Fiscal Consolidation, Structural Reforms and Greater Capital Allocations are Necessary


At the invitation of the European Central Bank, the Governor of the Central Bank of Montenegro, Mr. Radoje Žugić, participated in the conference dedicated to the countries of central, eastern and south-eastern Europe (CESEE) that was held on 17 July 2023 in Frankfurt am Main, Germany.

The conference titled Changing geopolitical landscape – economic implications for central, eastern and south-eastern Europe brought together representatives of the European System of Central Banks, central banks of EU candidate countries and potential candidates, international financial institutions and the academia.

In her opening speech, the President of the European Central Bank, Ms. Christine Lagarde, highlighted that there are two broad shifts reshaping the global economy that may have profound implications for the CESEE region and these are the rising geopolitical tensions and the weakening of global trade. Ms. Lagarde stressed that a changing geopolitical landscape means that a new foundation for strengthening resilience is needed and it relies on further deepening of economic and political ties between the European Union and the neighbouring regions, adding that despite an exceptionally difficult 2022, the prospects for the CESEE region are encouraging.

As the conference moved forward, the participants discussed the ways of overcoming the challenges that economies in the CESEE countries have been facing.

On the sidelines of the conference, the Governor Žugić had several bilateral meetings with colleagues from the region, where they discussed the impact of the macroeconomic environment on the functioning of central banks and the shaping of their policies. It was concluded that economic policies must focus on fiscal consolidation, structural reforms and maintaining financial stability, and that it is necessary to encourage growth, especially through greater capital investments.