Overview of measures taken and under consideration to mitigate the adverse effects of the COVID-19 impact on Montenegro’s financial system


Based on the submitted data, the Central Bank of Montenegro (CBCG) prepared an overview of the results of the existing measures to mitigate the coronavirus effects on the financial system. It has also made an overview of the measures under consideration aimed at further reducing the adverse impact of COVID-19 on Montenegro’s financial system.


1) Decision on interim measures to mitigate the adverse effects of the new coronavirus on the financial system

i. The first element of the Decision entitles the beneficiaries of loans granted by banks to a moratorium on loans repayment for the 90 days.

RESULT: Measure fully aligned with the Guidelines on legislative and non-legislative moratoria on loan repayments applied in the light of the COVID-19 crisis of the European Banking Authority (EBA).

Montenegro is one of the rare twelve countries in the world that adopted this measure, with interest rate calculated the same way as in other jurisdictions.

This decision enables legal and natural persons to increase their disposable income during these challenging times. The effects of the moratorium are apparent. A total of 64,434 loan beneficiaries applied for a moratorium until 10 April 2020, i.e. for 20 days of applying the moratorium, this being 52% natural persons that are loan beneficiaries and almost 74% of the economy. Loans for which the moratorium application was submitted amount to 1.31 billion euros or 46% of the total loans in the system.

ii. The second element of the Decision to assist households and the economy is the granting benefits to banks referred to in Article 43 of the Decision on minimum standards for credit risk management in banks.

In the process of asset classification and allocating provisions for potential credit losses, the Bank may treat the restructured loan as a newly approved loan, provided that the loan beneficiary documents to the bank that financial position has or will deteriorate in the near future due to the adverse impact of the new coronavirus on its operations since the onset of this virus worldwide, and the bank estimates that the loan beneficiary’s creditworthiness will improve upon restructuring.

This framework creates the basis for quality and favourable liquidity loans restructuring, both in the moratorium period and in the recovery process after its expiry.

RESULT: Measure aimed at stable and long-term economic recovery

From the introduction of the moratorium (21 March) until 17 April 2020, banks granted 38.3 million euros of loans to 1031 customers, i.e. to 899 natural persons and 132 legal entities. In March, banks approved 3,486 loan sub-accounts to natural persons and 282 loan sub-accounts to legal entities, totalling to 73.4 million euros. Banks are ready to channel their available liquidity to their clients, the economy and citizens, both now and in the further period of economic recovery.

iii. The third element of the Decision prohibits banks from paying dividends to shareholders, except in the form of bank shares.

RESULT: Measure in line with the recommendation of the European Central Bank (ECB) on strengthening the capital position, safeguarding and further enhancing the stability and security of (Montenegro’s) banking system in the face of risks caused by emerging situations produced by the coronavirus.

iv. The fourth element of the Decision allows banks, through the granting of loans or otherwise, to increase exposures to one person or a group of related parties beyond the statutory exposure limits (25 percent of the bank's own funds), with the prior approval of the CBCG.

RESULT: This measure enables banks to provide quick additional credit funds to their corporate clients affected by the coronavirus effects to mitigate its impact. This measure becomes entirely rational where a legal entity operates predominantly through one bank. Establishing a business relationship and obtaining adequate credit support from another bank would require some time, which would be counterproductive in the situation of urgent credit support.

v. The fifth element of the Decision enables the bank, to restructure and classify loans subject to the Decision on Macroprudential Measures under certain conditions. These conditions relate to loans granted to individuals by banks, including the possibility of negotiating an additional repayment period, up to two years longer than the deadlines set out in that decision and in the case where the loan was not collateralised.

RESULT: This measure enables banks to reconcile maturity and repayment terms with clients’ new (reduced) cash flows.


With the view of providing additional support to citizens and the economy, the CBCG is considering to introduce additional measures to mitigate further the adverse impact of the coronavirus on citizens and entrepreneurs and entire Montenegro’s financial system. The measures under consideration include:

  1. In close cooperation with the banks, and after considering the positive and adverse effects of the current 90-day moratorium and the occurrence of the coronavirus pandemic, 45 days before the current moratorium expiry, discuss the need of extending the moratorium for the most vulnerable categories of natural persons and legal entities;

  2. Ensuring efficient access and initialising favourable credit lines to the financial system by the European Bank for Reconstruction and Development (EBRD) for existing and new clients from Montenegro’s under the new Solidarity Package (3 billion USD);

  3. Ensuring efficient access and initialising favourable credit lines to the International Financial Corporation (IFC) financial system for existing and new clients in Montenegro’s banking system from the 160 billion USD of new World Bank projected funds;

  4. Significant reduction in the price of withdrawing reserve requirement for liquidity by amending the Decision on detailed conditions for granting loans to banks in case of their liquidity needs;

  5. Discuss the possibility of temporarily more favourable loan classification in the period after ending the moratorium.