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22/12/2022

At today’s meeting, the Council of the Central Bank of Montenegro approved the Draft Law on Amendments to the Law on Resolution of Credit Institutions to its harmonisation with the relevant EU directives, inter alia, the BRRD II Directive. These amendments will create prerequisites for additional strengthening of the capacity to cover losses and recapitalisation of credit institutions with a view to minimising the negative impact of possible resolution on the stability of the financial system and public finance. The entry into force of this Law fully harmonises the domestic legislative framework with EU regulations governing the credit institutions’ resolution.

Today, the Council considered and adopted the Central Bank of Montenegro Macroeconomic Report for Q3 of 2022. The Report states that real y-o-y GDP growth in Montenegro during the first nine months of the current year amounted to 7.1%, according to preliminary MONSTAT data. The achieved growth results from increased activities in tourism, trade and most types of transport.

The Inflation Report for Q3 2022, which the Council adopted today, stated that current trends indicate that this year’s inflation in Montenegro will be the highest since the restoration of independence. It pointed out that inflation was mostly imported, i.e. caused by international market factors, and the result of domestic imbalances in a minor portion. The model forecast for the end of 2022 projects that inflation will range from 16.2% to 18.9%, with a central projection of 17.8%. The CBCG expert assessment projects an inflation rate from 16% to 20%.

To meet the CBCG’s obligation to determine the countercyclical buffer rate quarterly, the Council adopted the Decision on the countercyclical capital buffer rate for Q1 2023. Based on the analysis of relevant trends in the banking sector and the overall economy, the Decision determined that the countercyclical capital buffer rate for the first quarter of 2023 will be 0%, as it has been until now.

The Council also adopted the Decision Amending the Decision on Capital adequacy of credit institutions and the Decision Amending the Decision on macroprudential measures related to retail loans granted by credit institutions, which extends the application of measures aimed at limiting the growth of unsecured cash loans natural persons also in the next year.

At the meeting, the Council also adopted the Report on Central Bank operations and implementation of the Central Bank Policy in October 2022 and the Quarterly Report on the banks’ operations (for Q3 2022) and discussed other current issues within the CBCG Council’s jurisdiction.