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13/03/2021

The Central Bank of Montenegro (CBCG) team, led by Governor Mr Radoje Žugić, and the International Monetary Fund (IMF) mission, led by Mr Srikant Seshadri, held the closing meeting today. During the previous four days, through several video meetings, the IMF mission conducted technical consultations with the CBCG and other competent institutions on the latest economic trends and prospects for the coming period.

“The CBCG measures to mitigate the Coronavirus pandemic effects on population and economy were timely, adequate, and followed the other central banks’ good practice,” said Mr Seshadri. As an institution responsible for maintaining the financial system’s stability, the CBCG has to closely monitor the banking market situation, especially concerning the possible non-performing loans growth after the gradual measures’ withdrawal. Given increased unemployment and the deteriorated real sector’s liquidity and solvency, the CBCG has to act proactively and anticipate should the disorder appear.

Governor Žugić emphasised that the CBCG monitors the quality of banks’ balance sheets daily. Current CBCG measures prevent the rapid spillover of real sector insolvency to banks’ balance sheets. He also noted that, with a high aggregate solvency ratio, the banking system can absorb potential NPL growth that will mostly depend on the real economy dynamics. In that direction, Governor Žugić emphasised the importance of achieving good results in the upcoming tourist season.

The IMF anticipates the implementation of the CBCG’s asset quality review (AQR) project, the results of which will show whether and to what extent the recapitalisation of individual banks is needed. The IMF pointed out the need for the timely creation of plans for possible banks’ recapitalisation, which the CBCG is working on.

Discussing population immunisation activities in Montenegro, the interlocutors agreed that faster and more massive vaccination would contribute to a more rapid economic recovery.

The CBCG representatives thanked the IMF staff for the proposed amendments to the Central Bank of Montenegro Law and provided technical assistance for this ongoing activity.

Mr. Seshadri thanked the CBCG staff for their cooperation and expressed readiness to continue technical support to Montenegro in other areas.