FED increased the basic interest rate from 0.5 to one percent as a result of US exiting the economic crisis, which will affect the rise in the dollar exchange rate. The European Central Bank did not announce an increase in its base rate, and plans to spend the next couple of years injecting a total of 1,100 billion euros in the payment system, estimating that this would reduce the value of the euro by five percent.
The Ministry of Finance said that currently the total debt in US dollars is 220 million, of which 188 million is the Chinese loan. Grace period for returning this 20-year loan matures in six years. The loan was signed in 2014.
“Based on the current state of government debt, 88 percent of the debt is in local currency, the Euro. This is why at this time, there can be no significant increase in our obligations due to exchange rate changes. Some increase may happed due to the highway loan, which is in dollars, from which 188 million USD has been withdrawn, or 172 million euros”, explained the Ministry of Finance.
Economic analyst, Dr Vasilije Kostic, says that, with the exception of credit for the highway, the dollar does not have direct impact on Montenegrin economy.
“But there are indirect impacts, related to direct dollar payments of companies. They will now have to pay more expensive, increasing their costs and hence prices, which will reduce competitiveness”, says Kostic.
It is known, he adds, that the change in the dollar exchange rate until the expiration of the grace period for the highway loan will not affect the amount of the debt, but upon expiry of the grace period, our finances will be exposed to changes of the dollar exchange rate.
He says the movement of the dollar exchange rate is ‘the million dollar question’, but that he thinks the dollar’s growth will be natural and moderate, especially in relation to the Euro.
