Press Releases 2016 - December

29.12.2016 - The 3rd CBCG Council Meeting Held

27.12.2016 - Central bank of Montenegro joined the humanitarian action for the treatment of Andjela Petrović

23.12.2016 - The governor of the Central Bank hosted a working breakfast with journalists

19.12.2016 - FSC: Financial system stable

16.12.2016 - Working Breakfast with the Governor of the Central Bank of Montenegro

15.12.2016 - Meeting of the Governor of the CBCG and the CEO of TBW – Fortune China Magazine (TIME Inc.)

13.12.2016 - Governor Žugić met with the management of NLB Banka AD Podgorica

CENTRAL BANK OF MONTENEGRO
Podgorica, 29 December 2016

The 3rd CBCG Council Meeting Held

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%.

CENTRAL BANK OF MONTENEGRO
Podgorica, 27 December 2016

Central bank of Montenegro joined the humanitarian action for the treatment of Andjela Petrović

Central Bank of Montenegro, as a socially responsible institution, has joined the humanitarian action and donated the amount of 2,000.00 euros, for the treatment of twelve year old girl Andjela Petrović from Kotor.

CENTRAL BANK OF MONTENEGRO
Podgorica, 23 December 2016

The governor of the Central Bank hosted a working breakfast with journalists

On the eve of the New Year and Christmas holidays, the Governor of the Central Bank of Montenegro, Mr. Radoje Žugić, hosted today a working breakfast with the representatives of the Montenegrin media.

The Governor informed the media representatives of the directions of Central Bank’s activities in 2017 that are aimed at achieving objectives of the functions under the competence of the CBCG, and that are defined in the current Policy and Guidelines for 2017.

In communication with the media representatives, the Governor underlined that the CBCG’s activities for this year are aimed towards achieving a countercyclical effect and putting a stronger focus on the recovery of the real economy. Thus, in addition to primary objectives, the activities are directed towards reducing the two key risks as regards the stability of the economic system, i.e. towards strengthening of liquidity (along with the recovery) of the real sector and contributing to the reduction of fiscal pressures, without jeopardizing the independence of the Central Bank.

In addition, it was emphasised that the Central Bank has its part in communication with the media, striving to use the cooperation regarding the exchange of information to increase the effectiveness of all measures under the competence of the Central Bank and contribute to the strengthening of the financial system and its better understanding in the public.

CENTRAL BANK OF MONTENEGRO
Podgorica, 19 December 2016

FSC: Financial system stable

The 33rd meeting of the Financial Stability Council was held today. The meeting was chaired by Mr. Radoje Žugić, the Governor of the Central Bank, and it was attended by all Council members: Mr. Drako Radunović, the Minister of Finance, Mr. Branko Vujović, the President of the Council of the Insurance Supervision Agency, Mr. Zoran Đikanović, the President of the Securities and Exchange Commission.

At today’s meeting, the members discussed the current condition of the financial stability in Montenegro, the risks and vulnerabilities of the entire economic system observed in the past nine months of 2016. The analysis, which was prepared for the Council, considered the trends and events, originating from domestic as well as international environment, that have influenced the situation in Montenegro’s economy.

In global terms, the increased uncertainty caused a certain degree of deterioration of the world economic outlook for 2016 and 2017. Lower growth rate of global economy, decline in the global trade, uncertainties regarding the oil prices, along with political backdrop, represent the key factors prompting the central banks of developed economies, the ECB and the FED, to maintain the same monetary policy rate and make no changes to interest rates. 

In addition, the ECB introduced an assistance increase and announced that it will continue the measures aimed at strengthening the recovery of the Member Countries.

In the past nine months, the international environment impact and the spillover of risks and uncertainties on Montenegro’s economy were moderate. 

Aside from the international environment, the analysis presented the trends in economic activity, the level and intensity of risks, sources of risks, as well as vulnerabilities threatening the financial stability that originated in the domestic environment. 

