Financial Stability Council Session Held
30/03/2018
The 39th 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 the Capital Market Authority. Upon invitation, Mr Predrag Marković, Director of Deposit Protection Fund, is present at the Council sessions.
In order to assess the financial stability, at today`s session, the Council discussed current trends in the domestic macroeconomic environment and the financial system, placing a special accent on the banking sector.
Council members considered the trends that defined the real sector in 2017, rating as extremely favourable the GDP growth of 4.4%, as per preliminary MONSTAT data. The Council noted that, in the previous year, almost all sectors recorded growth, especially construction and tourism. The fiscal consolidation implementation has contributed to public finances stabilisation, country’s credit rating upgrade as well as to receiving favourable assessment of the IMF.
Preliminary data reveal that net foreign direct investments inflow stood at 474.3 million euros in 2017, accounting for a 27.6% year-on-year increase. The risks stemming from the economic foreign trade are moderate.
In reference to the banking sector, the granted loans uptrend continued in 2017, accompanied by growth of deposits, and improved liquidity and profitability of banks. On the other hand, non-performing loan levels declined, on the back of the implementation of the amended Law on Voluntary Financial Restructuring of Debts towards Financial Institutions. Thus, at the end of 2017, non-performing loans accounted for 7.3% of total loans, recording a three percent decline in relation to the end of 2016 when the government bond issue was recorded.
Based on the analysis of the impact of all mentioned factors on the position of overall economic stability, with particular emphasis on the stability of the financial system, the Council concluded that the financial system is relatively stable and that there are moderate risks.
At today’s session, the Council also considered the Information on establishing a database/registry of traded real estate in Montenegro, prepared by the interdepartmental task force previously sat up by the Financial Stability Council, with a view to proposing a manner of establishing this database/registry.
It was concluded that the initiative for the establishment of a database/registry of traded real estate in Montenegro would bring multiple benefits, because it will improve the quality of statistics in this field, ensure that the requirements of the pre-accession negotiations are met, and serve as a useful means for the pursuit of the Central bank’s as well as tax policy.
Bearing the afore mentioned in mind, the Council supported the activities regarding the establishment of the database/registry of traded real estate in Montenegro, which will include initiating the amendments to the existing legislation (Law on State Land Survey and Cadastre and subordinate legislation), defining the institution in charge of this task, as well as providing the necessary financial resources.