IMF is ready to provide support to Montenegro, and make sure that fiscal policy in the coming period is focused on the sustainability of public debt, head of the IMF Mission to Montenegro, Mr Srikant Seshadri, said in the continuation of regular autumn meetings of the International Monetary Fund and the World Bank.
“Montenegrin delegation, composed of representatives of the Central Bank of Montenegro and the Ministry of Finance, participated in a virtual session of the Belgian-Dutch constituency, which was chaired by the President of the Central Bank of the Netherlands, Mr Klaas Knot. The session was also attended by senior officials of the other 14 member states of the Constitution (Armenia, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Georgia, Israel, Luxembourg, Moldova, the Netherlands, Northern Macedonia, Romania and Ukraine)”, the Central Bank said.
It was pointed out at the session that this year’s autumn meetings of the IMF and the World Bank mainly deal with the topic of the COVID-19 pandemic, which has brought serious health and economic problems on a global level. The decline in the economic activity and the disturbed fiscal balance conditioned the growth of public debt, which, in many countries, was at a worrying level even before the crisis.
“This situation raises two key questions – how to preserve people’s health and how to cope with the economic crisis and provide conditions for recovery. The participants agreed that, due to the narrow fiscal space, it is necessary to carefully create, implement and monitor fiscal policy, so that the health and economic crisis do not escalate into a financial or debt crisis. Well-designed structural reforms are crucial to recovery and macroeconomic stabilization, the session concluded. The need for continued close cooperation of all members of the Constitution was emphasized, as well as the readiness of the IMF and the World Bank to provide assistance to member countries, “the statement added.
Montenegrin delegation also held a meeting with the Director of IFC (International Finance Corporation (World Bank Group)) for Europe and Central Asia, Ms Wiebke Schloemer. At this meeting, CB Governor, Mr Radoje Zugic, opened the issue of providing sources of financing for microfinance institutions in Montenegro, which, according to him, would “contribute to lowering interest rates offered by microfinance institutions in the country, which currently represent a great burden for their clients.” It was agreed to continue communication on this issue in order to consider the possibility for this corporation to support the MFI sector in Montenegro.
Representatives of the World Bank said that Montenegro had met all the conditions for approval of the DPL (Development Policy Loan) arrangement and that its conclusion was expected in the coming period.
Montenegrin delegation also talked with the head of the IMF Mission to Montenegro, Mr Srikant Seshadri. Governor Žugić informed him about the situation in the banking sector, emphasizing that the situation is stable for now and that banks have preserved their liquidity and solvency, significantly contributing to that by the measures that the CBM adequately and timely implemented. Also, CBM measures, such as the introduction of a mandatory moratorium, have greatly helped citizens and the economy to cope with the crisis.
Representatives of the Ministry of Finance presented the latest macroeconomic data and said that the Montenegrin economy had suffered a strong negative impact of the pandemic and worsening of fiscal indicators. In order to mitigate the negative consequences of the pandemic on the population and the economy, the Government has, so far, adopted three packages of measures, the implementation of which is underway.
