The Central Bank of Montenegro (CBCG) expects inflation to decline in 2023, with the forecast that it will range from three to seven percent at the end of the year, it was assessed at the session of the Council of the Supreme Monetary Institution.
As announced, the Council adopted the report on price stability in 2022, which analyzed the trend of inflation in Montenegro during the previous year, which recorded the highest inflation since the restoration of independence in 2006, and gave a forecast for the current year.
The annual inflation rate in 2022 was 17.2%. Prices from the categories “food and non-alcoholic beverages”, “housing, water, electricity, gas and other fuels” and “transportation” made the biggest contribution to price growth. As for future price trends, inflation is expected to decline in 2023, so the CBCG model forecast for the end of the year projects inflation in the range of 2.9% to 5.7%, with a central tendency of 4%. The CBCG expert assessment forecasts a slightly higher inflation rate for the end of the year, in the range of 3% to 7% – the Central Bank announced.
The CBCG Council also analyzed the report on the stability of the financial system in 2022 and concluded that systemic risks at the end of the previous year were still present, but at a moderate level.
The financial position of citizens and businesses, the two main groups of clients to which banks are exposed, is still under the influence of uncertainty, especially in the context of the global unfavorable environment. Pressures in state finances continue to represent a systemic risk, bearing in mind the high level of public debt in a situation of rising interest rates and tighter financing conditions on the international market – it was assessed.
In order to reduce this risk, it is necessary to create and implement adequate fiscal measures.
Analyzing the exposure of the banking sector to the state, it was concluded that it does not currently pose a threat to financial stability, but it needs careful monitoring by the Central Bank – the announcement states.
In order to harmonize the domestic regulations in the field of bankruptcy and rehabilitation of banks with valid EU regulations, the Council established the Draft Law on Amendments to the Law on Bankruptcy and Liquidation of Banks. Furthermore, in order to comply with the Law on Amendments to the Law on Payment Transactions, which enters into force on October 8th of the current year, the Council adopted a Decision on the manner of keeping the register of payment institutions and the register of electronic money institutions.
The Council also adopted the Report on the operations and policy implementation of the Central Bank for January and February 2023 and considered other issues within its jurisdiction.
Successfully performed testing of the CBCG remote disaster site
The Central Bank also successfully tested the operation of the CBCG’s remote disaster location.
The testing confirmed that all the conditions for the operation of a remote location have been met, to which, in the event of an incident that would prevent the operation of the central and reserve location of the CBCG in Podgorica, such as a natural disaster, terrorist attack, etc., all key functions of the Bank could be transferred, which would ensure the continuity of its business – it was clarified.
