Delegation of the CBCG at the meeting with the ECB

10/10/2019

The delegation of the CBCG, headed by Governor Radoje Žugić, attended the High Level Meeting with the European Central Bank (ECB) held in Frankfurt today. The head of the ECB delegation was Benoît Cœuré, a member of the Executive Board.

Governor Žugić presented the latest data on Montenegro’s economy to the ECB representatives, primarily focusing on the banking sector’s condition.

“Montenegro’s economy has been continuously growing over the last six years. According to MONSTAT official data, Montenegro recorded a 5.1% growth rate last year, owing primarily to strong investment activity in both public and private sectors, and to growth in domestic demand and private consumption” said Governor Žugić. “Positive trends have also been recorded in fiscal area due to fiscal consolidation measures the Government is implementing decisively,” added Žugić, pointing out that the Ministry of Finance’s projections point to a downtrend this year.

Governor Žugić noted that the condition of the banking sector has strengthened after resolving issues related to vulnerable banks, as evidenced by outstanding indicators of key balance sheet items in 13 banks operating in Montenegro. The banks’ assets, amounting to 4.6 billion euros, is at its historical maximum, and the extremely high solvency ratio of 19.5% confirms the system’s stability. Non-performing loans are continuously decreasing and currently stand at 4.75% of total loans, showing a significant decline compared to 2011 when, as Governor Žugić reminded, the NPL ratio amounted to 25.9%. Interest rates continue to decline. Despite their low interest rates, deposits are rising, confirming the confidence in the banking system.

The meeting also focused on activities of the CBCG on the implementation of the planned Asset Quality Review of the banking system (AQR), further strengthening of supervision, especially in the prevention of money laundering, and payment system modernisation.

As the meeting continued, the Vice-Governors of the CBCG, Nikola Fabris and Miodrag Radonjić, presented to the ECB representatives macroeconomic trends in Montenegro, the status of our country’s negotiations with the European Union, as well as international reserves management and the effects of the CBCG's monetary policy.

During the dialogue, the discussion topics also included the economic situation and development of the banking sector in the euro area, as well as the ECB's monetary policy.

The ECB offered all forms of support to the CBCG in the monetary policy area, and particularly in the area of supervision.

High Level Dialogue is regularly held between the ECB and the central banks of the candidate countries for EU membership aimed at preparing these countries for membership into the European System of Central Banks.