“Risks in the national sphere still include a high level of low quality credits and lateness with structural reforms needed for financial stabilization and market competitiveness, as well as instability at the national political scene. These factors could decrease the level of trust in foreign investors and their retreat from Montenegro”, they warned from WB in their newest Report on Economic Tendencies in the Countries of South-Eastern Europe, that was presented earlier this week.
When it comes to Montenegro, WB estimates that the next year will be marked with continuous economic growth in this pace, with investments in public infrastructure and tourism, as main impellers of economic activity.
However, there are negative risks for those estimates.
“Lags or stagnation of growth in Eurozone or the world, as well as instability of financial markets as a result of monetary strictness are major outside risk for balanced budget and growth opportunities”, it is added in the Report.
WB stated that Montenegro’s fiscal policy will continue to be expansional until 2018.
“Deficit defined by the budget for this year is 6,2% of BDP, with an expectation that the growth will reach 4,1%. The Government plans to put forth 334,9 million EUR for capital investments, with an expectation of public debt rising to 72,3% of BDP”, the Report states.
In WB they said that the need for indebting this year will amount to 18% of BDP, in order to payout 389 million EUR of Euro-bonds, put forth 225 million EUR for the highway, and finance cash budget deficit and cover outstanding obligations of the health fund.
In WB they reminded that the Standard and Poor’s (S&P) in November confirmed long-term and short-term rating of Montenegro to be B+/B with estimated stability.
S&P je estimated that the average yearly economic growth will be 3,1% in the period since last up until 2018 year, with the support of large investments, primarily in tourism and energy. However, the rating is just a framework, because large deficit and public and foreign debt, especially highway construction, can pose a risk to public finances”, they said in WB.
WB predicts the growth of 3,7% for this year, and 3,1% for the next.
For the whole region the Report pertains to, Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia, WB predicts average rate of growth in this year to be 2,6%, and in next year 3%.
