The Central Bank of Montenegro (CBCG) sent the recommendations to the Government for managing economic policy in 2021, which includes rescheduling of the loan for the highway construction. Considering that the highway was to be finished in 2019, with the loan repayment to start in 2021, loan rescheduling would be a logical thing to do. Montenegro has lost two years of charging the highway pay-toll, so it is necessary to consider the possibility of getting the compensation for that in the loan rescheduling, said the CBCG Governor, Mr Radoje Žugić, in an interview for the Pobjeda.
Asked if there are any indications that some problems could arise in the banking sector, Mr Žugić said that the banking sector entered 2020 highly liquid, which is why banks have shown good resilience to the crisis caused by the pandemic, and furthermore, they improved the risk management systems. At the end of 2020, the banking system as a whole is still stable.
There were three vulnerable banks over the last period, so in the two of them, bankruptcy proceedings were initiated, whereas the third one managed to meet the regulatory requirements and is now in the regular business operations regime.
Asked to assess the cooperation with the new Government and to comment on the Government’s reprimanding to CBCG for faulty regulation, Mr Žugić said that the CBCG are doing their best to improve the cooperation with the Government, and as for the reprimands, the best assessment of their work comes from the European Commission and IMF.
Mr Žugić said that the European Commission noted their progress in Chapter 9 Financial Services was good (level 4 of convergence out of 5), and it refers to the harmonisation with the EU acquis regarding the banking sector.
As for Chapter 4 Capital Movement Freedom, some laws have already been sent to the Parliament for adoption, whereas for some others comments by the EC have been received and will soon be sent to the Government and Parliament.
Asked if the criticism of the €750 M debt is well-founded, Mr Žugić commented that they had assessed the emission of Eurobonds to be a good move, as it will provide funds necessary for debt repayment and public spending financing, which will provide fiscal stability.
As for the question will the CBCG introduce further measures for minimizing the COVID-19 consequences, Mr Žugić’s answer was that the period ahead causes suspense and requires a watchful eye, in order to find new ways of dealing with the crisis.
It is important and also a real challenge to find the right balance between the necessary support to the economy and preserving the stability of the banking sector.
The Pobjeda asked about his opinion of the new government’s announced changes in the Law on CBCG. Mr Žugić’s opinion is that any amendments to the law would be a huge step back, as this law was by the 2017 amendments fully harmonized with the EU acquis, which created a legal basis for the CBCG to become a member of the European system of the central banks upon Montenegro’s accession to the EU.
