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19/01/2018

The Council of the Central Bank of Montenegro held its session today, adopting the following materials: Governor`s Report on Central Bank of Montenegro Business Activities and Policy Implementation for November 2017, Macroeconomic Report of the Central Bank of Montenegro for the Third Quarter of 2017 and the Inflation Report Quarter III 2017.
 
Governor`s Report on Central Bank of Montenegro Business Activities and Policy Implementation for November 2017 noted that the activities of the Central Bank during this period were carried out in line with the commitments established by the Central Bank of Montenegro Work Programme for 2017.

The Council adopted the Macroeconomic Report of the CBCG for the Third Quarter of 2017, giving an overview of the most important developments characterized by the real, fiscal and financial sectors in the mentioned period. According to the available statistical data, the Montenegrin economy achieved significant growth in the first nine months of the previous year compared to 2016. The intensified activities in the construction of a number of infrastructure projects in construction and energy industry, as well as a significant increase in tourism indicators, contributed to GDP growth, which would amount to around 4% in 2017 according to the CBCG estimates.

Except for industrial output, which recorded a 6.7% decline in the first nine months of 2017 compared to the same period in 2016, growth was registered in the sectors of tourism, construction, forestry, air and road transport.

The banking sector was stable, liquid and solvent in the first three quarters of 2017. The quality of the assets of the banking sector recorded an improvement, with a significant decrease in the amount of non-performing loans, amounting to EUR 199.9 million at end-September 2017, which represented 7.4% of total loans. Compared to December 2016, non-performing loans decreased by 19.6%, this being 21.6% on the annual level. The Council members assessed that the implementation of amendments to the Law on Voluntary Financial Restructuring of Debts towards Financial Institutions contributed to the reduction of the level of non-performing loans. Lending and deposit interest rates continued to decline in the nine months of the previous year.

According to preliminary data, a decrease of 9.2% in the balance of payment current account deficit, was recorded from January to September 2017 when compared to the same period in 2016, which is the result of an increase in the surplus on the account of services, owing to revenues from tourism and transport, as well as positive developments in the primary and secondary income accounts due to the growth of remittances received from abroad.

Net inflows of foreign direct investments in the first three quarters of 2017 amounted to EUR 311.7 million, being an increase of 10.6% compared to the same period of 2016.

The number of employees in the first nine months of 2017 was 3.4% higher than in the same period of 2016, while the number of employees in September 2017 compared to December 2016 was 4.1% higher.

According to the expert assessment in the Inflation Report Quarter III 2017 the inflation rate in 2018 will range from 1.75% to 3.75%, with a central projection of 2.75%. The CBCG model projection shows that CPI inflation will vary from 1.3% to 3.6%, with a central tendency of 2.5%, depending on the month.

The Council also discussed other current issues within its mandate at today's session.