Montenegrin delegation takes part in 2013 IMF - World Bank annual meeting in Washington

Washington, the USA (14 October 2013) -- Montenegrin delegation, headed by Finance Minister Radoje Žugić and Governor of the Central Bank Milojica Dakić, takes part in the 2013 IMF - World Bank annual meeting in Washington. Montenegro’s representatives met Sunday with a number of senior officials of the two institutions: Laura Tuck, Vice President of the World Bank; Reza Moghadam, Director of the IMF European Department; Ellen Goldstein, World Bank Country Director for the Western Balkan, and Nadeem Ilahi, Head of the IMF’s Mission to Montenegro.

Finance Minister Žugić informed the IMF and World Bank's representatives about the most recent fiscal developments in Montenegro. He pointed out that a number of “serious” fiscal measures, such as the VAT increase, increase in income tax rates, brake on public sector pay, stricter control of gray economy and general fiscal austerity, have been carried out. These measures have yielded significant results and tax revenues increased by 9% in the first nine months of 2013 compared to the same period last year, FM Žugić underlined. If there had been no threats from the previous period (activation of guarantees for the Aluminium Plant Podgorica - KAP and enforceable court judgments), Montenegro would have had a balanced budget, he stressed.

Minister Žugić also acquainted the international institutions’ representatives with a new package of fiscal measures, which is being prepared. Its most important measures are related to: adjustment of public sector salaries in line with real possibilities as far as the budget deficit and public debt are concerned, changes in personal income tax, harmonisation of excise tax with new models of tax collection, more severe punishment of returnees in violating tax regulations, etc.

Governor Milojica Dakić informed the representatives of the IMF and World Bank about the state of the banking sector and financial stability. He pointed out that Montenegro has seen an increase in deposits, loans, bank assets, liquidity, as well as a tendency of decline in interest rates in 2013. As key vulnerabilities he mentioned high level of non-performing loans, high interest rates and level of illiquidity in the real sector. The overall level of risk to financial stability is moderate, Mr Dakić noted, emphasising that the preparation of the Podgorica Model for voluntary financial restructuring of non-performing loans is in its final stage and its implementation is likely to start in the first quarter of 2014.

IMF and the World Bank’ representatives noted that significant fiscal measures gave good results, but they also encouraged the Montenegrin delegation to pursue further fiscal consolidation measures. It was said that the new direct foreign investments, which implementation is underway, will contribute substantially to Montenegro’s economic growth and fiscal stability.

Laura Tuck, Vice President of the World Bank, highlighted that the World Bank is willing to continue talks with Montenegro about loans to improve energy efficiency and industrial waste treatment, and that they are available until the end of 2013.

Montenegrin delegation and the IMF’s representatives arranged the organisation of a banking forum, sponsored by the Central Bank of Montenegro and IMF, which will be attended by Montenegrin banks, their parent banks, regulators of parent banks and representatives of the World Bank and IMF.

The meeting also agreed technical assistance in the area of reporting public debt according to ESA 95 standards, advancement of measures in managing public debt and further improvement of tax regulations.