Domestic environment is marked by slower than expected growth. Favourable trends are recorded in all the basic sectors of the economy, along with lower growth rates in relation to the same period of 2015. In the nine months of 2016, industrial output declined by 4.2%. Monstat data show that the turnover of goods in retail trade (in current prices) recorded year-on-year increase of 3.9% over the same period. In the first nine months of 2016, tourist arrivals recorded year-on-year increase of 5.2%, while the number of overnights increased by 1.2%. Preliminary Monstat data show that, in the first nine months of 2016, construction recorded a year-on-year increase in the number of executed construction works of 37.3%, and a year-on-year increase in the effective working hours of 20.9%. 

In September, the annual inflation rate amounted to -0.1%. Due to such developments in price trends, the CBCG revised the expected inflation rate for December 2016. Inflation ranging from -0.1% to 1.3%, with the central trend at 0.4% is projected for the end of 2016.  

Insufficient recovery of the real sector, reflected in lower growth rates of the key economy sectors, remains the most prominent risk in the first half of 2016. Credit risk in the banking sector is on a downtrend; however, the level of non-performing loans is still high at 10.2% of total loans.  

The Council also discussed the situation in the fiscal sector, which recorded an increase in revenues, while the budget expenditure declined over the nine months of 2016. Fiscal deficit was recorded, albeit in the amount lower than in the comparative period of 2015. 

At the end of third quarter of 2016, the government debt (gross) amounted to 2.3 billion euros, or 61.8% of GDP.

Indicators point to an increased fiscal risk caused by the public debt pressures. 

To that end, the Council supported the announced Recovery Plan, adopted by the Government. The Council underlined as particularly encouraging the Budget consolidation aimed at reducing the existing fiscal risks.  

The past three quarters of the 2016 were marked by a year-on-year increase in the current account deficit of 13.1%. High import dependence is still present in foreign visible trade; however imports for the purposes of highway construction were reflected as an increase in visible imports. The inflow of foreign direct investments remains moderate, amounting to 551.9 million euros, while the net amount was 281.9 million euros.  

The banking system is stable, solvent and liquid. The insurance market shows favourable trends and stable development, while the situation in the capital market remains unchanged.

The Council finds the condition of the financial system stable in the nine months of 2016.

The Council also discussed the Information on establishing a Database of Traded Real Estate in Montenegro, and supported this initiative.

CENTRAL BANK OF MONTENEGRO
Podgorica, 16 December 2016

Working Breakfast with the Governor of the Central Bank of Montenegro

On the eve of the New Year and Christmas holidays, the Governor of the Central Bank of Montenegro, Mr. Radoje Žugić, hosted today a working breakfast with the Montenegrin bankers.

The Governor informed the representatives of banks of the directions of Central Bank’s activities in 2017 that are aimed at achieving basic objectives of the functions under the competence of the CBCG, and that are defined in the current Policy and Guidelines for 2017:

1. Maintaining the stability of the banking and financial system and price stability;
2. Soundness and efficiency of payment operations;
3. Efficiency in in performing the activities of fiscal agent and government banker;
4. International reserves management;
5. Supporting the Government of Montenegro in pursuing economic policy.

The Governor underlined that the CBCG’s activities for this year are aimed towards intensifying the cooperation with banks with a view to achieving a countercyclical  effect and putting a stronger focus on the recovery of the real economy. Thus, in addition to primary objectives, the activities are directed towards reducing the two key risks as regards the stability of the economic system, i.e. towards strengthening of liquidity (along with the recovery) of the real sector and contributing to the reduction of fiscal pressures, without jeopardizing the independence of the Central Bank. It is expected that these activities will also result in two important contributions to the achievement of the objectives of the CBCG.

1. Reducing the vulnerabilities of the banking system (by taking an active approach to restructuring of solvent debtors and the recovery of banks’ portfolios)
2. Reducing the negative public perception regarding the level of profits in the banking sector that are deemed to be to the detriment of Montenegro’s fragile economy.  

