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29/09/2016

Council of the Central Bank of Montenegro held today ninety-third meeting, chaired by the Governor Milojica Dakić.

The Council adopted Report of the Governor on operations and the implementation of the policy of the Central Bank of Montenegro in May 2016, in which it was stated that the activities of the Central Bank in this period were carried out in accordance with the planned commitments in the Agenda of the Central Bank for 2016.

The banking system, according to the Quarterly report on the operations of banks and MFIs during the first half of 2016, is characterized by positive trends in the key business indicators. There has been a growth in total assets of banks, liquid assets, profit, solvency ratio, asset quality, as well as the fall in interest rates. Improving the quality of bank loans continued in the second quarter of the current year. At the end of the period, non-performing loans amounted to 278.7 million euros, representing a decrease of 7.1% compared to the end of 2015. Non-performing loans to total loans amounted to 11.72% and were 0.85 percentage points lower than at the end of the previous year. Banks' capital increased by 5.8% in relation to the end of 2015, and the banking system of Montenegro in this period is characterized by a high level of solvency, with the solvency ratio of 16.65% at the end of June. The growth of capital during the period was largely a positive financial result, and the recapitalization of two banks and the opening of a new bank in the second quarter.

In the macroeconomic report, the CBCG analysed sectoral indicators in the Montenegrin economy and presented the semi-annual situation in the economy. According to available indicators, during the first six months of this year, most sectors largely observed an upward trend. Growth was recorded in the construction sector, tourism, trade and most kinds of transport. The decline in production was recorded in forestry, as well as in industrial production. In the first half of 2016 there was an increase of current account deficit which is mainly the result of an imbalance at the goods account. According to preliminary data, the deficit of the current account deficit amounted to 661.6 million euros or 35.7% more than in the same period of 2015. In the observed period, deficit on goods account increased by 16.1%. The significant increase in imports is largely a result of higher imports of machinery and transport equipment for investment projects in the country. In the international trade of services, Montenegro recorded a surplus of 92.2 million euros in the first half of 2016, which is 24.4% lower than in the same period of the previous year due to increased expenditures arising from transport, telecommunications and professional and consulting services.
     
Inflation report for the second quarter analyses trends, expectations and determinants of inflation in Montenegro. During the first half of the year there was a drop in consumer prices, compared to December last year, and on an annual basis (-0.6% and -1.0% respectively). The annual fall in prices in the category of transport by 6.9% had the greatest impact on the decline in total annual inflation rate. When it comes to inflation expectations of banks, based on a survey conducted in July this year, the largest number of banks expects inflation ranging between -0.5% and 0% by the year-end. As for the expectations of the corporate sector, of the total number of surveyed companies, majority of them, 26%, believe that inflation will range between 0.5% and 1% in 2016. According to the expert projections conducted by the Central Bank of Montenegro, inflation will range from -1% to 1%, in 2016, while the central projection is 0%.

The Council adopted a Decision on the appointment of internationally recognized independent external auditor for the Central Bank.