The state and local governments should work together in order to make better use of money from EU funds

The state and local self-governments must work together in order to get money from European funds as soon as possible and make better use of it, it was said at the second panel of the Bielopolska Business Forum.

Moderator Ana Cmiljanić, at the panel on the possibilities for implementation and financing of investment and development projects, said that preliminary data for the first five months of 2023 show that net foreign direct investments in Montenegro have decreased by 35 percent.

The executive director of the Investment Development Fund (IDF), Irena Radović, pointed out that this fund is the strongest financial lever that the state has when it comes to supporting the economy.

"We all have to be even better and improve practices so that businessmen can do business more easily and simply. We are talking about digitization - we are asking for the procedure to be shortened and speeded up so that businessmen do not spend time at the counters, but that the documentation is available to them "with a click", said Radović.

As reported by the Chamber of Commerce of Montenegro, she referred to the global situation that affects the increase in loan prices and inflation.

According to Radović, when funds are expensive, the stimulus to the economy is lower, and the lowest rate of demand for investment loans in Europe was in the second quarter of this year.

She said that all this is transferred to the IRF, which borrows from European banks.

"We are trying not to "spill" all of this onto the economy, but to ensure its sustainability, and that is why our interest rates are lower compared to commercial banks," said Radović.

She appealed to local governments to work on creating projects that can be financed from international projects.

"There are numerous high-quality projects here in the north, and the distribution center project stands out among them, and we should work to ensure that it receives European funds," Radović assessed.

She said that the transformation of IRF into a development bank will contribute to a better use of European funds for projects related to infrastructure, innovation, and green transition.

The head of the EBRD office in Montenegro, Remon Zakaria, pointed out that good infrastructure and connectivity can bring great economic benefits to every country and attract foreign investors.

"The Bar - Boljare highway represents a strong potential and its completion is of exceptional importance, and the European Bank for Reconstruction and Development provides strong support to this, but similar infrastructure projects, especially in the north, such as the Berane - Kolašin and Rožaje - Špiljani roads" Zakaria pointed out, adding that more than ten million euros have been invested in the reconstruction of these two roads so far.

During his presentation, he presented the credit lines that the EBRD implements with local banks, the focus of which is on small and medium-sized enterprises, as well as women entrepreneurs and young people in business.

"We want to help these companies and strengthen their competitiveness, but also provide advisory support to all of them," said Zakaria.

He said that the EU offers a number of support programs, including non-refundable grants, loans and guarantees, but that Montenegro must work harder and get more actively involved in order to take advantage of them.

"The state and local governments must work together so that these funds are available as soon as possible and used as a whole," said Zakaria.

Zakaria said that the EBRD helps the Government in policy reforms, attracting foreign investors, and provides technical support so that all tenders are according to international standards.

The General Secretary of the Union of Municipalities of Montenegro, Mišela Manojlović, said that the goal of this institution is to work hard on the development and improvement of local self-government, more efficient performance of their responsibilities in the interest of the local population, and on the protection and realization of the common interests of the members.

"This Association is key to monitoring and implementing projects, and our focus is primarily on strengthening municipalities in the financial sense, with an emphasis on grants and grants," said Manojlović.

She pointed out that they are particularly proud of the fact that the Association of Municipalities of Montenegro allocated 500 euros from its own funds to finance technical documentation for municipal investment projects, pointing out that at the moment 17 of them are using that money.

According to her, rural infrastructure projects also play a key role in the development of rural tourism in Montenegrin municipalities.

"Infrastructural projects in rural areas are key to realizing the BIO-EKO brand and provide municipalities with a significant opportunity to implement projects from the IPARD 3 program," said Manojlović.

President of the Board of the Association of Banking, Other Financial Organizations and Insurance, Miloš Miketić, upon the moderator's statement that the liquid assets of banks increased by 15 percent compared to the previous year, pointed out that there is money, and deposits are growing as a result of the war in Ukraine.

"We are witnessing a huge flow of money through Montenegro that we have not been able to keep and to create a fund to invest these funds in development projects," said Miketić.

That amount of money, as he stated, is a burden on the banks and they turn to bonds in a larger percentage, which means that there is a shortage of projects in which the banks are ready to invest.

"However, it's good that we are small and we can easily turn that wheel around", said Miketić, who looks with optimism at the data showing the reduction of the budget deficit and the forecast that a surplus can be expected from 2025, then at the reduction of the debt compared to GDP and other good trends.

He emphasized that banks are only part of the "investment puzzle" and that they must comply with the strict Basel 3 business standards.

"The bank gets involved in every project at the moment when the paperwork has been completed, all the necessary permits and other conditions that will not prevent the investment have been secured. The project must be good and profitable," said Miketić.

He emphasized the importance of the IRF as well as the planned Credit Guarantee Fund, which will assume part of the financing risk that commercial banks do not want and encourage Montenegrin companies to more easily obtain the necessary financing for investment.