CBCG Advisory Board meeting held

05/10/2018

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.