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Press Releases 2018 - October

31.10.2018 - Babies born during the upcoming week receive the first savings of 400 euros

30.10.2018 - ANNOUNCEMENT: Signing the Agreement on carrying out the "Savings Week" campaign

29.10.2018 - Financial Stability Council meeting held

15.10.2018 - Closing Meetings at the IMF and the WB Annual Meetings Held

13.10.2018 - Delegation of Montenegro continues participation at the World Bank and the IMF Meetings

12.10.2018 - Delegation of Montenegro at the World Bank and the IMF Meetings

10.10.2018 - The CBCG Delegation at the World Bank and the IMF Meetings

09.10.2018 - The CBCG Journal of Central Banking Theory and Practice listed in the Web of Science database

05.10.2018 - CBCG Advisory Board meeting held

05.10.2018 - Thirty-Second Session of the CBCG Council Held


CENTRAL BANK OF MONTENEGRO
Podgorica, 31 October 2018

Babies born during the upcoming week receive the first savings of 400 euros

The Governor of the Central Bank of Montenegro, Mr Radoje Žugić, and the Chief Executive Officers of all commercial banks signed the Agreement on carrying out of the "Savings Week" campaign today, which is being held in Montenegro for the fifteenth consecutive year on the occasion of 31 October - the World Savings Day.

The campaign under the slogan "First step towards the safe future" implies the joint action of giving savings books to children born 31 October through 6 November 2018 in Montenegro. Namely, children born in this period, whose parents open a savings account in one of the Montenegrin commercial banks, will be given 200 euros by the CBCG, and another 200 euros, along with a savings book, by the commercial bank which parents select. In this way, all children born in the mentioned period receive a gift as their first savings, in the total amount of 400 euros. The amount of 400 euros will be deposited for one year, and after the expiration of that period, parents can withdraw money or deposit for savings.

In the past fourteen years, through this campaign, the first savings were given to 1,924 new-borns, for which the CBCG allocated nearly 400,000 euros.

With this action, the CBCG has devised a rich program of educational activities in order to celebrate the Savings Day, which will include a large number of children and young people. Namely, the CBCG representatives will visit several schools during this and next week, in order to explain the significance of savings to the young people and introduce them to basic financial terms and categories.


CENTRAL BANK OF MONTENEGRO
Podgorica, 30 October 2018

ANNOUNCEMENT: Signing the Agreement on carrying out the "Savings Week" campaign

The Governor of the Central Bank of Montenegro, Radoje Žugić, and the Chief Executive Officers of all commercial banks, will sign an agreement on carrying out the "Savings Week" campaign tomorrow, which is being held in Montenegro for the fifteenth consecutive year on the occasion of 31 October - the World Savings Day.

The campaign under the slogan "First step towards the safe future" implies the joint action of giving savings books to children born 31 October through 6 November 2018 in Montenegro. Namely, children born in this period, whose parents open a savings account in one of the Montenegrin commercial banks, will be given 200 euros by the CBCG, and another 200 euros, along with a savings book, by the commercial bank which parents select. In this way, all children born in the mentioned period receive a gift as their first savings, in the total amount of 400 euros. The amount of 400 euros will be deposited for one year, and after the expiration of that period, parents can withdraw money or deposit for savings.

Signing of the Agreement will take place tomorrow, on 31 October, at 11:00 am, in the CBCG Governors' Hall.

All interested media representatives who will attend the event should register at the e-mail address slobodan.raonic@cbcg.me no later than Wednesday, 31 October, by 10:00 am.


FINANCIAL STABILITY COUNCIL
Podgorica, 29 October 2018

Financial Stability Council meeting held

The forty-first session of the Financial Stability Council was held today. It was chaired by Radoje Žugić, Governor of the Central Bank and the Chairman of the Council. All other members of the Council were present at the session: Darko Radunović, Minister of Finance, Branko Vujović, President of the Council of the Insurance Supervision Agency, and Zoran Djikanović, President of the Capital Market Commission. Upon the invitation, Predrag Marković, director of the Deposit Protection Fund, is present at the meetings of the Council.

