Economy growth joint interest of both government and banks

    Podgorica, Montenegro (22 January 2015) – Montenegro’s Deputy Prime Minister Vujica Lazović and ministers of economy, finance, and tourism and sustainable development met earlier today with representatives of banks operating in Montenegro for talks on banks net loan activity and conditions necessary to increase support for implementing new profitable and innovative projects.

    The meeting discussed vital issues for boosting money supply in the market in 2015 and risks influencing interest rate amount. The government’s representatives urged the banks to join their efforts in order to create institutional preconditions for lowering interest rates. Loans, in addition to foreign direct investments, are major generator of economy growth. The 2015 economy growth will be supported by EUR 100 million of loan funds from commercial banks. The loan growth of 4% will come as a result of lower effective interest rates, whose declining trend began in late 2014.

    Banks are open to new projects provided that defined standards have been met, resources provided and clients are operating in formal sectors. Government’s support for investments in priority development sectors – tourism, energy, agriculture and industry further simplifies the functioning and reduces the risks of banks loans placement.

    In addition to high liquidity of banks, the need to reduce participation of non-performing loans and good risk management have been recognised as preconditions for greater investment activity. The state stays committed to upgrading the business environment, and the competition of banking market has been confirmed by the number of banks operating in Montenegro and the announcement of 3 new banks.

    The meeting also addressed the upcoming adoption of the Law on voluntary financial restructuring and status of clients who repay loans in Swiss francs. The Hypo Alpe Adria Bank, who was the only one offering this product, voiced willingness to offer favourable conditions for their long-term treatment. It was agreed to work on defining mechanisms which will enable reprogramming loans to municipalities that have lower fiscal capacity, through longer maturities and lower interest rates, as well as through mechanism of egalisation fund.

    Source: Government of Montenegro