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21/02/2011

The Governor of the Central Bank of Montenegro, Mr. Radoje Žugić, and his associates held the final meeting with the delegation of the International Monetary Fund as a part of the regular IMF Article IV mission to Montenegro, as lead by the team leader Mr. Gerwin Bell.

As of the commencement on 10 February, the mission team members held a number of meetings with the CBM representatives. The discussions involved macroeconomic overview, monetary and credit outlook, restructuring of the banking sector and changes in and amendments to the banking supervision and banking legislation, respectively, whereby the latter involved primarily the Banking Law, Bank Bankruptcy and Liquidation Law, the Central Bank Law and the Financial Stability Council Law.

The parties achieved a high level of agreement on the discussed topics.

It was stated during the meeting that the assessment of the banking system was made on the basis of a detailed overview of operations and it was concluded that the system is sustainable, yet some weaknesses exist as a result of inherited circumstances, but the progress in the consolidation of the system in relation to the previous period is obvious and is supported by encouraging trends with regard to its stability, liquidity and solvency.

The Governor informed the IMF mission that the Central Bank is intensively working on further improvements of the regulatory framework in all significant areas of banking operations, especially regarding credit risk measurement and the introduction of IAS, looking ahead to the significant qualitative progress in banking regulations.

The IMF mission was also informed that the Central Bank has intensified its supervisory activities through on-site and off-site examinations with a view to addressing potential weaknesses in the system (the need for additional capital, providing the continuation of liquidity and eliminating the key risks that banks are facing in their operations). 

The Governor considered that with the actions being currently taken, the recovering of the banking system should be completed in short order, such that future discussions with the IMF can once again focus on the further development and growth of the banking system.

The IMF conducts annual Article IV consultation discussions with every member state.