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Europe > Montenegro

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Cover IMF Staff Country Reports
Montenegro: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Montenegro
International Monetary Fund. European Dept.
This report highlights the recent economic developments and outlook and risks related to the Montenegro’s economy. It also discusses policies which need to be implemented to boost growth. Montenegro’s economy has rebounded in the past year, and strong growth looks set to continue in 2016, at slightly more than 4 percent. Although the government’s growth strategy can bring substantial gains, it also carries sizable risks, notably to the public finances. The authorities have taken various policy measures to (1) contain fiscal sustainability risks, (2) sustainably revitalize credit conditions, (3) safeguard financial sector stability, and (4) boost competitiveness and economic flexibility.
Keywords:
ISCR; CR; asset; production GDP estimate; asset quality; consumer price index; Montenegro; article IV staff; growth strategy; Montenegro's economy; Montenegro authorities; insurance oversight framework; assessment of the resilience; Credit; Public sector wages; Global
Cover IMF Staff Country Reports
Montenegro: Staff Report for the 2014 Article IV Consultation
International Monetary Fund. European Dept.
KEY ISSUES Context: Moderate growth is continuing; however credit and wage growth are weak. The level of nonperforming loans (NPLs) remains high and public debt has risen sharply in recent years. Fiscal policy: Medium-term funding needs to roll over existing debt and to fund budget deficits are large. A new highway, budgeted to cost about one quarter of GDP, will cause deficits to widen and add to public debt. The draft 2015 budget shows appropriate restraint on other spending, but a long period of strong fiscal discipline will be needed to manage fiscal risks. Laying out clear long-term plans for managing the public finances would boost credibility and reduce risks to market access. Fundamental expenditure reform, especially of the pension system and the public sector wage bill, would be an essential part of such plans. Financial sector: The banking system’s liquidity appears comfortable; however, profitability is low and lending spreads are high. Regulatory provisioning is set higher than that reported under international accounting standards, but a wide range of provisioning levels across banks and weak incentives to take losses remain concerns. A more transparent and comprehensive reporting environment would be beneficial. Reforms to ensure better enforcement of contracts and collateral would help bring down structural lending risk premia. Structural reform: Higher levels of labor participation and employment are needed to boost potential growth and safeguard the public finances. Ensuring that wages adjust in line with productivity alongside reforms to achieve better employment outcomes and boost productivity would enhance the economy’s ability to respond to macroeconomic shocks, and are even more important in a country that lacks its own currency and with decreasing fiscal buffers.
Keywords:
ISCR; CR; authority; growth potential; public-sector wage bill; growth; banking system health indicator; Montenegrin authority; credit condition; financial asset; Loans; Current account balance; Income; Personal income; Global; Eastern Europe
Cover IMF Staff Country Reports
Montenegro: 2013 Article IV Consultation
International Monetary Fund. European Dept.
This 2013 Article IV Consultation highlights that Montenegro’s recovery from the collapse of the lending boom in 2008 has been slowed by the debt overhang that remains in the private sector. Output contracted in 2012 because of unusually severe winter weather early in the year, as well as a sharp decline in aluminum production as the financial position of the troubled aluminum company (KAP) continued to worsen. Activity picked up in early 2013 as more favorable weather conditions resulted in a sharp increase in hydro-based electricity production. A sustained, multi-year fiscal consolidation effort is needed to reduce the public debt burden to an appropriately low level in the medium term.
Keywords:
ISCR; CR; debt; Montenegro; current account; private sector balance sheets; lending boom; labor market; sluggish private sector demand; financial asset; debt accumulation; Credit; Tourism; External sector statistics; Global
Cover IMF Staff Country Reports
Montenegro: 2011 Article IV Consultation-Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Montenegro
International Monetary Fund
Since its independence in 2006, Montenegro has experienced an economic and financial roller coaster ride. The baseline is predicated on continued improvements in cost competitiveness and productivity-raising foreign direct investment (FDI). Avoiding a relapse into recession will thus require strengthening the health of the banking system and removing impediments to restructuring the economy. Montenegro’s attractiveness to investors will depend on reducing macroeconomic and structural vulnerabilities. The business environment needs to be further improved. Redressing solvency issues and improving liquidity were jointly seen as priority tasks.
Keywords:
ISCR; CR; staff recommendation; authority; staff; authorities of Montenegro; policy effort; swift response; fund team; Commercial banks; Income; Credit; Personal income; Government finance statistics; Global; Europe
Cover IMF Staff Country Reports
Montenegro: 2010 Article IV Consultation-Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Montenegro.
International Monetary Fund
This 2010 Article IV Consultation highlights that Montenegro has been hard hit by the global financial crisis. Contagion and concerns about the robustness of the banking system have triggered large deposit withdrawals and a credit crunch. Moreover, the unwinding of the real estate boom has generated strong negative wealth effects that depressed demand. The authorities have taken wide-ranging measures to stabilize the financial system and rekindle lending activity. Foreign parents have also stepped in with substantial liquidity infusion.
Keywords:
ISCR; CR; deficit; authority; mall; authorities of Montenegro; priced government service; IMF staff estimate; blanket deposit guarantee measure; further labor market reform; state guarantee; deposit withdrawal; Credit; Wages; Government finance statistics; Monetary statistics; Global; Europe
Cover IMF Staff Country Reports
Republic of Serbia: Staff Report for the 2010 Article IV Consultation, Third Review Under the Stand-By Arrangement, and Financing Assurances Review
International Monetary Fund
This 2010 Article IV Consultation highlights that the authorities’ adjustment program has contributed to limiting the fallout of the global crisis on Serbia. Although the output slump has been limited relative to regional peers, the decline in domestic demand has been significant, resulting in a strong external adjustment. The outlook for 2010 points to a slow but balanced recovery. The pickup in growth will likely be moderate, reflecting slow trading-partner recovery, protracted corporate deleveraging, nominal freezes in public wages and pensions, and lagging labor market adjustment.
Keywords:
ISCR; CR; policy; tolerance band; policy action; adjustment strategy; regime; inflation expectation; consumer cash loan; growth potential; Pension spending; Fiscal stance; Balance of payments statistics; Global
Cover IMF Staff Country Reports
Republic of Montenegro: 2008 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Republic of Montenegro
International Monetary Fund
This 2008 Article IV Consultation highlights that Montenegro has made significant progress in overhauling its economy. The authorities have taken several welcomed steps to help strengthen financial sector stability. Executive Directors have welcomed the structural reforms implemented over the past few years and financial integration that have helped Montenegro attract substantial foreign direct investment and generate rapid growth with moderate inflation. Directors have also supported the authorities’ actions to bolster financial system stability and reduce vulnerabilities by intensifying supervisory oversight, tightening prudential regulations, and lifting bank capitalization requirements.
Keywords:
ISCR; CR; FDI inflow; Montenegro; authority; deposit; credit growth; Montenegrin authorities; parent bank; response to the financial crisis; Commercial banks; Credit; Government finance statistics; Foreign direct investment; Global; Europe