In addition, it was emphasised that the Central Bank envisages fulfilling its active role together with the banks in the upcoming year. Operational objectives of the Central Bank include the issues regarding interest rates, level of collateral, credit support for micro, small-sized and medium businesses, fostering healthy competition and applying good banking practices, restructuring of debtors with a view to actively engaging all interested parties in resolving the issue of non-service of obligations towards banks and the government, etc. 

Without downplaying the main priorities of the Central Bank, the stress is placed on sound and competitive business environment that will generate a sound debtor, which, through their debtor-creditor relation, generates a sound bank, which all together results in financial, i.e. economic stability. Lingering effects of the crisis require such proactive approach to monetary policy, in order to fully contribute to achieving a sound and stable financial and banking system, recovery and stability of the overall economic system, and valorisation of economic potentials necessary for future growth

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CENTRAL BANK OF MONTENEGRO
Podgorica, 15 December 2016

Meeting of the Governor of the CBCG and the CEO of TBW – Fortune China Magazine
(TIME Inc.)

The Governor of the Central Bank of Montenegro, Mr. Radoje Žugić, met today with Mr. Gregory Sorokours, the Chief Executive Officer of the Target Business World Ltd - Fortune China Magazine (TIME Inc.). The meeting was held with a view to conducting an interview with the Governor for the purposes of preparing an article on the investment climate and stability of Montenegro’s system. At the meeting, the Governor Žugić underlined that Montenegro’s banking system provides adequate opportunities to all investors, including potential investors/banks from China, which would contribute to the creation of support for the valorisation of country’s potentials. Report on Montenegro will be published in the renowned magazine FORTUNE China, which is a part of the TIME Inc. media group and which stands for one of the most influential publications in the business world. The focus of the Report will be on the existing economic ties with China and on new prospects for investment available to Chinese companies. In addition, the Report will present all the reforms which directly benefit the foreign investors.

The Governor pointed out that, as a trade and investment partner, China represents one of the priorities as regards international business relations of Montenegro and Montenegro’s economy. Enhancing the economic cooperation of the two countries is of extreme importance and interest for the policymakers as well as for the business world.

CENTRAL BANK OF MONTENEGRO
Podgorica, 13 December 2016

Governor Žugić met with the management of NLB Banka AD Podgorica

The Governor of the Central Bank, Mr. Radoje Žugić, met today with Mr. Andreas Burkhardt, President of the Board of Directors of the NLB Banka AD Podgorica and a member of the Management Board of the NLB d.d. from Slovenia, and Mr. Martin Leberle Chief Executive Officer of the NLB Banka AD Podgorica. Current situation and trends in the financial and banking sector in Montenegro and the role of NLB in it were the main issues discussed at the meeting.

The Governor underlined the significance and individual contribution of each bank in creating a stable and sound banking system, particularly in regards to banks which develop and implement sound banking practice, introduce innovations to the market, improve competition and enhance efficiency in mediation.  Such business support to the economy is among key prerequisites for a sound and sustainable recovery of entities that would result in a more vigorous economic recovery, reduction of risks and increase of stability in financial, fiscal and consequently, the entire economic system. 

The Governor introduced the representatives of the NLB Banka to the current CBCG policy, necessary changes to the regulatory framework and the priorities of the set objectives, appreciating the importance of adequate risk management, recovery of clients, the significance of regulation strengthening and the cooperation of regulatory authorities and commercial banks in Montenegro. Representatives of NLB Banka management   informed the Governor of the announced changes in the bank’s strategy and operational measures for their implementation. Bank’s development directions in the Montenegrin market are aimed at the clients’ recovery and service, reduction of non-performing loans, strengthening the bank’s position in the market, and increase of the bank’s efficiency in business.
 
The Governor of the Central bank concluded the t the focus on the “sound” client is of interest not only to the regulatory authority and the bank, but has larger scale significance in the recovery and development of Montenegro’s economic system.