Economic measures for mitigating the pandemic effects
19/03/2020
The Government of Montenegro adopted today new measures aimed at facilitating the lives of citizens and assisting economy during the coronavirus pandemic, urging citizens to abide by measures and to show solidarity.
Prime Minister, Duško Marković, the Governor of the Central Bank of Montenegro (CBCG), Radoje Žugić and Chairman of the Board of Directors of the Investment and Development Fund (IRF), Zoran Vukčević, said at a press conference following the 162nd Cabinet session that the measures adopted so far were timely, the financial system was secure, and that the economy will be supported as much as possible.
“Until recently, our country was the only country in Europe not affected by the virus. We have resisted thanks to the timely decisions we have made, and we will continue to do so now that we have the first cases of the virus. The orders and recommendations had to be resolute. The further development of the situation challenges our citizens and the economy and causes consequences. For this reason, I requested that the departments, in cooperation with the Central Bank, prepare a set of comprehensive measures for citizens and the economy to mitigate the impact of the coronavirus. The Government has just adopted these measures,” Prime Minister Marković said.
The Prime Minister said that this is the moment when everyone - the state, the economy and the citizens - must share the burden, because that is the only way we can succeed.
“We already have bright examples of those who offered their hotel and tourist facilities and other resources free of charge for quarantine accommodation, and those who pay assistance to a specific account. We are grateful to them. That is why I urge and expect from every company to direct part of its accumulated profit to remedy the consequences of the crisis we will suffer; to protect the standard of living of its employees; that citizens subordinate their comfort and their habits, including their expenses to their health and the health of their loved ones. That way every citizen will contribute to the whole society," the Prime Minister said.
CBCG: No reason to panic and fear
The Governor of the CBCG, Radoje Žugić, informed the public that, as the result of the communication between the CBCG, the Government, and commercial banks, the CBCG Council adopted measures to remedy the effects of the adverse impact of the coronavirus pandemic on the Montenegrin economy.
He specified that the Council’s Decision defines the halt on payment of all obligations of citizens, entrepreneurs, companies and all loan users (moratorium) as the first point, and all that refers to interest, principal, commissions and other elements related to debts to banks.
“With record liquidity of banks (close to one billion euros), and hundreds of millions of euros of additional liquidity, my message to citizens is: do not worry about your deposits, deposits are safe, banks are stable, safe, highly liquid, and we have additional resources financing. There is no reason to panic and produce fear,” said Governor Zugic.
He said that we have made a step ahead compared to comparative systems – flexible loan restructuring.
“This means that when banks restructure a loan, and only potentially collectible loans are restructured, such loan is treated as a new loan that does not require new costs from banks, new burdens based on new provisions. With these elements, we have abolished the due day criterion. Based on that, banks have the room, in cooperation with their clients, to make longer periods after the expiration of the 90-day period, or possibly also decrease interest rates, in support of preserving the real economy. To be able to approve these benefits for clients, the bank has to be provided the evidence: for citizens, anyone who loses their job, anyone whose salary is late, everyone whose salary is reduced is entitled to the second phase of loan restructuring - the first phase is mandatory. For companies, the proof is the negative impact of the pandemic on business, especially on SMEs, but also for large companies”- said the CBCG Governor Radoje Žugić.
Government measures
The measures adopted today by the Government, and presented by the Prime Minister are:
1. Postponement of the repayment of loans at the request of citizens and economy with all banks, micro-credit institutions and the Investment and Development Fund for 90 days.
“It is necessary for our banking sector to provide the highest degree of administrative efficiency so that everyone who wants to exercise this right can easily do so. I am convinced that banks have the potential to do this,” the Prime Minister said.
2. Postponement of payment of taxes and contributions on earnings as well as obligations under the Law on Rescheduling of Tax Claims.
3. Credit line intended to improve the liquidity of entrepreneurs, micro, small, medium-sized and large enterprises up to a maximum amount of 3 million euros per beneficiary, by a simplified procedure, no approval fee and an interest rate of only 1.5%. “These funds are intended for companies operating in the field of procurement of medicine, medical equipment and vehicles; tourism and catering; traffic; services; food production and processing,” the Prime Minister said.
4. Provision of one-off financial assistance to the pensioners with the lowest pensions and beneficiaries of material assistance of EUR 50 each. To this end, the Government allocated today 1 million euros.
5. Postponement of payment of lease of state-owned real estate, also for a period of 90 days.
“The state must be an example and give impetus to others,” Prime Minister Duško Marković explained.
6. Suspension of payment of variable pay and all budgetary allowances for work in commissions, steering committees and other working bodies. The state administration will suspend these payments, and we recommend that local governments do the same.
“So, not a cent of budget spending except primary salaries!” pointed the Prime Minister”. He added that the Cabinet members would allocate one-off payment of the half of their salaries to the account of the National Coordination Body for Communicable Diseases. He said that he also asked for donations from all public officials.
7. Restriction and control of budget spending, with the prohibition of initiating all public procurement except those necessary for the functioning of the health system, that is, urgent procurement, in accordance with the provisions of the law.
“At the same time, it is forbidden for budget users to make donor payments. The budget is unique and now its function is to preserve the health of citizens and ensure the functioning of the state. We forbid receiving donations to any health and state-owned institution because there is the National Communication Body and a single gyro account for these purposes.
