100th Meeting of the CBCG Council


29/07/2021

The Council of the Central Bank of Montenegro held its 100th meeting today, chaired by the Governor, Mr Radoje Žugić. 


The Council discussed the effects of the previous nine sets of measures that the CBCG passed with the aim of mitigating the negative consequences of the coronavirus pandemic on the economy and population. It was concluded that the measures have achieved their full effect, especially in providing support to the most vulnerable categories of private individuals and legal entities, and that the CBCG`s response under conditions of growing uncertainties was adequate, allowing it to maintain a balanced support to the economy and citizens and preserve the soundness of the banking system and, consequently, maintain financial stability in the country. 


With a view to assessing the need for potential calibration of the measures, the CBCG analysed available macroecnomic data for the first half of the current year, taking into account the forecasts of the current and future economic trends made by the relevant international institutions and the Government of Montenegro. Positive trends have been recorded in the country`s important industries (industrial production, tourism, retail trade), and the forecasts for 2021 GDP trends are very optimistic as well. Therefore, the relevant institutional forecasts indicate a gradual recovery of Montenegro`s economy. 


Taking into account the above, as well as the positions of the international institutions regarding the duration of temporary measures involving the banking sector, primarily the opinion of the IMF, the CBCG Council assessed that there is no need to adjust the defined measures nor their validity periods. Certainly, the implementation of measures will be subject to ongoing CBCG monitoring and response in line with developing circumstances. 


The Council recommends the banks to support the efforts of economic policymakers aimed at economic recovery of the country through stimulating credit policies. The latest data on the banks` operations shows that they approved 515 million euros worth of new loans, which is 33.81% more than in the same period last year but 8.97% less than in the same period in 2019. In the first six months of the year, total deposits rose by 9%, which confirms the high confidence in the banking system and the regulator.


The Council also discussed and adopted the Inflation report for Q1 2021. The report states that March inflation amounted to 1.4% and price increase was mainly the result of the global rise in oil prices that affected the prices of transport (5% increase), as well as the prices of most food products within the category food and non-alcoholic beverages (1.8% increase). The model projection indicates that 2021 inflation will range between 1.6% and 3.4%, with the central projection around 2.6%. The CBCG`s expert assessment is similar and projects the annual inflation in the range of 1.75% to 4%, with the central projection around 2.75%. 


The CBCG Council also considered the Report on Central Bank operations and implementation of the Central Bank Policy in May 2021 and the Macroeconomic Report of the Central Bank of Montenegro for Q1 2021, and discussed other relevant issues within its authority.