Standard & Poor's and Moody's published reports on Montenegro's positioning

Podgorica, Montenegro (6 March 2020) -- New reports of credit rating agencies "Standard & Poor's" and "Moody's" confirmed Montenegro's B + / B i.e. B1 ratings, respectively, with a stable country outlook.

Analysing developments in the country, credit analysts at these agencies welcomed the path of development of Montenegro, estimating that the growth rate of the Montenegrin economy will exceed their expectations and it will be around 3.8% in 2019, while potential growth in the medium term will be 3.5%. In addition, according to the reports, despite the weaker growth prospects of the European economy, which will also affect the slowdown in Montenegro's growth rate, economic growth will remain strong in 2020 as well.

The high growth rates are the result of a strong contribution of the tourism sector, with 20% more revenue compared to 2018, as well as the growth in the construction sector. The reports welcomed the realisation and implementation of a number of projects in the energy sector, including modernisation of power plants, together with the production of electricity, which has an increasing focus on environmental protection and investment in solar and wind power plants. It was estimated that positioning Montenegro as an energy hub in the region, will enhance its competitiveness and export potential.

Additionally, it was stated that the continuation of significant private investments in tourist resorts will increase the capacities in the south and the north of the country, which will result in a higher degree of diversification and regional connectivity, higher household consumption and ultimately contribute to a greater economic growth.

Montenegro's long-term potential has been assessed as favorable, with the continuation of significant inflow of foreign direct investments (FDI), which are largely represented in the tourism and energy sectors. As it was estimated in the reports, FDI inflows will amount to about 10% of GDP annually. In addition, Montenegro's credit potential is further strengthened by the prospect of our country's joining to the European Union, accompanied by strengthening of institutions.

In light of the implementation of the structural reforms necessary for Montenegro to become an EU member, the Government's efforts to implement a large number of measures have been welcomed. Accordingly, reports have focused on measures, aimed at combating the informal economy, such as electronic taxation and boosted revenue collection.

In addition to the above, the main risks in the upcoming period, which were recognised by both rating agencies, are predominantly related to the further construction of the remaining sections of the motorway project and the possible effects on the fiscal position of the country.

Ministry of Finance