Montenegro’s central bank assesses financial system as generally stable

Montenegro’s financial system has remained stable over the past year, despite the challenges related to the bankruptcy of Atlas Banka and Invest Banka, central bank (CBCG) Governor Radoje Zugic said after a meeting with the CBCG financial stability council. He noted that systemic risks are moderate and that the level of stability of the financial system is similar to that in Q1’18. He also said that the central bank has managed to preserve the stability of the sector and put all major risks under control. He said that the central bank will further monitor potential risks to the sector and encourage fiscal and monetary policies, aimed at moderating those risks. He added that according to the council, the external environment had a slightly positive impact on the financial stability in Q1.

Zugic also said that the domestic economic environment remained favorable in Q1, characterized by increasing retail sales, improving construction sector performance and growing number of visitors to the country. He said that budget revenues were 8.3% above plan and budget spending was 15.3% below plan in the period. He noted that net FDI improved by 62.9% y/y to EUR82.7m in Q1, according to preliminary data, and that the total assets of the banks were higher compared to the same period of 2018. He added that the share of NPLs amounted to 5.9% of gross loans at end-March, down from 6.7% in the previous quarter.

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