Representatives of the CBCG and the Ministry of Finance held several meetings with senior IMF and World Bank officials


21/10/2020

Continuing the regular International Monetary Fund (IMF) and the World Bank autumn meetings, the Montenegrin delegation consisting of the representatives of the Central Bank of Montenegro (CBCG) and the Ministry of Finance participated in a meeting of the Belgian-Dutch constituency chaired by the De Nederlandsche Bank President Klaas Knot. Senior officials of the other 14 member states of the Constitution also attended the meeting (Armenia, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Georgia, Israel, Luxembourg, Moldova, the Netherlands, Northern Macedonia, Romania, and Ukraine).


At the meeting, it was pointed out that this year’s autumn meetings of the IMF and the World Bank mainly dealt with the COVID-19 pandemic that brought severe health and economic problems on a global level. The economic activity decline and the disturbed fiscal balance conditioned the public debt growth, which was at a worrying level in many countries even before the crisis.


This situation raises two key questions - how to preserve people’s health and how to cope with the economic crisis and provide conditions for recovery. The participants agreed that the narrow fiscal space requires to carefully create, implement and monitor fiscal policy, to prevent the health and economic crisis escalate into a financial or debt crisis. Well-designed structural reforms are crucial to recovery and macroeconomic stabilisation, the meeting concluded. They emphasised the need for continued close cooperation of all Constitution members and the readiness of the IMF and the World Bank to provide assistance to member countries.


The Montenegrin delegation also met with the Director of IFC (International Finance Corporation (World Bank Group)) for Europe and Central Asia, Ms Wiebke Schloemer. At this meeting, the Governor of the CBCG, Mr Radoje Žugić, opened the issue of providing financing sources for microfinance institutions in Montenegro. In his words, this would “contribute to lowering interest rates offered by microfinance institutions in the country, which currently burden their clients.” The counterparties agreed to continue communication on this issue and consider the possibility for this corporation’s support to the MFI sector in Montenegro.


In a meeting with the World Bank Vice President for Europe and Central Asia, Ms Anna Bjerde, and the World Bank Group Executive Director, Koen Davidse, the delegation discussed the macroeconomic situation in Montenegro with particular reference to the COVID-19 virus pandemic consequences. The World Bank representatives said that Montenegro had met all the conditions for approving the DPL (Development Policy Loan) arrangement. Its conclusion is expected in the coming period.


The Montenegrin delegation also talked with the head of the IMF Mission to Montenegro, Mr Srikant Seshadri. Governor Žugić informed his counterpart about the situation in the banking sector. He emphasised that the situation is currently sound and that banks have preserved their liquidity and solvency, which was mostly the result of the adequate and timely implemented CBCG measures. The CBCG measures, e.g. the introduction of a mandatory moratorium, have also helped citizens and the economy significantly to cope with the crisis.


Representatives of the Ministry of Finance presented the latest macroeconomic data. They pointed out that the Montenegrin economy had suffered due to a strong negative impact of the pandemic and worsening fiscal indicators. To mitigate the adverse pandemic effects on the population and the economy, the Government has adopted three packages of measures so far, that are being currently implemented.


Seshadri pointed out the IMF’s readiness to provide support to Montenegro, emphasising that fiscal policy in the coming period has to focus on public debt sustainability.


In the continuation of the autumn meetings, the representatives of the CBCG and the Ministry of Finance will meet with the Director General of the IMF, Ms Kristalina Georgieva, the Director of the IMF Sector for Europe, Mr Alfred Kammer and the newly appointed Executive Director of the IMF, Mr Paul Hilbers.