Montenegro : Staff Report for the 2014 Article IV Consultation.

Format:

Book

Government document

Author/Creator:

International Monetary Fund. European Dept.

Contributor:

International Monetary Fund, issuing body.

Series:

IMF Staff Country Reports; Country Report ; No. 2015/026

IMF Staff Country Reports

Language:

English

Subjects (All):

International Monetary Fund--Montenegro.

International Monetary Fund.

Economic development--Montenegro.

Economic development.

Fiscal policy--Montenegro.

Fiscal policy.

Monetary policy--Montenegro.

Monetary policy.

Montenegro--Economic conditions.

Montenegro.

Physical Description:

1 online resource (65 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2015.

Summary:

KEY ISSUES Context: Moderate growth is continuing; however credit and wage growth are weak. The level of nonperforming loans (NPLs) remains high and public debt has risen sharply in recent years. Fiscal policy: Medium-term funding needs to roll over existing debt and to fund budget deficits are large. A new highway, budgeted to cost about one quarter of GDP, will cause deficits to widen and add to public debt. The draft 2015 budget shows appropriate restraint on other spending, but a long period of strong fiscal discipline will be needed to manage fiscal risks. Laying out clear long-term plans for managing the public finances would boost credibility and reduce risks to market access. Fundamental expenditure reform, especially of the pension system and the public sector wage bill, would be an essential part of such plans. Financial sector: The banking system’s liquidity appears comfortable; however, profitability is low and lending spreads are high. Regulatory provisioning is set higher than that reported under international accounting standards, but a wide range of provisioning levels across banks and weak incentives to take losses remain concerns. A more transparent and comprehensive reporting environment would be beneficial. Reforms to ensure better enforcement of contracts and collateral would help bring down structural lending risk premia. Structural reform: Higher levels of labor participation and employment are needed to boost potential growth and safeguard the public finances. Ensuring that wages adjust in line with productivity alongside reforms to achieve better employment outcomes and boost productivity would enhance the economy’s ability to respond to macroeconomic shocks, and are even more important in a country that lacks its own currency and with decreasing fiscal buffers.

Contents:

Cover; CONTENTS; CONTEXT; RECENT DEVELOPMENTS; BOXES; 1. Montenegro's Highway Project; OUTLOOK AND RISKS; POLICY DISCUSSIONS; A. Fiscal Policy: Safeguarding Debt Sustainability Amid Mounting Fiscal Pressures; 2. Fiscal Policy in a Unilaterally Euroized Economy; B. Monetary and Financial Sector Policies: Strengthening Credit Conditions; 3. Interest Rate Spreads; C. Structural Reform: Strengthening Economic Resilience and Reinvigorating Growth; 4. External Competitiveness; STAFF APPRAISAL; FIGURES; 1. Real Sector Developments; 2. Fiscal Developments; 3. Pension Expenditures

4. Financial Sector Developments5. Risk Assessment Matrix; TABLES; 1. Selected Economic Indicators, 2010-19; 2. Savings and Investment Balances, 2010-19; 3. Summary of Accounts of the Financial System, 2010-14; 4. Balance of Payments, 2010-19; 5a. Consolidated General Government Fiscal Operations, 2010-19 (In millions of euros); 5b. Consolidated General Government Fiscal Operations, 2010-19 (In percent of GDP); 5c. Consolidated General Government (In millions of euros, GFSM2001); 5d. Consolidated General Government Fiscal Operations, 2010-19 (In percent of GDP, GFSM2001)

6. Financial Soundness Indicators of the Banking Sector, 2009-14APPENDICES; I. Public Debt Sustainability Analysis; II. External Debt Sustainability Analysis; CONTENTS; FUND RELATIONS; WORLD BANK GROUP RELATIONS; STATISTICAL ISSUES

Notes:

Description based upon print version of record.

Description based on online resource; title from PDF cover (ebrary, viewed March 3, 2015).

ISBN:

9781498376631

1498376630

9781498388993

149838899X