At today's session, the information on the state of financial stability for the second quarter of 2018 was considered, as well as the current issues under the competence of the Council.

Continuity of positive quarterly growth rates of GDP in Montenegro continued, which positively affected systemic risks. Positive signals, in terms of economic growth, come from the region and the wider environment (euro area).

The economic indicators for the first six months of 2018 show a stronger continuation of positive developments from the previous year. Namely, during the first two quarters of 2018, significant growth was registered in most sectors in relation to the same period of 2017. The volume of activities in construction, trade, tourism and industry has increased, where a particularly high growth was recorded in the energy sector (117.8%). Estimated real growth rate in the first half of the year was about 4.7%, based on quarterly estimates.

Positive trends were recorded also in certain fiscal indicators, thus, the original budget revenues for the first two quarters of 2018 were 12% higher than in the comparative period of the last year. Concerning budget expenditures, they are 7.9% higher than in the same period of the previous year, while 4% lower than the plan. The growth of expenditures is a consequence of higher realization of the capital budget in relation to the same period of 2017.

It was estimated that effects of fiscal consolidation are visible, which affected, among other things, the recent improvement of the credit rating of Montenegro by Moody's agency (in September this agency changed Montenegro's prospects from "stable" to "positive"). The control of fiscal risks and the accompanying structural reforms are currently key activities to preserve fiscal, and consequently, financial stability over the medium term.

It was noted that the indicators of stability and quality of operations at the banking, insurance and capital markets are positive and they record positive tendencies.

At the end of the second quarter of 2018, the total assets of banks amounted to 4.31 billion euros and it grew by 4.3% on a quarterly basis. The credit activity of banks, measured through new loans, amounted to 609.5 million euros in the first six months of 2018, which is 6.9% more than in the same period of the previous year.

The members of the Council discussed the preliminary results of supervision of two banks with some vulnerabilities present and discussed the possible impact of risk materialization in these banks on the overall system.

Based on the analysis of the impact of all mentioned factors on the overall economic stability, with particular emphasis on the stability of the financial system, the Council concluded that the financial system is relatively stable and that there are risks of moderate intensity.


CENTRAL BANK OF MONTENEGRO
MINISTRY OF FINANCE
Podgorica, 15 October 2018

Closing Meetings at the IMF and the WB Annual Meetings Held

Delegation of Montenegro held closing meetings at the IMF and the World Bank Annual Meetings.

At the meeting with Johannes Mueller, Deputy Director of the IMF Statistics Department, the Delegation expressed satisfaction with the quality of technical assistance received in the field of statistics on government financial positions, financial stability indicators, balance of payments statistics, monetary and national accounts. Further improvement of statistics in these areas will create conditions for a more quality and more informative adoption of fiscal and structural policies.

At the meeting with Gerd Swartz, Director of the IMF Fiscal Affairs Department, further technical assistance was agreed in the field of conducting analysis for possible reduction of public sector wage, analysis of the design of social benefits, cash management and outstanding liabilities. The importance of future cooperation in creating an institutional framework and strengthening the capacity of the Ministry of Finance in the implementation of the Law on Public-Private Partnership was particularly emphasized, with the aim of controlling and minimizing fiscal and residual risks that can arise out of these projects.


CENTRAL BANK OF MONTENEGRO
MINISTRY OF FINANCE
Podgorica, 13 October 2018

Delegation of Montenegro continues participation at the World Bank and the IMF Meetings

The Delegation of Montenegro, led by the Minister of Finance, Darko Radunović, and the Governor of the Central Bank of Montenegro, Radoje Žugić, continued its participate in the annual Meeting of the IMF and the World Bank.

The delegation participated at the conference on the presentation of the “Regional Economic Outlook” report. During the conference, chaired by the President of the European Department of the IMF, Poul Thomsen, it was stated that economic expansion is expected to continue, yet at a slower pace due to growing risk. The key sources of risk include external demand weakening, higher fuel prices and business cycle slowdown in Europe. It was concluded that growth slowdown could be expected, yet with a still relatively high growth. The recommendation for conducting economic policies is to “build” space for the monetary and fiscal policy manoeuvre gradually.

