---

24/02/2022

The Executive Board of the International Monetary Fund (IMF) adopted the Staff Mission Report prepared after regular Article IV consultation with Montenegro. The Report is available at: link.

The Report stated that the financial sector appeared to have withstood the COVID-19 shock well. The IMF supported activities on gradual phasing out of support measures of the CBCG to mitigate the pandemic consequences.

The Asset Quality Review (AQR) implementation, which findings confirmed the banking sector's resilience, was assessed as a significant achievement. The Report noted that the financial sector was well-capitalised and liquid and that there were no systemic problems.

In the Report, the MIssion pointed to the importance of starting the application of the Law on Credit Institutions and the Law on Resolution of Credit Institutions and their implementing legislation. It is essential not only for harmonising the legislation and supervision with the EU directives, completing the Financial Sector Assessment Programme (FSAP) recomendations and establishing a basis for introducing adequate macroprudential instruments.

The Report pointed to the possible risk of deteriorated asset quality in the coming period. Thereby, the CBCG was recommended to prudently monitor banks' operations, particularly managing this risk. Abrupt NPLs increase would not harm the system but could probably harm individual banks' operations. It also fully supported the CBCG activities on improving contingency planning and creating resolution plans for banks.