NewsMontenegro, Borrowing from domestic commercial banks is an unfavorable solution

Montenegro, Borrowing from domestic commercial banks is an unfavorable solution

Supported byOwner's Engineer banner

The decision of the Government of Montenegro to borrow up to 350 million euros from domestic commercial banks by the end of the year is generally not a good solution for this country, because the interest rates offered are unfavorable for it, said economic analyst Oleg Filipović.

He believes that there were enough positions on the expenditure side of this year’s budget within which a significant part of the predicted 350 million euros could be saved, primarily in the position of public procurement.

Supported by

“I am sure that by introducing other methodologies, such as a private-public partnership, 30 to 40 percent of the missing funds could be saved”, said Filipović, adding that 130 million euros came out of Montenegro last year through the business of the IT sector, and that on the principle of public-private partnership, a significant part of that money could have remained in Montenegro, the Mina agency reports, referring to Pobjeda.

According to him, savings in the budget could also be made by limiting the growth of salaries in the public sector.

Supported byElevatePR Digital

“I’m especially thinking of part-time contracts or part-time contracts, where other people are additionally engaged and paid in addition to ‘smartness’ in certain departments. It means that something is wrong or you are not satisfied with the existing staff, so you are forced to look for solutions in the hiring of staff from the outside”, said Filipović, indicating that the Montenegrin government is in a situation where it is in debt due to increased social benefits and costs in the public administration.

The Ministry of Finance is still negotiating this year’s indebtedness with several domestic banks, and recently they have been negotiating directly with the Hungarian OTP bank, which owns Montenegro Commercial Bank, the largest credit institution in Montenegro.

“Talks with OTP Bank are proceeding according to plan, and we can say that mutual interest in concluding an arrangement has been recognized. We will announce more about the scope and terms of the debt after finalizing the negotiations so as not to jeopardize the negotiating position at this stage,” Pobjeda was told in the Ministry of Finance.

In that department, they said that they are actively negotiating with all financial entities in Montenegro, and that they are receiving a positive signal from the banks for their readiness to cooperate with the state in order to overcome the crisis.

“In accordance with our needs and market conditions, we will make arrangements that will be in the best interest of the state.” The greater the volume of funds we secure this year, the more stable we will be in the next year”, stated the office of Aleksandar Damjanović.

For now, arrangements have been made official with two domiciled banks – Universal Capital, from which the Montenegrin government will borrow ten million euros for five years, with an annual fixed interest rate of 5.5 percent, and Erste, with which they signed a contract in the amount of six million. with a five-year repayment period and a fixed interest rate of 3.99 percent plus six-month Euribor. The government also planned to collect 70 million from the banks by issuing six-month government bills.

Commenting on the terms of borrowing from Universal Capital Bank, Filipović assessed that it was an excellent deal for that credit institution.

“Their goal is to make a profit, and they made the maximum profit with this business.” On the other hand, is the high interest rate for government borrowing? It is absolutely high”, said Filipović, asking how much the interest will be for citizens and business entities. He emphasized that in Montenegro there is no system for limiting the movement of interest rates.

He claims that the Government of Montenegro had an alternative because there is enough money abroad, that is, private capital that can be attracted.

“It is a matter of choosing the people who manage the Ministry of Finance – whether they are conservative or liberal economists.” If you are a conservative economist, then it is normal that business with foreign corporations and hedge funds is too risky for you and then you go towards the IMF, World Bank and commercial banks. I am not a supporter of that”, said Filipović, Biznis writes.

Supported byspot_img

Related posts

Supported byspot_img
Supported byspot_img
Supported byInvesting Montenegro logo
Supported byMonte Business logo
error: Content is protected !!