The Vice-President of the World Bank, Cyril Muller, pointed out that Montenegro is facing less challenges today than in the previous period, and that structural reforms are needed to fully support fiscal consolidation. He particularly emphasized the confidence built between the World Bank and the Montenegrin institutions pointing out that almost all conditions for the approval of the second part of development policy guarantee had been met regarding the fiscal measures and financial stability. Muller also said that the previous project of granting development policy guarantees was one of the most successful ones and that they would try to transfer positive experience from Montenegro to other countries. The meeting also discussed current projects in the area of waste management, tax administration reform and support to the process of public sector optimising. Minister Radunović emphasized that the Government of Montenegro is working on the implementation of structural reforms both to obtain the second part of the development policy guarantee and to strengthen economic growth. Governor Žugić pointed out that the banking system was stable, liquid and profitable and that, for the first time, the level of assets exceeded the level of GDP.

At a meeting with the Executive Director of the Dutch Constituency at the World Bank, Frank Heemskerk, the delegation discussed further European integration processes. The Government of Montenegro received full support for giving airports under concession, taking into account to select a reputable concessionaire bearing in mind all potential risks.

In the afternoon, a bilateral meeting was held with Poul Thomsen, the Director of the European Department of the IMF. At this meeting, Minister Radunović pointed out that the macroeconomic stability of Montenegro strengthened, and he presented high economic growth rates in 2017 and the first half of 2018, as well as indicators of budget revenues increase. Governor Žugić informed Mr. Thomsen on the significant improvements in the financial system. They also discussed the possible IMF technical assistance for further banking system improvement.

Our delegation also met the Treasurer General of the Ministry of Finance of the Netherlands, Christian Rebergen. The topic of the meeting was Montenegro’s EU accession process.


CENTRAL BANK OF MONTENEGRO
MINISTRY OF FINANCE
Podgorica, 12 October 2018

Delegation of Montenegro at the World Bank and the IMF Meetings

As the World Bank and the IMF annual meetings continued, the delegation of Montenegro, headed by the Governor of the Central Bank of Montenegro, Radoje Žugić, and the Minister of Finance in the Government of Montenegro, Darko Radunović, had a number of meetings today.

In addition to the plenary session of the World Bank and the IMF, which was opened by the President of the Republic of Indonesia, Joko Widodo, the delegation had several bilateral meetings.

At a meeting with the Executive Director of the Dutch-Belgian Constituency of the IMF Board, Anthony de Lannoy, and his deputy, Richard Doornbosch, Governor Žugić pointed to the fact that the economic growth achieved in Montenegro is higher than expected and that the financial and macroeconomic situation in the country has been significantly improved. He also emphasized that the level of non-performing loans in the banking system continued to decline, and that they now pose a challenge to individual banks only.

Minister Radunović said that accelerated economic growth should be used for the implementation of structural reforms, which are very important.

Anthony de Lannoy pointed out that "he is very pleased to confirm that the economic situation in Montenegro has been significantly improved" and, as the meeting continued, he introduced to our delegation the new head of the IMF mission to Montenegro and offered technical assistance in areas that are assessed priority.

The delegation met with the Deputy Director of the Monetary and Capital Markets Department (MCM) of the IMF, Mr Savastano. The exceptional cooperation with the Ministry of Finance in the public debt management segment was underlined at this meeting. In this regard, the quality of technical cooperation with Montenegro was especially praised in the MCM report for the past year and considered as one of the best examples of coordination. The possibility of continuing technical cooperation in the field of development of the domestic capital market was discussed, along with maintaining careful relations of the banks' exposure towards the State and with further improvement of the Debt Management Strategy. In order to further develop the financial system, technical assistance was requested for the improvement of consolidated supervision and the development of mechanisms for the banks’ resolution.

In the afternoon, the delegation also met representatives of the NRW Bank, headed by Executive Director, Frank Richter, who discussed the current situation in international financial markets, as well as the management of foreign exchange reserves. Discussions with representatives of the De la Rue Company with regard to cash management and safekeeping also continued.  

