Montenegro, Newly approved loans last year amounted to almost EUR 1.5 billion

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Newly approved loans last year amounted to almost EUR 1.5 billion, which is over 30 percent more than in 2021, according to the latest data on bank operations discussed at today’s session of the Central Bank Council (CBCG).

The CBCG said that the newly approved loans are 18 percent higher compared to the record year of 2019.

“Through this intensive credit activity, the banks made a full contribution to the recovery of the domestic economy,” the statement of the CBCG states.

According to preliminary data provided by the banks, NPL, i.e. the share of non-performing loans in the total, was 5.72 percent at the end of last year and was at a lower level compared to the end of 2021, when it was 6.17 percent.

“The maintenance of a relatively low level of NPLs, despite the stricter regulatory framework whose implementation began last year, was contributed to by the comprehensive activities of the CBCG,” said the supreme monetary institution.

Along with the continuation of profitable operations, high liquidity and good capitalization of the banking sector, expressed through a solvency ratio above 18 percent, an annual growth of deposits of almost 25 percent was recorded, so that they amounted to EUR 5.2 billion at the end of last year. The council discussed the work study Diagnostic analysis of inflation in Montenegro, the aim of which is to examine the extent to which inflation in Montenegro depends on global factors, and how much influence factors from the domestic market have on inflation.

“The results of the study showed that inflation in Montenegro is under the dominant influence of global factors, primarily the rise in food and oil prices on the international market. Analyzes have shown that, in times of increase or decrease of tax and excise burdens, the domicile factor also has an impact on the trend of inflation,” the announcement states.

The results of that study, as explained, point to the necessity of implementing structural reforms in the area of the public sector and especially in the segment of the social benefits system.

“The implementation of structural reforms would open up space for the application of a flexible fiscal policy in dealing with the negative effects of inflation and protecting the living standards of the population, while, on the contrary, increasing wages and social benefits with the aim of amortizing the inflationary impact would only further fuel inflation,” said the CBCG.

At today’s session, the Council adopted the Report on the operations and implementation of CBCG policy for November. Data at the end of November last year show that the number of blocked companies is growing, as well as the total debt on the basis of which the accounts were blocked, which points to the worsening liquidity of the real sector.

“The data on the current account deficit, which, at the end of September last year, amounted to almost EUR 480 million, which is an increase of over 90 percent compared to the same period in 2021, is also worrying, despite the growth of the surplus on the account of services and remittances from abroad.

The Council adopted amendments to the Decision on statistical data and information submitted by credit institutions to the CBCG. The amendment of the current decision was initiated in order to postpone the deadlines for submitting reports in order to provide credit institutions with additional time for the standardization of the development of internal systems, which will guarantee the quality of the requested data. At today’s session, other issues from the competence of the CBCG Council were discussed.

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