Montenegro’s recent decision to issue state bonds totaling 687 million euros has ignited a divergence of opinions within the public sphere. While the government extolled the move, highlighting its execution under favorable conditions, the opposition voiced criticism. Financial analyst Oleg Filipović acknowledged the necessity of the debt due to impending liabilities but questioned whether the entire sum was imperative at this juncture.
Filipović underscored the government’s astute choice to borrow in dollars, potentially securing a lower interest rate than if borrowing had been in euros. Despite the media and analysts not being held responsible for the 5.88% interest rate, Filipović dismissed them, attributing the increased rate to information leaked before the process. He urged introspection within the government or among potential investors to identify accountability.
Examining the substantial demand for Montenegrin bonds, Filipović interpreted it as indicative of investors’ lack of trust in the country’s system. He emphasized the emotionless nature of the financial market, where interest is the prime motivator for investors.
While Filipović supported the hedging strategy that reduced the interest rate to 5.8%, he stressed the need for transparency in understanding the entire transaction process. This includes elucidation on the selection of the four banks as providers, competition among them, and details about bond buyers.
Filipović suggested contemplating the issuance of bonds on the domestic market, involving citizens in investing in public debt. Activating the domestic financial market, according to him, could potentially offer a more attractive option for both the economy and citizens.
In conclusion, Filipović acknowledged that while the transaction was historically expensive, ranking as the second most costly transaction on the London Stock Exchange in terms of interest, he advocated exploring the possibility of issuing bonds on the domestic market for a more cost-effective solution.
