Montenegro, Financial situation will remain stable, key is political and economic stability

Published on 10. March 2023., News

The interest rate at which the state borrowed from Deutsche Bank is high, but it is below the level of inflation in Montenegro, announced the Minister of Finance, Aleksandar Damjanović, and added that there is no danger to public finances.

He said that It is a projected debt, and that the interest rate and conditions are the result of global events that Montenegro cannot influence at all.

– I would like the conditions on the international market to be much better, but unfortunately they are not. I would like the interest rate to be much lower and for even Montenegro to be a creditor of other countries, but the reality is like that – Damjanović told reporters after the ceremony of starting the implementation of the European Union Energy Support Package for Montenegro, worth EUR 30 million.

The Ministry of Finance, on behalf of the Montenegrin Government, provided EUR 100 million for the financing of budget obligations in the current year through a credit arrangement with Deutsche Bank.

The contract with the bank was concluded for three years, with a grace period of 12 months and an interest rate consisting of the six-month Euribor increased by the amount of the margin of 5.9 percent.

Damjanović reminded that, when there were other debts, not so long ago, those interest rates were many times higher than the inflation rate at that moment.

– That is a sufficient explanation for any economist – Damjanović added.

He stated that they will try to use some good things, such as keeping the credit rating, to reach better terms with respectable banks in the future if necessary.

– It will depend primarily on the international situation and global events on the financial markets, and from the aspect of Montenegro, with the political stability I expect and with the stabilization of public finances, I hope there will be better conditions for possible credit arrangements – said Damjanović.
He said that there Is no danger to public finances.

– The nominal interest rate is high, but in a relative sense, it is much lower than some interest rates and conditions that existed not so long ago when the state borrowed – said Damjanović.

According to him, this is the result of the global financial situation and other countries in the region have borrowed three times more than before.

– We hope that the global situation will improve, but it is up to us to do everything through political and economic stability so that conditions do not eventually worsen – Damjanović added.