Citizens keep over two billion in banks

The amount of money that citizens have in banks for the year increased by over 200 million, but only 19 percent is fixed term. Total deposits are worth 78 percent of the national GDP, and by 45 percent or 1,7 billion they are greater than the public debt of Montenegro.

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Deposits in banks are worth as much as 340 kilometers of highway (illustration), Photo: Shutterstock
Deposits in banks are worth as much as 340 kilometers of highway (illustration), Photo: Shutterstock
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

Deposits in banks in Montenegro amounted to 5,67 billion euros at the end of August, and according to data from the Central Bank (CBCG), this is a new record. This is 170 million more than in August last year, and 2,2 billion more than in August before the 2019 crisis.

The total Montenegrin gross domestic product (GDP) is now estimated at 7,2 billion euros, so that the total deposits in banks are worth as much as 78 percent of the national GDP.

The net public debt of Montenegro at the end of June amounted to 3,9 billion euros, so the total deposits in banks are 45 percent higher than the national public debt.

The construction of all 18 sections of the network of highways and expressways through Montenegro, of 480 kilometers, was estimated at eight billion euros, and deposits in banks could finance 70 percent of that amount. That is, deposits in banks are worth as much as 340 kilometers of highway.

The average citizen keeps four thousand euros in the bank

Montenegrin citizens keep two billion and 16 million in banks, which is also a new historical record and 216 million more than in August last year. This amount is 730 million more than in the same month of 2019. This means that the average adult citizen of Montenegro keeps around four thousand euros in banks.

According to CBCG data, of these two billion deposits of citizens, only 380 million or 19 percent are time deposits or time savings, while the remaining 1,63 billion are demand deposits. Although the total deposits of the population are growing, term deposits have decreased, as they amounted to 387 million euros in August last year.

Interest up to four percent

Citizens' time deposits of up to three months amount to seven million euros, and savings for a period of three months to a year are worth 178 million euros. 156 million euros are scheduled for a period of one to three years, and 38,5 million euros for over three years.

The average interest rate on deposits of citizens per increase is 0,02 percent, on time deposits for a period of three months to a year they are 1,26 percent, and for a period of one to three years the interest rate is 1,63 percent. 1,5 percent for term deposits for a period of three to five years, and 2,61 percent for a period of more than five years.

However, there are banks in Montenegro that invite clients to save on their websites and offer interest rates that amount to over three percent for a fixed period of three years, and four percent for a period of five years.

Foreign citizens hold 839 million in banks

Deposits of foreign citizens living in Montenegro are not included in this amount of total deposits of residents, and they have their own deposits in banks amounting to 839 million euros. They are only five million more than in August last year, while they are 340 million more than in the same month of 2019. This confirms that the number of foreign citizens living and doing business in Montenegro has increased significantly in recent years.

If the MUP data from the beginning of this year were taken into account that 90 thousand foreigners (adults and minors) reside in Montenegro, this would mean that they hold an average of 9,4 thousand euros in Montenegrin banks. If it were calculated that one third were minors, the deposit per adult foreigner would amount to 14 thousand euros, that is, it would be almost four times higher than the average deposit of domestic citizens.

Domestic private companies have deposits in banks worth one and a half billion euros, while state-owned companies have deposits of 262 million euros. Deposits of domestic private companies are in significant decline, as they amounted to 1,65 billion euros in August last year.

The government has deposits in banks worth 269 million euros, and local governments have 189 million euros.

Foreign companies and organizations hold deposits worth 485 million euros in Montenegrin banks.

Larger deposits than loans to businesses and citizens

The total amount of loans that citizens and the economy have at the end of August with Montenegrin banks amounts to 4,64 billion euros, that is, they are slightly more than a billion less than the total deposits.

The domestic economy has loans of 1,37 billion euros, which is 200 million euros less than the deposits this sector has in banks.

Montenegrin citizens have taken out loans worth 1,85 billion euros in local banks, which is about 160 million euros less than total deposits. However, citizens' total loans are five times higher than their time deposits.

Foreign natural persons residing in Cniway took loans from banks worth 58 million euros, which is only seven percent of the value of their deposits. The amount of foreign citizens' loans in domestic banks has increased significantly, because five years ago this amount was worth 11 million euros.

Foreign organizations and companies have loans in Montenegrin banks worth almost one billion euros. Of that, foreign financial organizations are responsible for 847 million euros, and not the financial sector for another 140 million euros. Loans from foreign companies and organizations are twice as large as the deposits that sector has in Montenegrin banks.

The government is planning bonds for citizens who save

In the Government's proposal for macroeconomic and fiscal policy guidelines for the period from 2024 to 2027, it is foreseen that the state will borrow three billion euros in the next three years, of which 2,15 billion are needed to repay old debts. The state plans to provide part of this money on the domestic market by issuing bonds that citizens will be able to buy.

The authors of this document recognize that citizens have excess money that they keep in banks, as well as that banks give them low interest rates. They believe that citizens would earn more on these bonds, and that the state would have a lower interest rate than on debt abroad.

"In this way, it will be possible to diversify sources of financing and reduce dependence on external sources of financing. The Ministry of Finance is considering the possibility of issuing retail bonds in 2024 in the amount of up to EUR 50 million with a maturity of two to three years. The state would enable citizens to place surplus funds on favorable terms and achieve a higher return on money that is now on deposits in banks," the document stated.

In March of this year, the government borrowed 750 million dollars, as the Ministry of Finance issued international bonds of that value, with a maturity of seven years and an interest rate of 7,25% per year. After the conversion into euros, in accordance with the realized hedging arrangement, the value of this debt is 687,76 million euros with a derived euro interest rate of 5,88%.

These are certainly higher interest rates than those that citizens now have in Montenegrin banks.

Next year, the government will have to borrow 1,1 billion euros because it has 829 million euros worth of old debts to pay, while the remaining 280 million euros will be invested in the capital budget.

The plan is for the state to borrow 2026 million euros in 630, of which 353 million is for returning old debts, and in 2027 for 1,26 billion, when 972 million euros must be returned.

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