Statement by the Minister of Finance Igor Lukšić

The information on state debt on the day 31.12.2007 produced, as you know, according to the Eurostat-prescribed methodology had shown that the latest estimation of the gross domestic product indicates certain decrease, as you know Monstat had yesterday published the data for the year 2006, which are significantly greater then our initial estimation, therefore, estimations for years 2007 and 2008 are also increased. Due to that, the gross national product for the year 2007 shall, according to our estimation, amount 2 billion 450 million Euro and therefore the total public debt amounting 737 million Euro shall maintain the level of 30.1% of the gross national product. One should have in mind that one part of the debt is calculated in USD, and since this currency had depreciated meanwhile, if we are to use the current course, the debt would maintain the level of 29.9% of the gross domestic product. This simultaneously implies the significantly better data regarding the gross domestic product evaluation, and the Ministry of Finance had given the projections for this year around 2 billion 720 million Euro, i.e. 4 thousand 400 Euro per capita, or 6 thousand 800 USD. As you may note, the real increase in year 2006 was 8.6%, which is the fastest growth of an economy, beyond the regional level. That puts Montenegro in line with Baltic states, which had had a very rapid growth as well this year.
Speaking of the Law on Remuneration of Users of the Retirement and Disability Funds rights, that is a well-known problem, and the issue we had been dealing with very intensively during the previous months, so in order to define the payment dynamics, it was necessary to treat this as a public debt, which was not yet included in the calculations, due to the fact that only when the Law is adopted and the bonds are converted, we may monitor that part of obligations. Therefore, we are talking about six retirement paychecks to be converted by this Law in public debt for which we define the payment dynamics, because, as you know, payment of one of eight delayed paychecks is expected nowadays, one had been paid in December, one should be paid nowadays, so six paychecks remain to be paid. Due to the Fund calculations, the remaining debt amounts approximately 90 million Euro or somewhat less, to be precisely determined after bonds emission, i.e. conversion. This Law, proposed to be urgently adopted by the parliament, prescribes payment of another retirement paycheck by the end of this year, namely on October 20th, to pay two additional amounts in April and October 2009, three more in 2010 in April and October, and finally the sixth on April 20th 2011. The deadline is therefore three years. However, the thing that would really enable faster spending of these bonds, i.e. collecting the debt by the retired persons are the options of bonds use. Besides the previously used modes for other debt categories such as payment of tax obligations providing that the bonds owner has any, purchase of state-owned shares or other property as the Government prescribes the possibility, we would include something that we believe would be appealing for this population use of the bonds for settling the electric bills. That should be done in accordance with the Rulebook to be prepared immediately after adoption of this Law and therefore enable the use of those bonds for the stated purpose. In that manner, the bonds to be emitted according to this Law shall be usable before the expiry date, of course for the bills due for the year the bonds are issued for, namely, after adoption of the Rulebook the bonds due on October 20th can be used for electric bills payment for this year, and so on in the next years...
As for the third decision, it is derived from an earlier information we had proposed to the Government, so we had decided to offer the owners of Old foreign currency savings bonds due in 2016 and 1017 to buy them for the price of 0.50 Euro cent per Euro. We consider that this sort of decision should be welcomed by the owners of these bonds, mostly because the prices are above the ones established on the Exchange for the bonds due in 2016 2017. That, of course, does not include only the owners of the Old foreign currency savings converted in public debt in 2004; it shall also include the non-resident banks such as Jugobanka and similar, to receive those bonds during this year and to be available for trading from July, and shall be applicable on the moment those bonds are issued for the owners of old foreign currency savings of Dafiment bank, Jugoskandik bank, according to the Law recently adopted by the Parliament.