Two MPs heard reports on the work of the Central Bank of Montenegro, announced a drop in fees and the arrival of digital banks

The Parliamentary Committee on Economics did not vote on the Central Bank reports for 2022, 2023, and 2024 today because at the end of the debate, only two of the 13 MPs who were members of the committee were in the room, namely the Chairman of the Committee, Boris Mugoša, and Mirsad Nurković.

In their presentations, the Governor of the Central Bank, Irena Radović, and the Vice Governors, Zorica Kalezić and Nikola Fabris, stated what the Central Bank has done in recent years, that the regulation required by the EU has been fulfilled, most of which was completed ahead of schedule, that the preparation of SEPA international payments, which will start in October and will significantly shorten the time for receiving money, has been successfully completed, while they announced that further harmonization with EU regulations will bring significantly lower prices for banking fees, and that the first European fin-tech company will start operating in Montenegro next month, and that several digital banks from Europe are interested in coming.

Radović also said that preparations are being completed with the Ministry of Social Welfare and banks for a project where social benefit recipients will not pay commissions to banks when withdrawing money from their accounts, which will mean significant savings for these recipients, as well as security and simplicity in receiving these benefits. She stated that there could be a hundred thousand beneficiaries of this benefit.

Kalezić said that SEPA, as well as harmonisation with other regulations on payment transactions with and within Montenegro, will significantly reduce the amount of bank fees this year and next, which citizens and businesses claim are high. She also said that fin-tech companies (IT companies that also offer financial services) are coming, new payment institutions, and that digital banks from the EU are interested in doing business in Montenegro. She pointed out that this will be significant competition for domestic commercial banks because they offer cheaper services, and that banks will have to adapt to this and create new business plans.

Nurković said that he calculated from the report that banks in Montenegro have generated a net profit of two billion euros from interest alone in the past ten years, and that this is too much compared to the size of the Montenegrin market and the capabilities of most citizens. He stated that the amounts of bank interest and fees are too high and that banks must show more social responsibility given the amount of profit they generate.

Radović said that the Central Bank of Montenegro does not have the authority to influence the reduction of prices for banking services, except to publicly call on them to reduce them, which was done in March 2024 and which had some success. She pointed out that the Agency for the Protection of Competition has the authority to investigate whether the prices of bank interest and fees are formed on non-market principles.

"The high interest rates are justified by the high risk of doing business in Montenegro, a fairly low credit rating, and slow collection of claims in court proceedings, but all of that is improving significantly. When Croatia entered the eurozone, they had a significant drop in bank interest rates because such risks no longer exist. This will happen in Montenegro as well," said Radović.

Fabris said that according to macro-financial strategies, public debt is expected to amount to 61 percent of GDP at the end of this year, and then grow to reach 2028 percent of GDP in 65. That year has been marked as the year of Montenegro's possible EU membership.

He stated that two years after joining, Montenegro could become a member of the eurozone. These are countries that have the euro as their official currency and that have the European Central Bank as their supreme monetary institution.

Fabris said that the condition for membership is that public debt not exceed 60 percent of GDP and that he expects its growth to be limited in the coming years so that it does not become an obstacle to membership.

Mugoša expressed concern about economic indicators that indicate that due to the growing deficit, decreasing tourism revenues, a decline in foreign investments and a decrease in their quality, as more than half of them go to the purchase of real estate.

He pointed out that there are trends of declining state revenues, and that GDP growth this year is now estimated at three percent, while the budget was projected expecting GDP growth of 4,8 percent and tourism revenue growth of eight percent. He stated that economic growth of three percent would be the lowest in the last eight years, excluding the year of the corona pandemic.

Fabris pointed out that the Central Bank of Montenegro, in response to the Fiscal Strategy, which expected economic growth of 4,8 percent, expressed the opinion that this was a projection that was difficult to achieve.

He also pointed out that inflation in July was 4,5 percent, which is above the desired level, and that it was caused mainly by domestic and then foreign causes. He stated that the continuation of the stop inflation campaign should be considered, as well as an analysis of whether traders are using their market position to excessively increase prices.

Radović pointed out the problem that the Central Bank of Montenegro has not had two vice governors and four members of the Council for 30 months, as well as the delay in the election of members of the Fiscal Council. She stated that she would nominate Gordana Kalezić and Milan Remiković, currently directors of sectors at the Central Bank of Montenegro, stating that they are excellent experts, independent of politics, who have received recognition from the EU and the ECB for their work and success at the Central Bank of Montenegro.

The Governor said that there have been multiple calls from EU institutions to complete the selection of the Vice Governor, members of the CBM Council and the Fiscal Council.

Her candidates did not receive the required number of votes in the May vote, although none of the MPs voted against or questioned their candidacies or expertise. At the time, the media speculated that the ruling majority was thus sanctifying the vice governor because the Central Bank of Montenegro, in accordance with European conditions, had challenged certain competencies of the new state-owned Development Bank.

Mugoša pointed out that the government has been settling scores with the Central Bank of Montenegro since the moment the Central Bank of Montenegro adopted certain decisions. He stated that this vote was a major defeat for the state of Montenegro and proof of the lack of maturity of the parliamentary majority, as well as that the parliament is late in electing members of the Central Bank of Montenegro Council and members of the Fiscal Council, which is a particularly big problem.