As for the meeting with the Executive Director of the International Finance Corporation for Europe and Central Asia, Ms Wiebke Schloemer, Minister Radunović expressed satisfaction with the significant increase in the IFC's portfolio in Montenegro, especially in the area of infrastructure and financing of local government projects. Particular emphasis was given to the quality of expert assistance provided by IFC on the Montenegro Airports concession project. It was pointed out that the adoption of the new Law on Public-Private Partnership opens new possibilities for cooperation with Montenegro, since the IFC has a huge comparative advantage in the implementation of public-private partnerships.

Our delegation, together with the representatives of the other 14 member countries, also participated in the meeting of the Dutch-Belgian Constituency, where the latest global macroeconomic trends and their impact on the Member States were analysed.


CENTRAL BANK OF MONTENEGRO
Podgorica, 10 October 2018

The CBCG Delegation at the World Bank and the IMF Meetings

Delegation of the Central Bank of Montenegro, consisting of the Governor Radoje Žugić and Vice-Governor Nikola Fabris, is participating at the annual meeting of the International Monetary Fund and the World Bank, being held in Indonesia, Bali.

During the first day of the meeting, Governor Žugić and Vice-Governor Fabris met with several IMF and the World Bank officials, with whom they exchanged views on the economic situation both in Montenegro and globally.

The delegation also met with Governor of the Bank of Indonesia, Perry Warjiyo and several governors of the Asian countries, as well as representatives of DeLa Rue Company, Damian Kwaitokowski and Michael Wilson. The so far cooperation and the possibilities for its extension in the areas concerning cash and its protection were discussed.

Over the next four days, the delegation will meet with a number of senior officials, such as Deputy Managing Director of IMF, Tao Zhang, World Bank Vice President Cyril Muller, Executive Director of the Dutch Constituency in the World Bank, Frank Heemskerk, Executive Director of the Dutch-Belgian Constituency in the IMF Board, Anthony de Lannoy and others.

The IMF and the World Bank annual meetings end on Sunday, 14 October.


CENTRAL BANK OF MONTENEGRO
Podgorica, 09 October 2018

The CBCG Journal of Central Banking Theory and Practice listed in the Web of Science database

The Scientific and expert Journal of the Central Banking Theory and Practice issued by the Central Bank of Montenegro was listed at the Web of Science (WoS) platform released by Clarivate Analytics (former Thomson Reuters Intellectual Property and Science Business).

Although there are different lists for indexing scientific journals, Clarivate Analiytics lists are the strictest and least populous, according to rigid criteria of the selected scientific journals. For this very reason, the journals this exclusive institution evaluates are considered to be the most significant in the scientific world.

Based on editorial evaluation, the Journal of Central Banking Theory and Practice will be included in the ESCI (Emerging Sources Citation Index), one of four indices by which the Clarivate Analytics classifies journals.

Adding the Journal of Central Banking Theory and Practice to the Web of Science database is a confirmation of the enviable quality and credibility of this edition and is a great success, especially given the fact that this magazine does not have a long tradition, i.e. it is being published only six years so far. Another special feature of this journal is the fact that it published the works of authors from all continents.

Editorial members of this journal are numerous distinguished and world-renowned professors and experts in central banking, as well as the governors of central banks of the developed European countries. Chief Editor of the journal is the CBCG Governor, Radoje Žugić, while the Honorary President of the Editorial is Finn E. Kydland, Nobel Prize winner for economics.

Inclusion in this database allows for greater visibility of the journal and availability of works, as well as monitoring of their citation. In addition to the ESCI list of Clarivate Analytics, the Journal of Central Banking Theory and Practice is also listed in 29 indexing lists, among which one should certainly distinguish Scopus, Ulrich and Cabell's Directory list.


CENTRAL BANK OF MONTENEGRO
Podgorica, 05 October 2018

CBCG Advisory Board meeting held

The Central Bank of Montenegro’s Advisory Board, whose members are esteemed professors, former governors from the region as well as the CBCG Council members meeting was held today. As an advisory authority of the CBCG, the Board follows modern trends in the area of monetary policy and financial stability at the global level, paying attention particularly to their potential effects on the financial system of Montenegro, and considers systemically important issues related to accomplishing objectives and executing functions of the CBCG. Today’s meeting was chaired by Mr Asim Telaćević, a former member of the CBCG Council.

