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23/07/2019

The Council of the Central Bank of Montenegro (CBCG) held its forty-eighth meeting chaired by the Governor, Mr. Radoje Žugić.

On today's meeting, the Council discussed and adopted the Report on the Central Bank of Montenegro Business Activities and Policy Implementation for May 2019. The Report noted that the activities of the Central Bank during this reporting period were implemented in line with the Central Bank Work Programme for 2019. 

The Council also adopted the Decision Amending the Decision on Minimum Standards for Credit Risk Management in Banks. The proposed amendments additionally harmonise the Decision with the relevant acquis communautaire and the guidelines of the European Banking Authority (EBA). The main update refers to termination of collaterals as the criteria for loan classification, including the prime collateral. This means that, if other criteria for classifying loan as non-performing one have been met, loan has to be classified as non-performing, disregarding of the type of collateral for its securing. The proposed changes enable full comparability of data on non-performing and restructured loans in Montenegro’s banking sector with the EU Member States’ data.

Moreover, the CBCG prepared the Information on the introduction of instant payments and further development of payment services in Montenegro, which describes the intent of further payment system harmonisation. Discussing on the Information, the Council concluded that the introduction of instant payments was necessary to provide preconditions for the application of contemporary technological innovations in the payment systems area with a view to boosting competition, opening the market to new participants, reducing payment costs and the use of cash and card payments. Thereby, the Council found justifiable, in parallel with drafting the Law Amending the Payment System Law that will transpose the PSD2 (Payment Service Directive of the EU), to consider all technical-technological requirements for providing safe and efficient operations of new payment service providers and their compulsory connecting with banks, as required by the PSD2.

On today’s meeting, the Council also adopted the Macroeconomic Report of the Central Bank of Montenegro for Q1 2019. According to preliminary MONSTAT data, real economic year-on-year growth in Q1 2019 was 3%. Despite being slightly lower in relation to the previous year growth due to high base effect over the last six years, this rate was considered to be confirming the dynamic growth of the local economy. The most prominent growth was recorded in construction and tourism. The Council commended the positive employment trend in Q1 2019. 

In Q1 2019, the banking sector was sound, solvent, profitable and with high liquidity. The declining trend in non-performing loans and interest rates continued.

The Council also adopted the Inflation report for Q1 2019, which indicates that the CPI inflation in Montenegro in March 2019 was 0.7% compared to December 2018 mostly resulting from increase in prices under food and non-alcoholic beverages and transport with respective 2.8% and 0.8%. The report also indicated that moderate inflation rate is expected in 2019. The model forecast pointed that the CPI inflation would range between 0.2% and 2.8%, with central projection of 1.2%. The CBCG experts’ model was similar to the model forecast, and it pointed that the inflation in 2019 might range between 1% and 2.5%.

On the meeting held today, the Council discussed other issues within its competence.