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29/12/2016

The CBCG Council met today for the third meeting chaired by the Governor Radoje Žugić.

The Council adopted the Governor’s Report, which stated that the activities of the Central Bank in this period were carried out in line with the obligations planned under the Central Bank of Montenegro Work Programme for 2016. The Council analysed and assessed the impact of potential risks, stemming from the macroeconomic environment and within the financial system, on the position of the financial stability and concluded that the financial system is stable, whereas the level of systemic risk is moderate. 

The Council defined a working version of the Draft Amendments to the Law on Voluntary Financial Restructuring of Debts towards Financial Institutions. Starting from the significance of sustainable financial restructuring for the economy as a whole, as well as for banks and other creditors, it was deemed justified introducing amendments to the said Law that would improve the currently applicable solutions, in the aim of overcoming the problems observed in the implementation stage of these solutions. The critical analysis of the limitations for the application of the Law lead to the proposal of the following amendments: the application period for the Law was extended by one year; the range of loans that can be subject to voluntary restructuring was expanded –in addition to loans classified as “B” and “C”, loans classified as “D” were also included; a new measure of restructuring was established – release from mortgage, fiduciary right or pledge encumbrance, part of collaterals given to secure claims creditors have against a debtor commensurate to the debt reduction; granting favourable tax and other incentives to the participants in restructuring was enabled; notwithstanding provisions of this Law, when a financial restructuring is being carried out only between the debtor and one bank, the debtor and the bank may carry out financial restructuring in line with internal procedures of such bank or such micro-credit financial institution, etc. 

The Council adopted the Macroeconomic Report of the Central Bank of Montenegro for the third quarter of 2016. The available statistical indicators for the nine months of this year revealed the increase in the level of economic activity, albeit somewhat below the initial plan, primarily due to delays in the implementation of major investment projects. Majority of the observed sectors trended up, including the construction, tourism, transportation and trade sectors. Decline was recorded in forestry and industrial output. Current account deficit widened as projected bearing in mind the highway construction as well as the implementation of other projects in the area of energy generation and tourism. The banking system was stable, solvent and highly liquid. Both, lending and deposit interest rates continued to decline.  Non-performing loans recorded further decline, and were rated as becoming less of a systemic, and more of an individual issue. In September this year, the employment recorded a year-on-year increase. The number of registered unemployed persons remains relatively high. In the first nine months of this year, the average gross and net wages and salaries recorded a year-on-year increase.

The Council adopted the Inflation Report for the third quarter of 2016. The report stated that in September 2016, the CPI inflation in Montenegro increased by 0.3% in relation to December 2015, while in relation to September 2015, it slightly declined (-0.1%). The main cause for the decline in the total annual inflation rate lies behind the 5.2% prices drop in the transportation category. Montenegro’s annual HCIP inflation rate amounted to 0.2%, which is below 0.4% recorded in the euro area. The Central Bank’s expert assessment indicates that at the end of 2016, the inflation could range between -0.3% and 1.3%, with the central projection at 0.7%.