Press Releases 2017 - October
31.10.2017 - The CBCG marks the Savings Week for the fourteenth consecutive year
30.10.2017 - Sixteenth CBCG Council Session Held
30.10.2017 - ANNOUNCEMENT: Signing the Agreement on carrying out the "Savings Week" campaign
23.10.2017 - Positive effects of implementing the Law on Voluntary Financial Restructuring of Debts
20.10.2017 - ANNOUNCEMENT: A meeting concerning implementation of the Law on Voluntary Financial Restructuring of Debts towards Financial Institutions
17.10.2017 - Minister Radunović and Governor Žugić in Washington: Meetings with the IMF and IFC officials held
16.10.2017 - Fiscal Consolidation and Financial Policy Encouraging Results
09.10.2017 - Financial Stability Council meeting held
CENTRAL BANK OF MONTENEGRO
Podgorica, 30 October 2017
The CBCG marks the Savings Week for the fourteenth consecutive year
The Governor of the Central Bank of Montenegro, Mr Radoje Žugić, PhD and the Chief Executive Officers of all commercial banks signed the Agreement on carrying out of the "Savings Week" campaign today, which is being held in Montenegro for the fourteenth consecutive year on the occasion of 31 October - the World Savings Day.
The campaign under the slogan "First step towards the safe future" implies the joint action of giving savings books to children born 31 October through 6 November 2017 in Montenegro. Namely, children born in this period, whose parents open a savings account in one of the Montenegrin commercial banks, will be given 200 euros by the CBCG, and another 200 euros, along with a savings book, by the commercial bank which parents select. In this way, all children born in the mentioned period receive a gift of their first savings, in the total amount of 400 euros. The deadline for submitting the documents is 31 March 2018, while the savings book can be opened in one of the commercial banks only, with the identity card of both parents and a birth certificate for the new born child.
In addition to this, the CBCG devised a number of activities this year to mark the Savings Day, which will include a large number of children and young people. Therefore, today and tomorrow (31 October and 1 November) students of two primary schools from Podgorica will visit the Money Museum in Cetinje. The CBCG representatives will visit a number of preschool and school institutions from 1 to 6 November in order to explain the importance of savings to children and young people as well as to get them acquainted with basic financial terms and categories.
The CBCG will host students from four faculties (Faculty of Economics - University of Montenegro, Faculty of International Economics, Finance and Business - University of Donja Gorica, Faculty of Political Sciences - University of Montenegro and Faculty of Business Studies - Mediterranean University) and organize a debate on savings and its role in a society. This event will take place on Friday, 3 November.
Through the initiation and implementation of such educational and socially responsible activities, the Central Bank of Montenegro supports financial education, i.e. strengthening of financial literacy, which is a prerequisite for responsible money management.
CENTRAL BANK OF MONTENEGRO
Podgorica, 30 October 2017
Sixteenth CBCG Council Session Held
Savjet Centralne banke Crne Gore održao je danas šesnaestu sjednicu, kojom je predsjedavao guverner dr Radoje Žugić.
The Council of the Central Bank of Montenegro held the sixteenth session today, chaired by the Governor Mr Radoje Žugić, PhD.
The Council established the CBCG Policy in 2018, as well as the Guidelines for the Implementation of the CBCG Policy in 2018 at today`s session. In order to further stimulate and preserve financial stability, the Central Bank will improve the indicators for assessing the condition of financial stability and prevention of the systemic risks occurrence, as well as the instruments for their suppression in the next year as well. Furthermore, in order to strengthen confidence in the financial system as a whole, the CBCG will improve the stability and security of the banking system, timely identification and minimization of negative impacts, at the same time conducting a monetary and financial stability policy based on undertaking all necessary activities and implementing the available instruments and measures within its competence. The CBCG activities will also focus on improving the regulatory framework in order to harmonize it with the European Union directives, increasing the supervision capacity, which will strengthen the stability of the financial system and contribute to its further development. As so far, the CBCG will continue to maintain safe, efficient and effective payment transactions in the course of the next year, which will be the subject of further improvement through harmonization with the new European Union regulations and the implementation of international standards, principles and best practices in the functioning of modern payment systems.
