Bloomberg.com: Montenegro Won’t Rule Out Eurobond, Vice Premier Says

http://www.businessweek.com/news/2010-11-08/montenegro-won-t-rule-out-eurobond-vice-premier-says.html

Nov. 8 (Bloomberg) -- Montenegro’s “fantastic” response to its first-ever Eurobond this year means the country may return to the markets in 2011, deputy Prime Minister Vujica Lazovic said.

The country doesn’t need help from the International Monetary Fund as it expects its budget deficit to narrow from “about” 3 percent of gross domestic product in 2010 to 2.6 percent next year, Lazovic said in an interview today at a conference in Vienna.

A decision about international bond offerings will depend on how the economy performs, he said. The economic crisis is “leaving” and the country is anticipating GDP growth to accelerate to 2.5 percent next year from an estimated 0.5 percent in 2010, he said.

Montenegro, which split from Serbia in 2006, unilaterally adopted the euro as its currency in 2002. Revenue in tourism, which accounts for 25 percent of GDP, rose an annual 5 percent in the first nine months of the year, a sign that the economic crisis is easing, Lazovic said.

The government’s growth forecast trails an IMF projection of 3.5 percent for next year, because the Cabinet wants to have room to maneuver on fiscal policy should growth underperform or exceed expectations, Lazovic said.

“Most certainly,” growth “will be 2.5 percent, although we are counting on more than that,” Lazovic said, adding that for the first time there is widespread political stability in the region.

The Montenegrin government will focus on completing tenders through the first half of next year to build a highway linking the Adriatic coastline with the Serbian border and construct new hydro-electric plants, Lazovic said.

The government will look to encourage public-private partnerships across the economy, including the health-care industry, port upgrades and the development of state-owned companies.

--Editor: Balazs Penz.

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