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Montenegro Country Report - March, 2015

  • April 2015
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 20 pages

This report covers the key macroeconomic and financial releases as well as the political events from Montenegro for the period of March 6 - April 5, 2015.

The European Union (EU) opened on Monday, March 30, two new chapters in Montenegro's negotiations - on taxation (chapter 16) and on external relations (chapter 30).

The European Investment Bank (EIB) will provide a EUR70mn in credit lines to Montenegro's Investment and Development Fund (IRF) to support its operations.

The international environmental organisation CEE Bankwatch Network said that the electricity generated by the planned second unit at Montenegro's sole thermal power plant TE Pljevlja will not be profitable. Meanwhile, Montenegro's government has signed an interim agreement with A2A for the Italian company to continue managing the power utility EPCG for three more months. A2A's contract expired on March 31, but the two sides are still negotiating their future cooperation, with the government saying the goal of the interim deal is to create the framework for further negotiations on a future longer-term contract.

Montenegro plans to invest EUR780.6mn in regional development projects in 2015. Most of the funds will be invested in the Smokovac-Matesevo section of the key Bar-Boljare motorway (EUR206mn).



Key points:



o The budget deficit expanded 12.93% y/y to EUR40.1mn in the first two months of 2015 due to higher spending and lower revenue growth

o The consumer prices accelerated their annual growth to 0.6% in February from 0.2% y/y in January

o Industrial production increased by 5.9% y/y in February, reversing a 3.4% y/y contraction in January

o Unemployment rate decreased to 18.1% in Q4 2014 from 19.5% a year earlier - labour force survey

o Bank assets rose 4.9% y/y to EUR3.12bn at end-February, slowing from a 6% annual growth the month before

Table Of Contents

Montenegro Country Report - March, 2015
EXECUTIVE SUMMARY3

REAL SECTOR4

1.GDP4

Government revises down 2015 GDP growth target to 2%4

2.Inflation4

CPI inflation speeds up to 0.6% y/y in February4

EU harmonised deflation eases to 0.1% y/y in February5

PPI inflation slows to 0.6% y/y in February5

3.Industry and Trade6

Industrial output up 5.9% y/y in February6

Industrial sales growth accelerates to 6.7% y/y in February7

Retail sales grow 1.4% y/y in November7

4.Labour Market8

Monthly average net wage rises 0.6% y/y in February8

Unemployment rate falls to 18.1% in Q4 - labour force survey8

5.Tourism8

Foreign tourist arrivals to Montenegro rise 21.8% y/y in February8

FISCAL SECTOR9

Montenegro sells EUR500mn five-year Eurobond with 3.875% coupon10

FINANCIAL INTERMEDIATION10

Bank assets growth slows to 4.9% y/y at end-February10

Bank deposits growth slows to 9.2% y/y in February11

Average lending interest rate in Montenegro falls to 9.74% in February11

NPL ratio down to 16.4% in February - c-bank12

Mandatory reserves of Montenegrin banks fall 0.5% m/m to EUR213.7mn at end-February12

EXTERNAL SECTOR12

Net FDI inflow jumps nearly 50% y/y to EUR25.6mn in January12

Net public debt reaches EUR2.02bn at end-December13

STRUCTURAL REFORMS AND CORPORATE NEWS13

UAE's Royal Group confirms withdrawal from Montenegro's Kraljicina Plaza resort sale13

Montenegro, Italy's A2A sign temporary agreement on EPCG management13

European NGO says Montenegro's 250 MW thermal power unit will not be profitable14

Submarine power link between Italy and Montenegro to be operational in 201815

Montenegro's EPCG opens final bids for 250 MW thermal power unit15

Russia's central bank appeals restored licence of Montenegro's Atlas Banka16

Montenegro to invest EUR780.6mn in regional development in 201517

Montenegro, ECB complete EUR300,000 needs-assessment project17

Montenegro to invest EUR250.2mn in roads in 201517

Opposition Pozitivna Crna Gora party proposes higher VAT on luxury goods18

EIB, Montenegro's IRF sign EUR40mn loan deal18

Italy's Terna to pay EUR2.75mn to rent sea area for major submarine power cable in Montenegro18

EIB to provide EUR70mn to Montenegro's IRF to support SMEs19

Government to refinance up to 70% of SMEs costs for modernisation19

Montenegro mulls drawing EUR689mn loan for Bar-Boljare motorway stretch from China's Exim Bank19

POLITICS20

EU, Montenegro open chapters on taxation and external relations in accession talks20

Montenegro's parliament approves government changes20

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