The Council deliberated and adopted the Governor`s Report on Central Bank of Montenegro Business Activities and Policy Implementation for August 2017, which concluded that the activities of the Central Bank in this period were carried out in line with the commitments established by the Central Bank of Montenegro Work Programme for 2017.
The Council also adopted the Recommendations to the Government of Montenegro for 2018 Economic Policy, encouraging the stimulation of the growth potential, increase and improve of the overall stability of the system, simultaneously removing all recognized vulnerabilities of the Montenegrin corporate sector. Recommendations refer to four segments: real sector, financial system, fiscal policy and statistics. Recommendations in the real sector are related to the improvement of competitiveness, at micro and macro level, encouraging development, predominantly in the key corporate sectors (tourism, energy, agriculture and manufacturing) and further improvement of the institutional environment. The general objective of the recommendations in the area of the financial system is to preserve its stability by ensuring smooth and stable functioning of all segments of the system and efficient mediation in the field of financial services. Regarding the recommendations for the fiscal policy, they fully support the long-term goals of Montenegro's Fiscal Strategy 2017-2020, which primarily relate to strengthening fiscal stability and establishing the declining trend of the public debt. Recommendations given for statistics are aimed at achieving full harmonization of official statistics with the Acquis.
The most important trends that characterized the real, fiscal and financial sector in the previous quarter were analysed In the Macroeconomic Report for the Second Quarter of 2017. According to the MONSTAT preliminary data, the real GDP growth in the first half of the year was 4.2%, while, according to the CBCG estimates, similar growth is expected for the whole year. In the first six months of 2017, most sectors in the economy recorded growth when compared to the same period last year. In addition to industrial output, which recorded a decline of 9.6% in the first half of this year, compared to the same period of 2017, growth was registered in the sectors of tourism, construction, forestry, air and road transport. Inflation, measured by the consumer price index, was 2.1% in June 2017, while consumer prices recorded a 0.5% increase in June compared to the end of the previous year. In the first half of 2017, a decrease in the current account deficit by 5.1% was recorded, if compared to the same period of the previous year, which is a result of an increase in the surplus on the services account, owing to revenues from tourism and traffic, as well as positive developments in the accounts of the primary and secondary income due to the growth of remittances from abroad and increased use of the EU funds. Employment growth rate of 3.9% was recorded in the first six months of this year when compared to same period last year, while the number of employees in June was 6% higher than in December 2016.
The Council also discussed other current issues from the domain of its competence at today's session.
CENTRAL BANK OF MONTENEGRO
Podgorica, 30 October 2017
ANNOUNCEMENT: Signing the Agreement on carrying out the "Savings Week" campaign
The Governor of the Central Bank of Montenegro, Mr Radoje Žugić, PhD, and the Chief Executive Officers of all commercial banks, will sign an agreement on carrying out the "Savings Week" campaign tomorrow, which is being held in Montenegro for the fourteenth consecutive year on the occasion of 31 October - the World Savings Day.
The campaign under the slogan "First step towards the safe future" implies the joint action of giving savings books to children born 31 October through 6 November 2017 in Montenegro. Namely, children born in this period, whose parents open a savings account in one of the Montenegrin commercial banks, will be given 200 euros by the CBCG, and another 200 euros, along with a savings book, by the commercial bank which parents select. In this way, all children born in the mentioned period receive a gift as their first savings, in the total amount of 400 euros.
Signing of the Agreement will take place on 31 October at 12 hours in the CBCG Governor's Hall.
We ask the interested media to register the representatives who will attend the event to the e-mail address [email protected] no later than Tuesday, 31 October until 10:00 am.
CENTRAL BANK OF MONTENEGRO
Podgorica, 23 October 2017
Positive effects of implementing the Law on Voluntary Financial Restructuring of Debts
The meeting of the CBCG Governor with the chief executive directors of banks operating in Montenegro was held today.
The meeting was organized with the aim to review the effects of loan restructuring pursuant to the Law on Amendments to the Law on Voluntary Financial Restructuring of Debts towards Financial Institutions, after the adoption of its amendments in June this year.
