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22/04/2017

The Montenegrin delegation, including the Minister of Finance, Mr Darko Radunović, Governor of the CBCG, Mr Radoje Žugić and Vice-Governor for Financial Stability and Payment System, Mr Nikola Fabris, met with IMF Vice-President Mr Tao Zhang, Director of the IMF's European Department Mr Poul Thomsen and the director of the IFC for Europe and Central Asia Mr Tomasz Telma on the second day of the annual meetings of the International Monetary Fund (IMF) and the World Bank, held in Washington. 

Contentment with the economic growth in Montenegro, the results of fiscal consolidation and the achieved level of financial stability, accompanied by a significant improvement in the performances of the banking sector was expressed during the discussions with Mr Zhang and Mr Thomsen.

It was pointed out that the growth at an average rate of 4.2% was achieved in the first half of 2017, conditioned by the significant increase in the sectors of tourism, construction, transport, forestry... It was also mentioned that the external position in this year recovered, which was primarily conditioned by a strong growth of the services sector and the significant inflow of foreign direct investments. The IMF high officials particularly welcomed the firm commitment of the Government to implement fiscal consolidation measures, which, although strong and generally unpopular, aim to establish the sustainability of public debt. The first results of the consolidation were also recognized by the renowned rating agencies, which in recent reports have improved the economic outlook for Montenegro.

It was emphasized that the timely creation of a better maturity of public debt and the level of interest repayments should be taken into consideration in the forthcoming period, especially bearing in mind the risk of normalization of monetary policies of the developed countries, which could lead to a rise in the cost of borrowing on international capital markets.

In the discussions concerning the banking sector in Montenegro, the senior IMF officials confirmed it to be at an aggregate level, stable and secure, followed by a continuous improvement of asset quality parameters, level of credit activity and profitability, which were previously marked as relatively high source of vulnerability. It was also concluded that the CBCG made a major step forward in the past year in terms of improving the institutional framework, through the preparation of a set of systemic laws. It was pointed out that the new regulation provides not only formal harmonization of the institutional framework with the Acquis, but also represents its systemic improvement and provides higher resilience of banks and the private sector to potential external shocks.

The Vice-President and the Director of the IMF's European Department expressed the readiness of this institution to continue providing strong support to Montenegro, which will primarily focus on the stabilization of public debt and the reform of the financial system.

The intensification of cooperation through the recently approved project of constructing a bypass, a new boulevard and a bridge in Podgorica was positively assessed at the meeting with the Director of the IFC for Europe and Central Asia, Mr Tomasz Telma, which opens the possibility for further cooperation on similar projects and in other local self-administrations. The IFC representatives expressed their interest to support the realization of projects in the areas of sustainable tourism, infrastructure and agriculture business.