Podgorica, (MINA-BUSINESS) – Head of the International Monetary Fund’s Mission to Montenegro Srikant Seshadri has said that Montenegro’s economy is making a good progress, with the average mid-term growth projection of three percent, adding that the public debt should be additionally reduced.
“The economy is making a very good progress. After the last year’s growth of 4.9 percent, we expect mid-term average growth of three percent,” Seshadri said at a press conference, held on the occasion of the regular annual IMF mission.
He said that, in addition to tourism, the country has considerable untapped potentials in the field of renewable energy sources, thanks to its natural endowments.
“However, there are potential risks that the growth will be lower than projected, because of the complex economic developments,” said Seshadri.
He said that the fiscal adjustment had resulted in an improved budget balances, adding that, excluding highway spending, the primary fiscal balance had swung from a deficit of one percent of GDP to a two-percent surplus.
“However, the public debt of 79 percent of GDP, including guarantees, is still high. These debt levels limit the Government’s room to counteract possible future downturns,” said Seshadri.
He said that, with global growth prospects increasingly uncertain, government debt needs to be further reduced.
“Moreover, the costs and benefits of completing further phases of the Bar-Boljare highway in the near term need to be carefully analyzed,” Seshadri said, adding that a new feasibility study is essential in this process.
According to him, the banking sector remains liquid, profitable and stable, without any spillover to the broader banking system from the closure of two non-systemic banks.
“Additional efforts are needed to strengthen the financial system. The current structure, tools, and processes for bank supervision and anti-money laundering need further enhancement. The central bank is moving in the right direction to address these issues,” said Seshadri.
Minister of Finance Darko Radunovic said that there was a good economic growth trend in the first quarter, at a rate of three percent, resulting from strong economic activities, tourism and civil engineering, combined with combating the informal economy.
“In the first five months, the revenues amounted to €679.6 million, up 9.1 percent year on year, and 3.6 percent more than planned,” said Radunovic.
He said that the mid-term fiscal policy focuses on further reduction of budget deficit and creating preconditions to see a surplus in public finance next year, and to reduce the public debt to 60 percent in 2022.
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