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09/10/2017

The 36th session of the Financial Stability Council was held today, chaired by Mr Radoje Žugić, Governor of the Central Bank and Chairman of the Council. All other members of the Council also attended the session, Mr Darko Radunović, Minister of Finance, Mr Branko Vujović, President of the Insurance Supervision Agency Council and Mr Zoran Djikanović, President of Securities and Exchange Commission. Upon invitation, Mr Predrag Marković, Director of Deposit Protection Fund, is present at the Council sessions.

The financial stability condition for the second quarter of 2017 was considered at today`s session. Impacts from the international and domestic macroeconomic environment were considered in this analysis, including risks and potential vulnerabilities that may have implications for systemic stability.

It was noted that the moderate economic growth in the countries of the Eurozone, i.e. the European Union continued in the second quarter of this year, with the reference interest rates of the European Central Bank remaining unchanged. 

Nevertheless, despite the moderate development of indicators and the unchanged direction of monetary policy, a reduction in uncertainty in the financial market and a positive impact on the growth of European developing countries is expected, as well as to the growth of the Montenegrin economy and the position of systemic risks.

As for the other influential economies, the United States, Russia and China recorded a growth in the second quarter of 2017, compared to the same period last year, which can also have a positive impact on the emerging economies.

According to preliminary estimates, the growth of Montenegrin economy in the first half of 2017 was about 4.2%. It was stated that the increase in the economic activity was mainly the result of the investment cycle, and that the construction, tourism and transport sectors had a dominant positive impact on the recorded growth, which had a positive effect on the liquidity of the real sector, although this risk is still present. If such trends continue in the economy, annual growth in 2017 can be expected at this level. A positive trend is followed by foreign direct investments, which recorded a strong growth of 41.7% in the first half of 2017, according to preliminary data and compared to the same period last year. Risks arising from the economic exchange of goods and services abroad are moderate.

Regarding the banking sector, it is characterized by positive trends, i.e. growth of capital, assets and deposits, as well as further intensification of banks' lending activities. The downward trend in non-performing loans continued in the second quarter of this year. Also, the indicators in the insurance market have a positive trend, while the situation in the capital market remained unchanged.

Based on the analysis of the impact of international and domestic factors on the overall economic stability situation, with particular emphasis on the stability of the financial system, the Council concluded that the financial system is relatively stable, with moderate intensity risks.

Among the ongoing issues, the Council supported activities in establishing a real estate database in Montenegro and adopted a Decision on the establishment of a temporary working body, with the task of preparing proposals for the establishment of the mentioned database, which will improve the quality of statistics in this area in the future.