8. Advance payment to service providers and contractors on started capital projects with the provision of a bank guarantee in the value of advance payment to ensure their liquidity and maintain continuity of works, where this does not endanger the health of citizens. The Prime Minister specified that the “started capital projects will not be stopped because they are crucial to development and faster recovery of economy and standards”.
9. All measures related to the liquidity of the economy also apply to the entities that are the founders of the Montenegrin media.
“We have made a clear recommendation to the Agency for Electronic Media and the Ministry of Culture - to find a way - and for a period of 90 days to free the media from paying a fee, and urgently provide print media with certain competitive funds based on the need for social and responsible action resulting from the current situation,” the Prime Minister said.
Prime Minister Marković said that in order to support local public broadcasters, the Ministry of Culture will provide one-off financial assistance to all of them.
“We have decided to support the media because their role in these situations is crucial!” the Prime Minister said.
Stay home, there will be no compromise for breaking orders
Prime Minister Marković said that only healthcare professionals could not win this battle. “They are the most vulnerable of us all; please allow them to help those who need medical help. I especially thank them for their efforts and patriotism so far, and all other services for their expressed devotion. So, I underline again: Let’s obey orders and measures! By failing to comply, we will be in danger of spreading it uncontrollably. Remember that two days ago, the epidemic was on the borders of Montenegro, and now it is on the doorstep of our homes! Therefore - stay in your homes. The situation demands sanctions to be imposed against those persons who disobey orders and recommendations and there will be no compromise on that,” the Prime Minister said.
He reminded that the Council for Defence and Security decided to transfer the focus of security to quarantine facilities and supervision over isolation and distance measures, in addition to public order and peace.
The Prime Minister said that no ban is a punishment, but a necessary measure - to save people's lives, to preserve the substance of Montenegrin society.
“That is why we have to understand all the decisions and act accordingly. The goal and focus of all these measures is the man, the citizen, his family and our common home. I am sure that united and in solidarity we will defend these values. This is the time that gave birth to new heroes in Montenegro - institutions, collectives, individuals in them, citizens. I want to thank them all. I believe that in the coming days, until the final success, there will be more and more examples of solidarity and courage, along with responsibility,” the Prime Minister concluded.
We will help enterprises to deal with the first impact
The Chairperson of the Board of Directors of the Investment and Development Fund, Zoran Vukčević, said that the credit line of the Liquidity Fund is aimed at enabling enterprises to deal with the first impact and have the opportunity to use these funds to purchase products, semi-finished products, and pay salaries.
“Reprogramming of existing loan arrangements - after the moratorium, reprogramming of the arrangements, considering the situation for each enterprise according to the needs of the enterprise,” said the IRF Director.
We are currently not thinking of declaring a state of emergency
Responding to journalists’ questions, Prime Minister Duško Marković said, inter alia, that declaring a state of emergency was not being considered so far.
Asked if the payment of salaries and pensions from the budget would be regular, the Prime Minister replied in the affirmative, adding that we need to expect the adverse effects of the pandemic on the economy.
“These measures that we have taken are aimed, among other things, at social support, as stabilisation measures and at the same time measures that should ensure the sustainability of public finances. Therefore, I believe that at least in the near future we will have no problems in this regard,” the Prime Minister said.
Minister of Finance: Report VAT, there will be exemptions upon request
Responding to journalists’ questions whether VAT should be reported, Minister of Finance, Darko Radunović, said that it should be reported, and that there would be exemptions upon request. It is important, he added, to keep records and know the amount of tax obligations.
Responding to questions, Minister Radunović said that the possibility of changing the VAT rate had not been considered and that now is not the time to rebalance the budget, but that circumstances would probably lead to this.
“We will take care that health system works, we will take care of the beneficiaries of social welfare policies, but we do not have the ability to issue money. Through these reliefs, exemptions, delays, etc. we will create the environment and space for the economy to function,” the Minister said.
Minister of Economy: Citizens stock up on food supplies enough for four months
Minister of Economy Dragica Sekulić said that the main task is to provide uninterrupted supply of electricity, water and telecommunication services to citizens who are at home these days.
“At the moment, we have not considered measures to delay the payment of bills for electricity, telephone, water, but that does not mean that they will not be discussed in the coming period. We need to be aware that all these companies operate on market principles and that it is necessary to preserve these systems so that they can provide services that are in the interest of the citizens of Montenegro,” Minister Sekulić said.
The Minister of Economy pointed out that none of us received any information that any bakery in Montenegro today was without flour. The Minister said that in the previous days citizens made food supplies enough for four months.
“Regardless of that, Montenegro is the only country in which there is nothing missing on the shelves in stores. This means that all services, including the Government of Montenegro, the Ministry of Economy, the Food Safety Administration, the Customs Administration and many others, work 24 hours a day so that no food is missing. At this point, we have enough groceries. We import flour and wheat, and our mills are working,” explained the Minister of Economy.
She added that based on 300 market inspections, we have a very small number of changes in food prices that are in accordance with the law.
Minister Purišić: Support of 50 euros for over 20,000 citizens
Minister of Labour and Social Welfare, Kemal Purišić, said that the assistance of 50 euros each will be distributed through social welfare centres. “This type of assistance will be provided to each of 8,583 beneficiaries of financial support for families would receive, and will be delivered by mailmen”.
He added that the 11,957 pensioners receiving the minimum pension would receive one-off assistance of EUR 50 each in the same way as they receive pensions.