Minister Radunović meets with IMF and IFC officials in Washington

Washington, the USA (17 October 2017) -- On the second day of the annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington, the Montenegrin delegation, headed by Minister of Finance Darko Radunović, met with IMF Vice-President Tae Zhang, Director of the IMF European Department Poul Thomsen and IFC Director for Europe and Central Asia Tomasz Telma.

The meeting with IMF Vice-President Tae Zhang and Director of the IMF European Department Poul Thomsen voiced satisfaction with the economic growth in Montenegro, the results of fiscal consolidation and the achieved level of financial stability, accompanied by a significant improvement in the performances of the banking sector.

It was pointed out that the growth achieved in the first half of 2017, at an average rate of 4.2%, was conditioned by the significant growth in the sectors of tourism, construction, transport, forestry. It was also noted that the external position in this year which was advanced thanks to primarily the strong growth of the service sector and the significant inflow of foreign direct investments. High officials of the IMF particularly welcomed the Government’s commitment to implementing fiscal consolidation measures, which, although strong and generally unpopular, aim to establish the sustainability of public debt. The first results of the consolidation were also recognised by the renowned rating agencies, which in recent reports have improved the economic outlook for Montenegro.

It was stressed that in the forthcoming period the focus should be placed on the timely creation of a better maturity of public debt and the level of interest payments, especially given risk of normalization of monetary policies of developed countries, which could lead to a rise in the cost of borrowing on international capital markets.

As to the banking sector in Montenegro, senior IMF officials confirmed that the banking sector, at the aggregate level, is stable and secure, and followed by continuous improvement of asset quality parameters, level of credit activity and profitability, which were previously labelled as relative high source of vulnerability. It was also concluded that the Central Bank of Montenegro made a major step forward in the past year in terms of improving the institutional framework, through the preparation of a set of systemic laws. It was pointed out that the new regulation provides for not only formal alignment of the institutional framework with the acquis, but also its systemic improvement and provides greater resilience of banks and the private sector to potential external shocks.

IMF representatives expressed the readiness of this institution to continue providing strong support to Montenegro, which will primarily focus on the stabilization of public debt and the reform of the financial system.

Meeting with the Director of IFC for Europe and Central Asia Tomasz Telma welcomed the intensification of cooperation through the recently approved project of constructing a bypass, a new boulevard and bridge in Podgorica Tomasz Telma, which opens up possibility for further cooperation on similar projects and in other local self-governments as well. Representatives of the IFC expressed interest in providing supporting the implementation of projects in the areas of sustainable tourism, infrastructure and agriculture.