Representatives of banks presented the results of the implementation of the Law on Amendments to the Law on Voluntary Financial Restructuring of Debts towards Financial Institutions, achieved over the past four months since their adoption. At the system level, inclusive 20 October, nine restructuring contracts were signed in the amount of EUR 10.2 million, of which the largest part (97.4%) refers to loans to legal entities, while the remaining 2.6% refers to loans from natural persons. In addition to the agreements concluded so far, and based on the signed agreements on the consent to enter the restructuring process, it is expected that the restructuring contracts will be signed in an additionally significant amount in the upcoming period.
Based on the data presented, the participants at the meeting concluded that the implementation of the Law on Amendments to the Law on Voluntary Financial Restructuring of Debts towards Financial Institutions had significant effects in a relatively short time period. Governor Žugić assessed the banks` commitment to improving the process of voluntary debt restructuring as positive, mentioning, in particular, that "reducing the level of non-performing loans contributes to the improvement of the quality of banking assets, faster recovery of borrowers and, ultimately, the stronger growth of credit activity and thus more dynamic economic growth."
It is expected that implementation of this law will have significant effects in the upcoming period, emphasizing that this issue, given the limited validity of the law, will be in the focus of the CBCG and all other banks. An invitation was also sent to all borrowers to use the possibilities of restructuring their loans in accordance with the Law.
The current improvement of the regulations and the implementation of the EU standards conditioned by the accession process of Montenegro to the EU was also discussed at the meeting, stressing that these activities will not jeopardize the profitability of banks or the banking sector stability. The obligation of banks to introduce international financial reporting standards (IFRS9) as of 1 January 2018 was discussed and announced that banks with a need for additional capital due to the implementation of these standards will have a period of four years to reach the required level of capital. The need to further improve the banking practice in certain banks was also highlighted.
The present agreed that the practice of frequent meetings and intensive communication between the CBCG and the banks is extremely useful, and that the cooperation of all participants contributes to a better functioning of the overall system.
CENTRAL BANK OF MONTENEGRO
Podgorica, 20 October 2017
ANNOUNCEMENT: A meeting concerning implementation of the Law on Voluntary Financial Restructuring of Debts towards Financial Institutions
The meeting of the CBCG Governor with the chief executive directors of banks operating in Montenegro will be held in the premises of the Central Bank of Montenegro on Monday, 23 October 2017.
The meeting is organized with the aim to review the effects of loan restructuring pursuant to the Law on Amendments to the Law on Voluntary Financial Restructuring of Debts towards Financial Institutions, after the adoption of its amendments in June this year.
Press statements by the CBCG Governor, Mr Radoje Žugić, PhD, and the Chairman of the Board of Directors of the Association of Banks of Montenegro, Mr Esad Zaimović are scheduled for 12:00 in the CBCG Governor's Hall.
We ask the interested media to register the representatives who will attend the event to the e-mail address [email protected] no later than Monday, 23 October until 10:00 am.
CENTRAL BANK OF MONTENEGRO
MINISTRY OF FINANCE
Podgorica, 17 October 2017
Minister Radunović and Governor Žugić in Washington
Meetings with the IMF and IFC officials held
The Montenegrin delegation, including the Minister of Finance, Mr Darko Radunović, Governor of the CBCG, Mr Radoje Žugić and Vice-Governor for Financial Stability and Payment System, Mr Nikola Fabris, met with IMF Vice-President Mr Tao Zhang, Director of the IMF's European Department Mr Poul Thomsen and the director of the IFC for Europe and Central Asia Mr Tomasz Telma on the second day of the annual meetings of the International Monetary Fund (IMF) and the World Bank, held in Washington.
Contentment with the economic growth in Montenegro, the results of fiscal consolidation and the achieved level of financial stability, accompanied by a significant improvement in the performances of the banking sector was expressed during the discussions with Mr Zhang and Mr Thomsen.