The main topic of today’s meeting referred to the Economic Policy Recommendations that the CBCG gives to the Government of Montenegro with a view to fostering the growth potential and promoting overall stability of the system.

Governor Žugić introduced the Board members to the essential elements of the Recommendations for 2019, emphasising that they point to a need for further developing domestic business environment, reducing red tape, and boosting productivity and businesses’ competitiveness. “Creating these Recommendations, special consideration was given to the comments from businessmen and investors operating in Montenegro, as well as to the opinions of relevant domestic and foreign institutions”, the Governor stated.

It was noted that the Government has adequately devised fiscal consolidation measures and that it is implementing them courageously and decisively, although they are unpopular and difficult. Considering the evident positive effects of these measures in the area of fiscal policy, the Board members specifically stressed the need to address the vulnerability of the real sector. In that regard, the Board members find that the Government’s economic policy should focus on further improving the business environment, encouraging activity in the priority sectors of the economy and promoting new employment, especially of the youth, since Montenegro is characterized by  adverse demographic trends. Doing so will contribute to creating new value, reducing the burden of existing debts, increasing system liquidity, and releasing the growth potential.

The Board also found that fiscal consolidation, although effective, will not suffice to ensure long-term economic growth and development unless accompanied by the implementation of structural reforms. They represent a key component of increasing the quality of life in the country and should be the focus of economic policy. The members of the Board agreed that an efficient institutional environment, a flexible labor market, a sustainable pension and health system and, in particular, effective education should be created to this end.

The members of the CBCG Council attended the meeting of the Advisory Board.


CENTRAL BANK OF MONTENEGRO
Podgorica, 05 October 2018

Thirty-Second Session of the CBCG Council Held

The Council of the Central Bank of Montenegro held its thirty-second session today, chaired by the Governor, Radoje Žugić.
 
The Council considered and adopted the Report on Central Bank of Montenegro Business Activities and Policy Implementation for August, which presents the key activities of the Central Bank during the mentioned month. It was noted that the activities of the Central Bank conducted in August 2018 were implemented in line with the planned commitments established by the Central Bank Work Programme for the current year.

The Council also considered the Macroeconomic Report of the CBCG for the Second Quarter of 2018. It was noted that the economic indicators for the first six months of 2018 indicate a continuation of positive developments from the previous year and that all of those are above the projected values. Specifically, in the first two quarters of 2018, significant growth was registered in most sectors year on year. The volume of activities increased in the construction, industry (significantly high growth was recorded in the energy sector), trade, transport and tourism.  

The banking sector in Montenegro at the systemic level is characterized by stability, liquidity and solvency. Non-performing loans (excluding interest and accruals) amounted to 205 million euro at end-June and accounted for 7% of total loans (the downward trend in non-performing loans continued, therefore the share of NPL’s decreased to 6.75% at end-August). It was concluded at the Council session today that although having a downward trend, non-performing loans still present the vulnerability of the banking system, at the individual rather than at the systemic level.   

The average weighted effective interest rate on total loans continued the perennial downward trend, reaching a historical minimum value of 6.47% in June 2018. Compared to December 2017, the average weighted effective interest rate was lower by 0.34 percentage points, while compared to June 2017, it recorded a decrease of 0.59 percentage points. It was concluded that interest rates continue to represent a high expenditure for treating the vulnerability of the real sector.

It was noted in the Inflation Report Quarter II 2018 that inflation was on the increase as a result of higher excise taxes on tobacco products, the global oil price growth, which also affected the rise in fuel prices in Montenegro, as well as the increase in the VAT rate.

As for inflationary expectations, a survey conducted by the CBCG shows that most banks and companies expect inflation between 2.5% and 3%. The surveyed banks and companies expect further decline in interest rates and production and investment growth, which will have an anti-inflationary impact.

The model estimate for end-2018 forecasts inflation in the range from 2.4% to 3.6%, with a central projection of 3%. A very similar is the CBCG expert estimate, which projects inflation in the range of 2% to 4% with a central projection of 3%.
 
The Council also discussed other current issues under its competence at the session held today.

 

 

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