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11/07/2016

The Council of the Central Bank of Montenegro held the 89th meeting presided by the Governor, Mr. Milojica Dakić.

The Council adopted the Governor`s report on the Central Bank operations and the implementation of the Central Bank Policy for May 2016 in which it is noted that the CBCG activities in this period were carried out in accordance with planned commitments set out in the Central Bank`s 2016 Working Program.

The Council analysed and rated the impact of the potential risks from the macroeconomic environment and in the financial system on the state of financial stability and concluded that the financial system is stable, the level of systemic risk moderate.

The Council adopted the Report on the implementation of strategies and operational goals of banks with regard to NPL resolution in the first quarter of 2016. Analysing the efficiency of the underlying strategies, it was estimated that the banks were successful in the application of restructuring options, which resulted in a decrease in non-performing loans of 5.6% at the end of the first quarter of the current year. On the other hand, banks were less efficient when it comes to the option of involuntary NPL resolution.
 
The Council adopted the Q1 2016 Macroeconomic Report of the Central Bank of Montenegro. According to available statistical indicators, most sectors in the economy achieved growth year-on-year. Growth was recorded in tourism, transport, forestry, and construction, while a decrease was recorded in total industrial production. There was an increase in the current account deficit, which was projected keeping in mind the highway construction. The banking system was stable, which is confirmed by the solvency and liquidity ratios that were significantly above the prescribed level. Lending and deposit interest rates continue to decline. It was also assessed that the downward trend of non-performing loans seems encouraging and that it has become less a systemic and more an individual issue. There has been a slight increase in employment in March this year compared to the previous month, as well as compared to March 2015. The average net salary in March this year achieved growth compared to the same month last year, and also compared to the average net earnings in 2015.
 
The Council adopted the Q1 2016 Inflation report. The report indicates that CPI inflation decline in Q1 and stood at -1.3%. Consumer prices declined in March by 0.9% at the annual level. The annual HICP inflation amounted to -0.5% and it was lower than in the euro are (0%). The Central Bank survey showed that most local banks and entrepreneurs believe that the annual inflation in 2016 will range between 1% and 1.5% and 0.5% and 1%, respectively. The expert assessment made by the Central Bank indicates that the 2016 inflation could rnage from -1% to 2%.

The Council was also introduced to the January – June 2016 Banking Ombudsman Report.