Montenegro May Turn to IMF for Assistance, Central Bank Says

Montenegro may turn to the International Monetary Fund to improve its fiscal policies amid slowing economic growth, the country’s central bank said after the governor met with an IMF delegation.

“Representatives of the Fund expressed readiness that, should Montenegro make a request for an arrangement, they can start negotiations in a very short time,” the Podgorica-based central bank said in an e-mailed statement today after the talks with Governor Radoje Zugic. It also noted “deterioration of the economic situation” in the country and among its key trading partners.

The IMF advised that Montenegro “needs a protective fund, fiscal reserves, to increase credibility of its policies,” the central bank said. The smallest of the six former Yugoslav republics unilaterally adopted the euro in 2002, so its “instruments of monetary policies are limited,” according to the statement.

The 14-day IMF visit that began last week is looking into Montenegro’s macroeconomic and fiscal stability, banks and debt stock, the Finance Ministry said last week.

Montenegro’s economy grew 2.5 percent last year to 3.27 billion euros ($4.33 billion), even as industrial production fell 10.3 percent. Its budget gap was 143 million euros, or 4.37 percent of gross domestic product, while public debt rose 16.75 percent to 1.48 billion euros, or 45.3 percent of GDP.

To contact the reporter on this story: Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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