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16/03/2011

Net FDI inflow in 2010 amounted to EUR 542.4 million or 49.1% less than in 2009. However, net FDI inflow in 2009 (EUR 1,066.5 million) was remarkably high for two reasons: 1) revenues from privatization and recapitalisation of EPCG of EUR 436.1 million and EUR 150 million of debt accumulated from the previous period that was transferred into capital. To wit, the international methodology registers this kind of transaction as an FDI inflow although it is actually the transformation of debt into company’s capital and not the actual inflow registered in the respective year.

In 2010, pursuant to the CBM Decision on Keeping Separate Records on Foreign Current and Capital Transactions and their Reporting to the Central Bank of Montenegro, the Central Bank was informed by companies that funds from the credits withdrawn in the period 2003-2008 were transformed into equity capital in 2009. Pursuant to the IMF methodology provided in the Balance of Payments Manual, Fifth edition - BPM5, paragraph 540, the transformation of debt into capital is recorded in the balance of payments as the reduction of credit obligation and an increase of obligation arising from FDIs at the moment of the debt-into-capital swop which, in our case, occurred in 2009.

If this amount of inflow from privatization and recapitalization of EPCG and the amount of debt transferred into capital were excluded from net FDI inflow in 2009, the amount of net FDI inflow in 2010 would be 12.3% higher than in 2009.