It was pointed out that the growth at an average rate of 4.2% was achieved in the first half of 2017, conditioned by the significant increase in the sectors of tourism, construction, transport, forestry... It was also mentioned that the external position in this year recovered, which was primarily conditioned by a strong growth of the services sector and the significant inflow of foreign direct investments. The IMF high officials particularly welcomed the firm commitment of the Government to implement fiscal consolidation measures, which, although strong and generally unpopular, aim to establish the sustainability of public debt. The first results of the consolidation were also recognized by the renowned rating agencies, which in recent reports have improved the economic outlook for Montenegro.
It was emphasized that the timely creation of a better maturity of public debt and the level of interest repayments should be taken into consideration in the forthcoming period, especially bearing in mind the risk of normalization of monetary policies of the developed countries, which could lead to a rise in the cost of borrowing on international capital markets.
In the discussions concerning the banking sector in Montenegro, the senior IMF officials confirmed it to be at an aggregate level, stable and secure, followed by a continuous improvement of asset quality parameters, level of credit activity and profitability, which were previously marked as relatively high source of vulnerability. It was also concluded that the CBCG made a major step forward in the past year in terms of improving the institutional framework, through the preparation of a set of systemic laws. It was pointed out that the new regulation provides not only formal harmonization of the institutional framework with the Acquis, but also represents its systemic improvement and provides higher resilience of banks and the private sector to potential external shocks.
The Vice-President and the Director of the IMF's European Department expressed the readiness of this institution to continue providing strong support to Montenegro, which will primarily focus on the stabilization of public debt and the reform of the financial system.
The intensification of cooperation through the recently approved project of constructing a bypass, a new boulevard and a bridge in Podgorica was positively assessed at the meeting with the Director of the IFC for Europe and Central Asia, Mr Tomasz Telma, which opens the possibility for further cooperation on similar projects and in other local self-administrations. The IFC representatives expressed their interest to support the realization of projects in the areas of sustainable tourism, infrastructure and agriculture business.
CENTRAL BANK OF MONTENEGRO
MINISTRY OF FINANCE
Podgorica, 16 October 2017
Fiscal Consolidation and Financial Policy Encouraging Results
The Montenegrin delegation, including the Minister of Finance, Mr Darko Radunović, the Governor of the CBCG, Mr Radoje Žugić and Vice-Governor for Financial Stability and Payment System, Mr Nikola Fabris, met with the Vice-President of the World Bank for Europe and Central Asia, Mr Cyril Muller, Director of the World Bank for Southeast Europe, Ms Linda van Gelder and Head of IMF Mission to Montenegro, Mr Martin Petri on the first day of the annual meetings of the International Monetary Fund (IMF) and the World Bank, held from 13 to 15 October in Washington, D.C.
Encouraging and credible results of the Fiscal Strategy, as well as the financial system, which was assessed as relatively stable and secure, were discussed at a meeting with Mr Muller and Ms Van Gelder. It was concluded that the recorded progress in economic policy created preconditions for efficient debt management, while an effectively implemented Fiscal Strategy ensures the sustainability of public debt in the medium term. Vice President Miller emphasized that the government made significant progress in improving the fiscal position and strengthening financial stability, reflected through the record growth of the economy in 2017 and improving its macroeconomic prospects by the prominent credit rating agencies. Financial stability has been enhanced and supported through the strengthening of the balance sheet, the recovery of lending and a significant decline in non-performing loans. With liquidity and solvency ratios at the level significantly above the legally prescribed minimum and a strong growth in credit activity, the banking system proves to be stable, solvent and highly liquid.
Significant progress of Montenegro in meeting the World Bank's priority activities for receiving support in the amount of USD 90 million guarantee was appreciated, which would contribute to Montenegro's more favourable access to international capital markets, as well as the stabilization of public debt. Real expectations are that this arrangement will be completed by the end-2017.
The idea of additional financing of the highly successful MIDAS project, in preliminary amount of a roughly USD 34 million was supported at the meeting with the Vice President Muller, which would provide additional support to the development of agricultural capacities and strengthening of the food safety system.
