The deputy director of the EBRD, Peter Sanfey, said that it was clear there were some strong elements of growth of the Montenegrin economy.
“They are not reflected only in tourism but also in highway construction project. I think 4% economic growth is a very reasonable forecast for this year,” said Sanfey presenting the report on EBRD’s transition for the period from last year to this year.
He said that last year there had been an improvement in the economic performance and recovery in Montenegro.
“The percentage of economic growth for last year was slightly more than three per cent. One of the main things last year in Montenegro was the beginning of the highway construction. It is an important project for Montenegro, which provides a lot of opportunities, but also implies significant risks,” said Sanfey .
He added that Montenegro had made progress last year in terms of accession to the European Union.
When it comes to priorities for this year, Sanfey said it was very important to focus on the area of public finances.
“Few of us are concerned about the fact that the public debt in Montenegro increased a lot last few years. We know the reasons for the increase, but it is a huge burden for a small economy such as Montenegrin,” said Sanfey.
The EBRD assessed that it was important to manage public finances very carefully in the future.
Sanfey stated that the competitiveness of the business environment in Montenegro was rather good, but that there was still a room for improvement.
“We keep talking to investors and it is clear from these discussions that additional reforms are needed in the field of rule of law, real estate development and tax policy. Investors are worried about these things,” Sanfey added.
He stated that privatisation was also one of the priorities.
“Montenegro has made good progress in the area of privatisation and a good part of privatisation process is completed. However, there a lot of resources left that could be sold, particularly in the energy sector and tourism,” said Sanfey.
As he said, EBRD is ready to assist Montenegro in the privatisation sector.
When it comes to the region of 36 countries in which the EBRD operates, Sanfey said he anticipated certain recovery.
“There is a deep recession in Russia and we expect a further decline of their economy. Russia is very dependent on oil, and now the prices are quite low and are expected to remain low. Ukraine is also in bad situation, in the middle of a deep crisis”, said Sanfey.
Giulio Moreno, Head of the EBRD Resident Office in Podgorica, said that last year had been a successful one for that financial institution with €9.4bn investment in 381 projects and nearly €1bn profit.
“This was an important year for the Western Balkans. We invested a total of €461m and one part of it was invested in Montenegro,” Moreno said.
He said that the Montenegrin economy had reached a peak last year.
“This was a reflection of the growth of industry and tourism, which is very important, since the fact that the crisis in Russia and Ukraine had been clearly a bad signal for the tourism sector in Montenegro,” said Moreno.
As he said, the EBRD believes that Montenegro would become an energy hub for the Balkan region in two years.
“Installing the power cable between Montenegro and Italy, which is to be completed by the end of next year or in early 2018, is very important in this regard,” said Moreno.
He said that Montenegrin infrastructure had been gradually improved, but that it needed additional development in order to increase tourism capacities and to protect the environment.
“One of the remaining challenges is limited fiscal room and the overall liquidity of the financial sector,” said Moreno.
Last year, the EBRD signed 13 new projects in Montenegro worth the total of €99m.
“Since we started operating in Montenegro, the total investment has amounted to €538m. Thus, we have mobilised almost €1bn, having in mind that the bank does not finance the whole projects, but works on the principle of co-financing,” explained Moreno.
When it comes to the EBRD’s portfolio, Moreno said that it was energy sector, as well as financial institutions and infrastructure.
“Last year we invested more than it was planned by the budget. The focus was on energy with two important projects. One of them is the first wind power plant in Montenegro, ie the project on Krnovo hill that is more than €130m worth. The EBRD participated in the project with €48.5m,” Moeno said, adding that the second project was the construction of a mini hydro power plant on the Bistrica river, which was €5m worth.
When it comes to plans for this year, Moreno said they had already been working on some projects, including support for the reconstruction of the building of a new terminal at Tivat airport, as well as several projects in the energy sector in cooperation with Elektroprivreda (the Electric Power Company of Montenegro – EPCG) and Crnogorski Elektroprenos (the Montenegrin Power Transmission System – CGES).
“When it comes to EPCG, one of the projects will be the completion of installing smart electric meters,” said Moreno.
As he said, when it comes to project funded in the field of tourism, EBRD is interested in supporting new investments in the port of Bijela, as well as in the Institute Simo Milosevic.
Moreno said that the EBRD would announce its strategy for the next four-year period, which would not be significantly different from its current strategy for Montenegro.
“Our idea is to continue to be fully involved in the three main pillars of the current strategy, ie the expansion of the economic base, improving competitiveness and security of power supply and energy efficiency,” Moreno concluded.
