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Europe > Montenegro

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Cover IMF Staff Country Reports
Montenegro: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Montenegro
International Monetary Fund. European Dept.
The 2024 Article IV Consultation discusses that the Montenegrin economy grew robustly by 6 percent in 2023 as consumption remained strong, tourism revenues exceeded pre-pandemic levels, and the influx of relatively affluent Russian and Ukrainian nationals due to Russia’s war in Ukraine contributed to growth. Growth is expected to moderate to 3.7 percent in 2024 and ease further to about 3 percent over the medium term. While system-wide indicators of financial stability are healthy, the Central Bank Governor needs to remain vigilant regarding lingering pockets of vulnerability. In order to better inform policy judgements, trends in domestic advantage, as well as the banking sector’s growing exposure to foreign securities need to be closely monitored. Diversification both within and away from the tourism sector can help decrease the vulnerability of the economy to shocks. A more conducive environment for a small and medium enterprises sector would enable it to benefit from the presence of skilled migrants in the country.
Keywords:
production GDP estimate; EU integration; economic growth prospects; Policy discussion; CBM balance sheet; European Union initiative; Fiscal stance; Anti-money laundering and combating the financing of terrorism (AML/CFT); Europe; Global
Cover IMF Staff Country Reports
Montenegro: Technical Assistance Report-External Sector Statistics
International Monetary Fund. Statistics Dept.
The International Monetary Fund (IMF)’s Statistics Department (STA) conducted a technical assistance (TA) mission to the Central Bank of Montenegro (CBM) for the compilation of external sector statistics (ESS) during April 28–May 13, 2021. The mission was funded by Eurostat to meet the European Union (EU)’s acquis1 from the ESS perspective. The mission focused on the compilation of quarterly international investment position (IIP),2 and assisted the CBM in preparing the Reserves Data Template (RDT) as well as in recording of financial intermediary services indirectly measured (FISIM) in balance of payments statistics.
Keywords:
BIS LBS; CBM data; IMF's Statistics Department; CBM staff; data template; International investment position; Balance of payments statistics; Foreign direct investment; External sector statistics
Cover IMF Staff Country Reports
Montenegro: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Montenegro
International Monetary Fund. European Dept.
COVID-19 hit the economy hard, but a strong recovery is underway. Public debt, already elevated before the pandemic, has increased further. The government has embarked on a reform program ‘Europe Now’, which aims to arrest outward migration through a sharp minimum wage increase, labor tax wedge reduction, and the introduction of a progressive tax code. The financial sector appears to have withstood the COVID-19 shock well.
Keywords:
production GDP estimate; staff growth estimate; authorities' baseline scenario; Montenegrin authority; taxation regime; Government debt management; Labor taxes; Europe; Global
Cover IMF Staff Country Reports
Montenegro: Technical Assistance Report-Report on External Sector Statistics Mission
International Monetary Fund. Statistics Dept.
The IMF’s Statistics Department (STA) conducted a technical assistance mission to support the Central Bank of Montenegro (CBM) for the compilation of external sector statistics in Montenegro during January 20–31, 2020. The mission recommended that the CBM compile preliminary quarterly International Investment Position data and submit them to STA for review by the end of December 2020. The mission recommended that the CBM start recording the Economic Citizenship Program (ECP) according to the characteristics of the payments from the applicants by the end of March 2020. The ECP was just introduced in 2019 and details of the program were not made available during the mission. The mission advised that the payments from applicants for the ECP should be recorded in services, current or capital transfers, or direct or portfolio investment, according to the characteristics of the payments. The CBM plans to start recording data based on the information obtained from the international transaction reporting system (ITRS). The mission advised that the CBM approach the agency in charge of the ECP to collect precise information on the characteristics of the payments and cross-check the data from the ITRS.
Keywords:
ISCR; CR; CBM start; Montenegro; asset; CBM use LBS data; ITRS; CBM plan; CBM record; loan assets; Foreign direct investment; External sector statistics; International investment position; Portfolio investment; Reserve assets
Cover IMF Staff Country Reports
Montenegro: Technical Assistance Report-Report on the Monetary and Financial Statistics Mission
International Monetary Fund. Statistics Dept.
This Technical Assistance Report on Montenegro highlights work of the mission with the authorities which included compiling monetary data based on the IMF standardized report forms (SRF), 1SR, and SRF 2SR, for depository corporations. While the depository corporations sector currently dominates the financial system in Montenegro, the Central Bank of Montenegro (CBCG) should also ensure the availability of source data for the compilation and dissemination of a quarterly Other Financial Corporations (OFC) survey given the sector’s potential to grow. The mission found the CBCG’s current data collection framework is broadly appropriate for the compilation of monetary data in line with the MFSMCG 2016 for the depository corporations’ sector, but further work is needed for OFCs. The mission advised on the correct treatment of negative interest accruals (due to negative interest rates) to ensure that the negative accruals diminish the value of the asset.
Keywords:
ISCR; CR; CBCG staff; financial system; CBCG official; CBCG's chart of accounts; CBCG management; holdings of Eurobond; holdings of government; CBCG's Directorate for Accounting; CBCG's holding; holdings of debt securities; interest receivables; CBCG's Information Technology Department; fair value; Monetary statistics; Chart of accounts; Commercial banks; Financial statements; Currencies
Cover IMF Staff Country Reports
Montenegro: Technical Assistance Report-Report on External Sector Statistics Mission
International Monetary Fund. Statistics Dept.
To support the compilation of external sector statistics (ESS) in Montenegro, the International Monetary Fund (IMF)’s Statistics Department (STA) conducted a technical assistance (TA) mission during December 4–15, 2017. The mission was requested by the Central Bank of Montenegro (CBM), the main ESS compiling agency, and supported by the IMF’s European Department. STA’s mission for the Enhanced General Data Dissemination System (e-GDDS) during June 28-July 4, 2017 also suggested TA for Montenegro to start compiling international investment position (IIP) and external debt statistics (EDS). The mission focused on assisting the CBM in preparing IIP, EDS, Reserves Data Template (RDT), and addressing persistent net errors and omissions. Compilation of IIP and EDS is required to be qualified for Threshold 2 of the e-GDDS. Montenegro does not participate in the Eurosystem, but it is fully eurorized. Euro circulating in Montenegro should be included in the assets of the IIP for Montenegro, but difficulty in estimating the amount had been preventing the CBM from compiling IIP for several years.
Keywords:
ISCR; CR; balance of payments; Montenegro; position data; portfolio investment position; CBM view; balance of payments division; CBM plan; FDI survey; bank transfer; equity security liability; Foreign direct investment; External sector statistics; International investment position; Currencies; Portfolio investment
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