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12/04/2021

Concerning the statements of Deputy Prime Minister Dritan Abazović and an MP of GP URA Miloš Konatar on the absolute moratorium introduction, the Central Bank of Montenegro issues the following statement:

The quality of measures the Central Bank of Montenegro adopted since the beginning of the crisis can be determined inter alia whether the help came to those in objective need. A moratorium, i.e. a temporary suspension of settling liabilities to banks, makes sense only when revenues cease or reduce. Suspending liabilities’ repayment in a situation of unchanged revenues turns into its opposite. This is the case with some 50,000 employees in public administration and industries without a turnover decline, such as energy production, pharmacy, construction, etc. The elementary economic logic dictates that everyone with an undiminished income should continue the orderly repayment of the obligations.

The Government has borrowed from the international financial market, inter alia, to provide regular and undiminished wages to the public sector and pensioners. Although their income remained unchanged, instructing them to stop repaying their obligations regularly now would expose them to increased costs for unnecessary longer loan use when they do not need it. For example, why would an MP with unchanged income suspend the loan repayment until the end of the tourist season, after which its income would remain unchanged compared to the moratorium period? The same applies to the entire public administration.

Understanding the monetary policy’s inseparability from the overall country’s economic policy and fully respecting its monetary policy’s independence set out in Article 7 of the CBCG Law, the CBCG fully cooperates with the Government. More precisely, it cooperates with the Ministry of Economic Development and the Ministry of Finance and Social Welfare. Before starting formal cooperation with the ministries, the CBCG tied most of its measures to economic policy measures defined by the Government. Only in that way can they give a full synergetic effect.

Currently, the CBCG measures apply to 2,338 companies from 112 priority vulnerable industries, including tourism and SMEs. They also apply to over 15,000 people who lost their jobs and more than 60,000 employees whose earnings are reduced or will potentially reduce.

A working group consisting of the Ministry of Economic Development, the Ministry of Finance and Social Welfare and the CBCG is drafting new measures to be jointly presented at the end of this month. This coordination was agreed at a publicly presented joint meeting at the Ministry of Economic Development. Surprisingly, the Deputy Prime Minister is not familiar with the work and plans of line ministries.

The legal solutions ensuring the monetary authority’s independence are not made to make the Council, the Governor and Vice-Governors feel comfortable. Contrary, they enable making decisions following their professional views without pressure. It is Montenegro’s achievement taken from countries with a long history of monetary authorities independence. It follows the recommendations of the European Commission and the IMF. We should nourish such achievement for the common good provided when politics does not govern the monetary sphere.

Vice President Abazović assessed that people in the CBCG do not have a sensibility for the economy. We remind Vice President Abazović that the CBCG, guided by the needs of the population and the economy affected by the COVID-19 pandemic effects, created seven sets of measures and five moratoriums. This achievement is more extensive than in any other central bank in Europe and with the longest duration. Is there a better denial to Vice President Abazović than the fact that international authorities, such as the IMF, assessed the CBCG measures as strong, adequate, and timely?

A transparent analysis of its impact on the economy, the population and banks preceded each CBCG measure. Except for qualifications, the GP URA’s proposal does not show or provide any serious analysis to convince us of their proposal’s correctness.

Still, this is less important than the allegations that the CBCG performed certain activities contrary to the law. As a minimum, such a statement requires Vice President Abazović to specify the activities and the verdicts of CBCG breaching the law.

Concerning the quality, legality and transparency of the CBCG’s work, the IMF’s assessment speaks for itself. For the first time since the CBCG was established, the IMF conducted an external analysis of the CBCG’s control mechanisms this February. The analysis showed that the CBCG has strong operating control mechanisms of its key functions supported by external audit. They were conducted following international standards with a transparent financial reporting framework. Moreover, the external audit of the CBCG’s financial statements for 2020 was completed successfully and qualitatively. The external auditor Deloitte d.o.o. gave a positive (clear) opinion with the following statement: “In our opinion, the accompanying financial statements provide a true and fair view, in all materially important aspects, of the CBCG’s financial position as at 31 December 2020, and of its financial performance and cash flows for the year ended that day, following International Financial Reporting Standards”. Finally, the CBCG is one of the rare institutions that received an assessment of good progress in the European Commission’s Progress Report for 2020. Based on the already fulfilled recommendations of the European Commission for 2021, we expect a similar result this year as well.

Finally, we remind the public that the Central Bank of Montenegro is not part of public administration. It is an institution that has its own institutional, personal, financial and functional independence, so its reform cannot be part of public administration reform.

 
Despite all the aforesaid, the CBCG remains open to any form of further cooperation.