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22/07/2022

Economic Policy Recommendations to the Government of Montenegro for the period 2022-2024 were the main topic discussed at the meeting of the Advisory Board of the Central Bank of Montenegro. In addition to the members of this body - distinguished professors, former governors from the region, and former members of the CBCG Council, the meeting was also attended by the current members of the CBCG Council.

The Governor Žugić commenced the meeting with the presentation of the basic elements of the Recommendations to the members of the Board, emphasizing that they had been prepared based on an overview and assessment of the key challenges and risks facing the Montenegrin economy. In order to mitigate the identified risks, the CBCG had created six sets of recommendations, namely: recommendations for an anti-inflation package of measures, recommendations in the areas of fiscal policy, real economy, green economy and statistics, as well as in other areas of importance for the pursuit of economic policy.

The Advisory Board members agreed with the assessment that the global events are very complex and the future remains unpredictable and uncertain. The main sources of risk are connected with the current geopolitical situation, pronounced inflationary pressures, uncertainty regarding the further course of the pandemic, the expected tightening of the monetary policy of the leading central banks, and unfavourable fiscal trends in Montenegro. Against such backdrop, it is necessary to conduct a prudent and targeted economic policy in order to mitigate risks and preserve the standard of living of citizens and the growth potential of the economy. The priority of the economic policy should be measures aimed at curbing inflation and ensuring fiscal sustainability. It was highlighted that fiscal sustainability can only be achieved if fiscal consolidation is accompanied by deep structural reforms, whilst avoiding populist moves. The Board members supported the recommendation to consider the possibility of Montenegro entering into an arrangement with the International Monetary Fund.

After the Advisory Board meeting, the CBCG Council members also held a meeting where they adopted the 2021 Annual Macroeconomic Report of the Central Bank of Montenegro that discusses the progress made in the domestic economy in the reporting year, primarily owing to the growth in tourism, industrial production, trade, construction, and transport. During 2021, the Central Bank adopted six packages of measures (eleven since the beginning of the pandemic) as the support to citizens and the real economy, whilst preserving the stability of the financial system. 

The recovery of economic activity that had begun in 2021 continued during the first three months of the current year when, as indicated by preliminary data from MONSTAT, real growth of 7.2% was recorded and this was stated in the Macroeconomic Report of the Central Bank of Montenegro for the first quarter of 2022. Positive trends in tourism, retail trade, forestry, and transport were the main contributors to this growth. Decline was recorded in total industrial production and construction. The banking sector preserved its liquidity and stability and also engaged in intensive lending activity, as seen in the uptrend of total loans over the reporting period.

The Council also adopted the Reports on Central Bank operations and implementation of the Central Bank Policy in April and May 2022, Decision on statistical data and information submitted by credit institutions to the Central Bank of Montenegro, and Inflation Report for Q1 2022.

The Council also granted a licence to a new company for the purchase of receivables and discussed other issues within their authority.