Council of the Central Bank of Montenegro held its 54th meeting
16/12/2019
The Council of the Central Bank of Montenegro (CBCG) held its 54th meeting today chaired by the Governor, Mr. Radoje Žugić.
At today’s meeting, the Council discussed and adopted the Report on the Central Bank of Montenegro Business Activities and Policy Implementation for October 2019. The Report indicates that the activities of the CBCG during this reporting period were implemented in line with planned commitments stated in the CBCG Work Programme for 2019. The report notes that the banking system is stable, secure and without systemic vulnerabilities, expecting that international monetary institutions will confirm such assessment.
The Council adopted the Financial Plan of the Central Bank of Montenegro for 2020, prepared based on the execution of the financial plan for the ten months of 2019 and the projections of expected revenues and expenditures in the coming year. The financial plan, prepared in accordance with the principles of rational and responsible business operations, provides the conditions for achieving the goals and performing the functions of the CBCG.
At today’s meeting, the Council discussed and adopted the Report on Performance of MFIs, Leasing and Factoring Companies as at 30 September 2019. The Report indicates that the microcredit sector recorded the respective quarter-on-quarter growth in Q3 in total capital and liquid assets of 5% and 29.9%, and a decline in gross non-performing loans of almost 2%. The operations of leasing companies were characterised by stability, positive financial result and growth in assets, receivables and capital in Q3 2019. The factoring sector, consisting of only one factoring company, recorded an increase in the total assets and liabilities, total capital and liquid assets of 2.2%, 1.3% and 2.3%, respectively. The Report on Performance of the Investment and Development Fund of Montenegro as at 30 September 2019 indicates that, in Q3 2019, the IDF recorded an increase in total loans of 2.8%, and the decline in gross past due loans over 30 days of 22.3% loan and in past due loans over 90 days of 27.8%.
Today, the Council also adopted the Macroeconomic Report of the Central Bank of Montenegro for Q3 2019. Over the first nine months of 2019, there was an increase in construction (y-o-y growth of 18.7% in the value of executed construction works) and tourism (y-o-y growth of 16.4% increase in tourist arrivals). The Council saw the increase in net y-o-y FDI inflow of 22.5% and a y-o-y decrease in the current account deficit of 3% positive, this being the result of an increase in the surplus in services and secondary income sub-accounts.
The Council adopted the Decision on Amendments to the Decision on the Chart of Accounts for Banks, which provides that banks will start applying International Financial Reporting Standard 16 (IFRS 16 - Leasing) as of 1 January 2020. This standard provides with the obligation to recognise almost all assets with a right of use longer than 12 months with the leasing receiver (lessee) as fixed assets.
The Inflation Report for Q3 2019, adopted today by the Council, stated that consumer prices recorded a slight increase of 0.1% during the Q3 2019. The average CPI (first nine months of 2019 compared to the same period of 2018) was 0.3%, while annual prices in September were 0.2% lower compared y-o-y. The report further states that the model forecast for December 2019 forecast inflation in the range of 0.3% to 1.2%, with the central tendency of 0.8%. The CBCG’s expert assessment is similar to the model assessment and indicates that the inflation at year-end will be range from 0.3% to 1.3%.
The Council adopted the Report on Bank Lending Survey Results for Q3 2019. The survey results indicate that in this period, as compared to the previous quarter, credit standards for the households and corporates eased, which banks saw as the result of increased market competition. As for the next quarter, banks expect further continuation of easing of lending conditions for loans granted to corporate sector, while they expected tightening of standards, especially for granting consumer and other loans.
At today's session, the Council adopted the Decision on issuing the license for the operations to the company for the purchase of receivables “Foldana Financial” Ltd. Podgorica and the Decision on issuing the license to the MFI “Moj kredit” Ltd. Podgorica.
In addition to the abovementioned materials, the Council also discussed other current issues within its competence.