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30/10/2017

The Council of the Central Bank of Montenegro held the sixteenth session today, chaired by the Governor Mr Radoje Žugić, PhD.

The Council established the CBCG Policy in 2018, as well as the Guidelines for the Implementation of the CBCG Policy in 2018 at today`s session. In order to further stimulate and preserve financial stability, the Central Bank will improve the indicators for assessing the condition of financial stability and prevention of the systemic risks occurrence, as well as the instruments for their suppression in the next year as well. Furthermore, in order to strengthen confidence in the financial system as a whole, the CBCG will improve the stability and security of the banking system, timely identification and minimization of negative impacts, at the same time conducting a monetary and financial stability policy based on undertaking all necessary activities and implementing the available instruments and measures within its competence. The CBCG activities will also focus on improving the regulatory framework in order to harmonize it with the European Union directives, increasing the supervision capacity, which will strengthen the stability of the financial system and contribute to its further development. As so far, the CBCG will continue to maintain safe, efficient and effective payment transactions in the course of the next year, which will be the subject of further improvement through harmonization with the new European Union regulations and the implementation of international standards, principles and best practices in the functioning of modern payment systems.

The Council deliberated and adopted the Governor`s Report on Central Bank of Montenegro Business Activities and Policy Implementation for August 2017, which concluded that the activities of the Central Bank in this period were carried out in line with the commitments established by the Central Bank of Montenegro Work Programme for 2017.

The Council also adopted the Recommendations to the Government of Montenegro for 2018 Economic Policy, encouraging the stimulation of the growth potential, increase and improve of the overall stability of the system, simultaneously removing all recognized vulnerabilities of the Montenegrin corporate sector. Recommendations refer to four segments: real sector, financial system, fiscal policy and statistics. Recommendations in the real sector are related to the improvement of competitiveness, at micro and macro level, encouraging development, predominantly in the key corporate sectors (tourism, energy, agriculture and manufacturing) and further improvement of the institutional environment. The general objective of the recommendations in the area of the financial system is to preserve its stability by ensuring smooth and stable functioning of all segments of the system and efficient mediation in the field of financial services. Regarding the recommendations for the fiscal policy, they fully support the long-term goals of Montenegro's Fiscal Strategy 2017-2020, which primarily relate to strengthening fiscal stability and establishing the declining trend of the public debt. Recommendations given for statistics are aimed at achieving full harmonization of official statistics with the Acquis.

The most important trends that characterized the real, fiscal and financial sector in the previous quarter were analysed In the Macroeconomic Report for the Second Quarter of 2017.  According to the MONSTAT preliminary data, the real GDP growth in the first half of the year was 4.2%, while, according to the CBCG estimates, similar growth is expected for the whole year. In the first six months of 2017, most sectors in the economy recorded growth when compared to the same period last year. In addition to industrial output, which recorded a decline of 9.6% in the first half of this year, compared to the same period of 2017, growth was registered in the sectors of tourism, construction, forestry, air and road transport. Inflation, measured by the consumer price index, was 2.1% in June 2017, while consumer prices recorded a 0.5% increase in June compared to the end of the previous year. In the first half of 2017, a decrease in the current account deficit by 5.1% was recorded, if compared to the same period of the previous year, which is a result of an increase in the surplus on the services account, owing to revenues from tourism and traffic, as well as positive developments in the accounts of the primary and secondary income due to the growth of remittances from abroad and increased use of the EU funds. Employment growth rate of 3.9% was recorded in the first six months of this year when compared to same period last year, while the number of employees in June was 6% higher than in December 2016.

The Council also discussed other current issues from the domain of its competence at today's session.