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25/06/2019

The Council of the Central Bank of Montenegro held its forty-sixth session, chaired by the Governor, Mr Radoje Žugić.

At today's session, the Council adopted the Annual Macroeconomic Report of the Central Bank of Montenegro for 2018. As highlighted in the Report, 2018 is characterized by positive trends, which are evident in the estimated economic growth rate of 4.9%. Increased activities on the construction of large infrastructure projects in construction and energy, growth in the manufacturing industry and a strong increase in the number of tourists resulted in such high GDP growth rate. The number of employed persons has increased, while the number of unemployed persons has been reduced. The budget deficit at the end of 2018 was estimated at 159.2 million euros or 3.4% of GDP and is the result of higher realization of the capital budget i.e. infrastructure projects. The report noted that public debt recorded a growing trend, but that implemented fiscal consolidation measures can be positively evaluated. According to the CBCG model projection, GDP growth in 2019 will range from 2.5% to 3.2%, with a central tendency of around 2.9%. Also, the Report concluded that the holders of economic growth in the coming period will be tourism, energy and construction.

The Council also considered the Quarterly Report on Banking Operations on 31 March 2019, with the Information on implementation of operational objectives of banks, which concluded that the banking system recorded positive trends in relation to the previous quarter. At the end of the first quarter, the growth of key balance sheet positions was recorded in relation to the end of the year, as follows: assets by 1.66%, loans by 5.47%, deposits by 0.86% and capital by 3.66%. At the end of March 2019, the share of non-performing loans in total loans amounted to 4.87%, while at the end of the previous year their share was 5.24%.

The Council considered and adopted the Report of MFIs and Leasing Companies’ Operations for the first quarter of the current year. It was noted that in the micro crediting sector, in relation to the end of 2018, the total balance sheet increased by 6.37%, loan increased by 2.21%, with a decline in the percentage of non-performing loans which amounted to 4.61% at the end of this quarter. The micro-crediting sector recorded a growth of capital in this period of 4.56% and a significant increase in liquid assets of 122.02%. Also, for the first time, the subject of the review was also the Report of Leasing Companies Operations, given the legal requirements that these companies should be included in regular mandatory reporting to the Central Bank of Montenegro. Two leasing companies operating in Montenegro, at the end of the first quarter of 2019, had total assets in the amount of 34.7 million euros, receivables of 29.5 million euros, while the capital of companies amounted to 3.5 million euros. The level of non-performing assets in leasing companies amounted to 3.00% at the end of the first quarter.

In the Report on Lending Activities of Banks, the results of the survey conducted in the first quarter of 2019 are summarized. The results of the survey indicate that during the first quarter of 2019, credit standards for the economy were moderated, while credit standards for the population, primarily housing loan standards, were slightly stricter. In the next quarter, banks expect easing of credit standards for loans to large companies, as well as consumer and other retail loans.

The Council adopted the Annual Report on the Work of the Deposit Protection Fund, the Decision Amending the Decision on Reporting to the Central Bank of Montenegro, and discussed other issues within its competence.