Meeting of the Financial Stability Council
20/02/2024
The Financial Stability Council held a meeting that was chaired by Ms Irena Radović, the CBCG Governor and the Council Chairman, and attended by the Council members Mr Novica Vuković, the Minister of Finance, Mr Željko Drinčić, the President of the Capital Market Authority, and Mr Marko Ivanović, the President of the Insurance Supervisory Agency’s Council. The Director General of the Deposit Protection Fund, Mr Vojin Vlahović, also attended the meeting at the Governor’s invitation.
At the 67th meeting of the Council, the members discussed the Information on Financial Stability for Q4 2023 which detailed trends and challenges stemming from the domestic and international environment. The information presented in this document shows that almost all economic sectors recorded growth, so estimates for Montenegro`s 2023 economic growth are some 6%. Inflation slowed down during the previous year, with the annual rate standing at 4.3% in December and the average 2023 inflation rate amounting to 8.6%.
At the aggregate level, the financial sector continued to record positive trends in 2023. Observed year-on-year, bank capital, deposits, and loans recorded respective growths of 22%, 4.8%, and 11.9%. At end-Q4 2023, the share of non-performing loans and receivables in total loans was 5% or 0.04 p.p. less than at the end of Q3, and 0.7 p.p. less compared to the end of 2022.
Taking into account these ratios, the Council members assessed that the systemic risk to financial stability was moderate. They emphasised the need for continued careful monitoring of the financial system stability indicators since Montenegro`s economy was still under the influence of global geopolitical uncertainties.
The Council members also expressed their full commitment to the process of Montenegro’s accession to the Single Euro Payments Area (SEPA). To that end, the CBCG and competent ministries have been undertaking intensive activities in preparing the application for joining the SEPA, which will be sent to the European Payments Council in the following period. “Joining the SEPA would represent one of the clearest signals of our country’s taking a concrete step towards EU accession, with numerous benefits for citizens and the economy through the process simplification, acceleration and reduction of transaction costs”, it was concluded at the session.
The Council members also discussed the potential issue of government bonds on the domestic market. This initiative was welcomed, and the Council highlighted that the Government needs to investigate all potential sources of funding against the backdrop of deteriorated borrowing conditions on the international financial market.