INTERVIEW
Fiscal Consolidation
STRENGTHENS FINANCIAL POSITION RADOJE ŽUGIĆ GOVERNOR OF THE CENTRAL BANK OF MONTENEGRO
The Central Bank of Montenegro considers that the government is successfully implementing fiscal consolidation, and that and that, for its part, it is contributing to the implementation of these policies by empowering the banking sector through the continuous improvement of regulations and the strengthening of its supervisory function
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acroeconomic stability and the reform path of the Government of Montenegro contribute positively to increasing confidence in the banking sector, assesses Radoje Žugić, Governor of the Central Bank of Montenegro (CBCG), adding that this kind of policy has also contributed to reducing the risks associated with financing public debt. The CBCG actively supports fiscal consolidation measures through its own set of policies aimed at strengthening the position of the banking sector.
■ How would you assess the current situation in the financial sector? - I consider the banking system as representing the most developed part of the Montenegrin economy. The banking sector is stable, liquid, and profitable, such that it is characterised by a high degree of security – though at the individual level certain vulnerabilities, which are continuously decreasing, do exist. Banks' assets, which are in amounts over four billion euros, have exceeded the 2016 GDP level. Total deposits amount to 3.3 billion 28 | MONTENEGRIN FOREIGN INVESTORS COUNCIL 2018
euros and have also been marked by a significant increase of 14.83% over the annual comparative period. The growth in deposit potential is reflected in confidence in the banking system. On the other hand, a huge decline in non-performing loans has been recorded, from a level exceeding 25 per cent in 2011 to the current level of just 7.09%. ■ How satisfied are you with the results Montenegro has achieved to date in fiscal consolidation; has this process impacted on the state of the financial sector? - The state of the financial sector is influenced by the fiscal situation and the situation in the sphere of the real economy, and vice versa, due to the strong interdependence of these policies. Under conditions of euroisation, the CBCG does not have enough “strong” instruments at its disposal, so the focus is on fiscal policy, which – through the stabilising and strengthening of public finances – contributes to overall financial stability. The government is pursuing fiscal consolidation with determination, which is yielding tangible results. Specifically, positive trends have been recorded in all economic,