financial institutions. The Council concluded that, when implementing the announced fiscal consolidation measures, it is necessary to take into account the risk of potential growth of the non-observed economy, and therefore continue the activities for its further suppression.
When it comes to the situation in the financial sector, the indicators of stability and quality of operations in the banking, insurance and capital markets are positive and they recorded positive tendencies.
Based on the analysis of the impact of international and domestic factors on the overall economic stability situation, with particular emphasis on the stability of the financial system, the Council concluded that there are positive trends, but that certain risks are still evident. The financial system is rated stable.
CENTRAL BANK OF MONTENEGRO
Podgorica, 03 July 2017
Twelfth session of the CBCG Council held
The Council of the Central Bank of Montenegro held its twelfth session today, chaired by the Governor Mr Radoje Žugić, PhD.
At today's session, the Council adopted the Governor`s Report on Central Bank of Montenegro Business Activities and Policy Implementation for April and May 2017, Central Bank of Montenegro Macroeconomic Report for the first quarter of 2017, as well as the Inflation Report for the first quarter of 2017.
The Governor`s Report for March and April 2017 stated that the activities of the Central Bank in this period were carried out in line with the planned obligations established by the Central Bank's Work Programme for 2017. Total assets of banks at end-May 2017 amounted to EUR 3.9 billion, which is a growth of 2.9% compared to end-2016, that is, 12.2% annually. Total approved loans in the first five months of this year increased by 2.3% compared to the previous month, while compared to May of the previous year they increased by 10.7%. The Council members were particularly satisfied with the fact that banks gave significant credit support to the economy this year. The weighted average lending and deposit interest rates continued to decline, while interest rates on retail deposits grew slightly in April 2017. The average weighted effective lending interest rate on total approved loans at the end-May 2017 amounted to 7.09%, which is a drop of 0.03 percentage points compared to end-April. During the first five months of this year, the banks showed a positive financial result in the amount of EUR 15.5 million.
The Council members found as positive the trends characterized by the situation in public finances, primarily referring to the realization of the fiscal surplus in the amount of EUR 2.8 million in April and the reduction of budget expenditures in April by 18.2% compared to the plan.
At today's Council session, the rational business activities of the CBCG were acclaimed, with expenditures in the first five months of this year being 9% lower than the planned for the mentioned period. The largest savings were made in salaries, severance pays and other income of employees, travel expenses, as well as operating and other business expenses, among which are the costs of telecommunication services, representations, conferences, seminars, etc.
The Council adopted the Macroeconomic Report of the Central Bank of Montenegro for the first quarter of 2017, which gives an overview of the most important developments that characterized the real, fiscal and financial sectors in the previous quarter. According to the available statistical data, most sectors in the economy recorded growth in the one-year comparable period. Except for industrial output, which recorded a 10.9% drop in the first quarter of this year compared to the same period in 2016, growth was recorded in tourism, construction, forestry, air and road transport. Inflation, measured by the consumer price index, amounted to 2.7% in March 2017, while consumer prices recorded a growth of 0.1% in March compared to the previous month. In the first quarter of 2017, the banking sector was stable, liquid and solvent. The continuation of the downward trend in non-performing loans was noted and it was pointed out that they, still, represent the vulnerability of the banking sector at the individual level. The expectation is that the new Law on Voluntary Restructuring of Debts towards Financial Institutions will contribute to further lowering the level of non-performing loans. The increase in the current account deficit in the first quarter of 2017 was recorded in the amount of 10.5% in relation to the same period of the previous year, which is a consequence of intensive investments, especially in the infrastructure. The slight increase in the number of employees was recorded in March this year compared to the previous month, from 0.9%, while the increase in the number of employees compared to March 2016 was 4.5%. Average net salary in March this year amounted to EUR 510, which is an increase of 4.1% compared to the same month of the previous year.
At today's session, the members of the Council discussed and, with certain constructive suggestions, adopted working versions of the Draft Law on Amendments to the Banking Law, the Law on Bank Rehabilitation, as well as the Law on Financial Leasing, Factoring, Micro-Crediting and Credit-Guarantee Operations. The discussed laws, the adoption of the obligations from the EU accession process, as well as the condition for the budget support of the World Bank, were appreciated by Council members. It was pointed out that after the adoption of these laws, the regulatory framework will be significantly improved and harmonized with European standards and the best practices. The members of the Council also got acquainted with the comments provided to the CBCG by the World Bank, which refer to the Draft Law on Amendments to the Law on the Central Bank of Montenegro, giving a high affirmative rating on all issues covered by the Law. Such comments by the World Bank confirmed that the CBCG prepared a law that will allow for full harmonization of the Central Bank operations with the European Union law in this area and its future smooth involvement in the work of the European System of Central Banks.
At today's session, the Council also adopted the Decision on Amendments to the Decision on Minimum Standards for Credit Risk Management in Banks, which preparation was initiated with the aim of strengthening the regulatory solutions related to loan restructuring under the new Law on Voluntary Restructuring of Debts towards Financial Institutions. In this respect, the implementation of this Decision will contribute to a more comprehensive monitoring of the effects of the loan restructuring process.
The Council considered and, with certain amendments, adopted the proposal of the CBCG's opinion on the Draft Law on Amendments to the Law on Investment and Development Fund of Montenegro. Also, the Council adopted the proposal of CBCG's opinion on the Proposal of fiscal strategy of Montenegro 2017-2020. The Council members supported the proposed measures, emphasizing that they were carefully selected and created, respecting the social and overall economic segment and taking into account the competitiveness of the economy, and expressed the expectation that their implementation would have positive effects on the position of public finances, as well as on the real and external sector.
The Council also discussed other current issues under its competence.