A strong growth in the first half of 2017 and the positive effects of the measures adopted within the framework of the Recovery Plan and Fiscal Strategy were discussed at the meeting with Mr Martin Petri, Head of the IMF Mission to Montenegro. The Montenegrin delegation showed appreciation to the IMF team for their support and quality recommendations, which were the grounds for forming a credible fiscal consolidation agenda, as well as for improving financial policy. On this occasion, the members of the Montenegrin delegation emphasized Montenegro's commitment to continuing the implementation of measures, which will contribute to the reversal of the public debt trend in the medium term. Technical assistance with the aim to continue implementing mid-term debt management strategy was also arranged with the IMF.
The Head of Mission confirmed that significant progress was made in the implementation of the 2016 FSAP (IMF and World Bank Financial Sector Assessment Program) mission recommendations. Specifically, intensive activities to improve the regulatory framework resulted in the preparation of a set of laws in the previous period, those including (i) the Central Bank Law, which is fully in line with the Treaty on the Functioning of the European Union and the Statute of the ESCB and of the ECB; (ii) the Law on Amendments to the Banking Law; and (iii) Bank Resolution and Recovery Law, implementing the Bank Recovery and Resolution Directive; and (iv) the Law on Financial Institutions, which provides for the regulation and supervision of the most important non-banking institutions by the CBCG, that will reduce the potential risk of their business to financial stability.
As the discussions continued, opinions on the 2018 Budget Plan, as well as on the modalities of reducing the non-observed economy through digital fiscalization were exchanged.
FINANCIAL STABILITY COUNCIL
Podgorica, 9 October 2017
Financial Stability Council meeting held
The 36th session of the Financial Stability Council was held today, chaired by Mr Radoje Žugić, Governor of the Central Bank and Chairman of the Council. All other members of the Council also attended the session, Mr Darko Radunović, Minister of Finance, Mr Branko Vujović, President of the Insurance Supervision Agency Council and Mr Zoran Djikanović, President of Securities and Exchange Commission. Upon invitation, Mr Predrag Marković, Director of Deposit Protection Fund, is present at the Council sessions.
The financial stability condition for the second quarter of 2017 was considered at today`s session. Impacts from the international and domestic macroeconomic environment were considered in this analysis, including risks and potential vulnerabilities that may have implications for systemic stability.
It was noted that the moderate economic growth in the countries of the Eurozone, i.e. the European Union continued in the second quarter of this year, with the reference interest rates of the European Central Bank remaining unchanged. Nevertheless, despite the moderate development of indicators and the unchanged direction of monetary policy, a reduction in uncertainty in the financial market and a positive impact on the growth of European developing countries is expected, as well as to the growth of the Montenegrin economy and the position of systemic risks.
As for the other influential economies, the United States, Russia and China recorded a growth in the second quarter of 2017, compared to the same period last year, which can also have a positive impact on the emerging economies.
According to preliminary estimates, the growth of Montenegrin economy in the first half of 2017 was about 4.2%. It was stated that the increase in the economic activity was mainly the result of the investment cycle, and that the construction, tourism and transport sectors had a dominant positive impact on the recorded growth, which had a positive effect on the liquidity of the real sector, although this risk is still present. If such trends continue in the economy, annual growth in 2017 can be expected at this level. A positive trend is followed by foreign direct investments, which recorded a strong growth of 41.7% in the first half of 2017, according to preliminary data and compared to the same period last year. Risks arising from the economic exchange of goods and services abroad are moderate.
Regarding the banking sector, it is characterized by positive trends, i.e. growth of capital, assets and deposits, as well as further intensification of banks' lending activities. The downward trend in non-performing loans continued in the second quarter of this year. Also, the indicators in the insurance market have a positive trend, while the situation in the capital market remained unchanged.
Based on the analysis of the impact of international and domestic factors on the overall economic stability situation, with particular emphasis on the stability of the financial system, the Council concluded that the financial system is relatively stable, with moderate intensity risks.
Among the ongoing issues, the Council supported activities in establishing a real estate database in Montenegro and adopted a Decision on the establishment of a temporary working body, with the task of preparing proposals for the establishment of the mentioned database, which will improve the quality of statistics in this area in the future.