Governor Žugić participates at the Meeting of regional governors and bankers in Rovinj
The Governor of the Central Bank of Montenegro (CBCG), Radoje Žugić, participates in the 10th Meeting of regional governors and bankers, held in Rovinj on 5 and 6 May, organised by the magazine Lider and the Croatian National Bank.
The main topics of this year's Meeting cover the challenges related to the region's current economic, financial, and monetary situation. The participants in the Meeting discussed measures and policies implemented in the region's countries to minimise the adverse effects of rising inflation and the war in Ukraine. The challenging times in which we live call for even closer cooperation and exchange of views and opinions, it was said at the Meeting in Rovinj.
Governor Žugić spoke within the panel dedicated to monetary policy issues, which was attended by other governors from the region's countries - Slovenia, Croatia, Bosnia and Herzegovina and Northern Macedonia. In his speech, Governor Žugić identified the possible consequences of the Ukrainian crisis and sanctions against Russia on the Montenegrin economy. He pointed out that the initial shock on the side of the aggregate supply, and the resulting rise in oil and food prices, caused negative chain reactions, which primarily materialised through rising inflation. As far as Montenegro is concerned, direct consequences can be expected in the tourism sector, in fewer tourists from the Russian and Ukrainian markets. It is also realistic to expect a drop in investments, especially considering that Russia was the largest foreign investor in Montenegro in the previous year.
“The crisis caused by the war in Ukraine has shown that the Montenegrin economy's dependence on imports and its insufficient diversification are sources of potential risks,” said Governor Žugić. He concluded that the focus must be on developing domestic production, especially food, given Montenegro's resources in this area.
Expansive monetary policy and negative interest rates are in the function of economic growth. Still, it is necessary to consider increasing interest rates in high inflation conditions, which would be realised in phases and gradually following economic activity and inflation expectations.
On the sidelines of the Rovinj meeting, Governor Žugić and the Governor of the Croatian National Bank, Boris Vujčić, held a bilateral meeting. On that occasion, two governors signed a Memorandum of Understanding, which aims to improve further cooperation between the CBCG and the Croatian National Bank and promote the integrity, stability and efficiency of supervised entities and the financial system. The document specifies the principles of information exchange between the two regulators and the procedures for providing mutual assistance to perform better the responsibilities entrusted to them. The focus is on exchanging information and cooperation in the supervision of the supervised entities and their cross-border establishments.