The financial system of Montenegro maintains stability, with the need for continuous risk monitoring and further strengthening of the system's resilience in the face of a changing macroeconomic and regulatory environment, it was assessed at the meeting of the Financial Stability Council.
The Council session was chaired by the Governor of the Central Bank of Montenegro, Irena Radović, and was attended by the Minister of Finance, Novica Vuković, the President of the Capital Market Commission, Željko Drinčić, and the President of the Council of the Insurance Supervisory Agency, Marko Ivanović. At the invitation of Radović, the newly appointed Director of the Deposit Protection Fund, Andrija Radunović, also attended the session.
The Council discussed the Information on the State of Financial Stability for the fourth quarter of last year, which states that the Montenegrin economy achieved growth of 3,2 percent in the first nine months of last year.
"Indicators from the real sector point to annual growth in retail trade and construction, while industrial production recorded a decline. In the period January-November, a slight increase in revenue from foreign tourists was recorded, although the number of overnight stays decreased by 1,4 percent, and the annual growth in tourist arrivals was five percent," the Central Bank of Montenegro said.
The Council considered trends in the area of public finances over the past year, with a focus on the realization of budget revenues, expenditures and the level of public debt.
"The banking sector was characterized by positive trends, confirming its stability, liquidity and solvency, with continued growth in deposits. Exposure to systemic risks at the end of last year was assessed as moderate, with cyclical risks identified, primarily related to intensive credit growth and rising real estate prices," the statement added.
The session also discussed the first report on the implementation of the Financial Sector Roadmap towards Sustainable Finance, which the Council adopted in March last year, with the aim of gradually harmonizing the Montenegrin financial system with European and global sustainable development standards and ESG principles.
"The implementation of the Roadmap represents an important step towards bringing the domestic regulatory and supervisory framework closer to the standards applied by key European institutions, thereby further strengthening institutional readiness for full integration into the European financial system," the Central Bank of Montenegro said.
The report provides an overview of implemented activities, a qualitative assessment of progress over the past year, identifies key challenges and defines recommendations for the coming period.
It was noted that measurable initial progress was achieved in the first year of implementation, primarily in establishing management and coordination mechanisms, strengthening institutional capacities, and preparing regulatory and methodological foundations for the further development of sustainable finance.
A particular step forward was made in the banking sector through the adoption of ESG risk management guidelines, while in the capital markets area, the preparation of a legislative framework for the development of green and sustainable financial instruments has begun. At the same time, activities have been carried out in the insurance and pension fund sectors to strengthen climate risk management mechanisms.
By providing a fiscal, normative and institutional framework for financing the green transition, the Ministry of Finance has contributed to creating conditions for directing public and private capital towards sustainable and green investments.
The report indicated that key challenges remain related to limited institutional and market capacities, the lack of comparable data, as well as the dynamic development of the EU regulatory framework in the area of sustainable finance, which requires continuous adaptation at the national level.
"Therefore, in the coming period, we should focus on the operational application of the developed frameworks and guidelines, the development of methodologies and tools for data collection and reporting, additional capacity building through training and technical support, and improving the availability and quality of data," the statement said.
The importance of continuing cooperation was emphasized, both at the sector level and with regional and international partners, for the purpose of transferring knowledge and implementing good practices, while respecting the specificities of the domestic financial system.
It was concluded that the implementation of the Roadmap so far confirms the commitment of the institutions of the financial system of Montenegro to the gradual development of sustainable finance, while the Report represents an important basis for further monitoring of progress and improving the implementation process.
Based on the data presented by the Deposit Protection Fund, it was assessed that this institution has adequate capacities to exercise its legal responsibilities.
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