Montenegro Country Report - February, 2015

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Montenegro Country Report - February, 2015

This report covers the key macroeconomic and financial releases as well as the political events from Montenegro for the period of February 6 - March 5, 2015.
Montenegro’s government is considering the introduction of economic citizenship in order to attract more foreign investors.
The European Bank for Reconstruction and Development plans to invest €100mn in projects in the country this year, up from €76mn in 2014. The bank’s total investments reached €400mn so far in energy, agriculture, trade, industry and tourism projects.
The country’s Liberal Party has drafted a bill on consumer bankruptcy that would allow insolvent and overburdened by debt individuals to reprogram their liabilities.
A group of 16 non-government organisations (NGOs) from Montenegro, its neighbouring countries and Italy, have sent a letter to Italy's A2A, asking the company not to agree with Montenegro’s government plan to construct a second unit at the country's sole thermal power plant TE Pljevlja as they see the project as negative for the country in the long term. Currently, A2A and Montenegro’s government are in talks on the thermal power unit construction. At the same time, A2A claimed it has completed all its obligations defined in the 5-year management contract it had signed with Montenegro’s government for EPCG.
Key points:

• Public debt rose 4.8% y/y to €1.96bn at end-November, equalling 57.8% of the full-year GDP forecast
• The number of foreign tourists visiting Montenegro increased by 24.9% y/y to 14,102 in January
• Industrial production contracted by 3.4% y/y in January
• Unemployment rate remained unchanged at 15.14% as of early March
• The share of non-performing loans (NPL) in Montenegro rose to 16.55% in January

Table of Contents

EXECUTIVE SUMMARY 3
REAL SECTOR 4
1. Inflation 4
Consumer prices tick up 0.2% y/y in January 4
EU harmonised deflation softens to 0.4% y/y in January 4
PPI inflation slows to 0.8% y/y in January 5
2. Industry and Trade 6
Industrial output falls 3.4% y/y in January 6
Industrial sales growth slows to 5.4% y/y in January 6
Retail sales up 1.8% y/y in January 6
3. Labour Market 7
Monthly average net wage rises 0.8% y/y in January 7
Unemployment rate flattens at 15.14% in early March – employment agency 7
4. Tourism 7
Foreign tourist arrivals to Montenegro jump 24.9% y/y in January 7
Foreign tourist arrivals to Montenegro rise 2% in 2014 8
Montenegro to invest €220mn in tourism in 2015 8
FISCAL SECTOR 8
Montenegro sells €21.23mn of 182-day T-bills at higher yields 8
Montenegro sells out €40mn issue of 182-day T-bills at slightly lower yields 9
Government reprograms €89mn tax debt of municipalities 9
Outstanding debt of Montenegrin municipalities nearly doubles y/y to €350mn in 2014 10
FINANCIAL INTERMEDIATION 10
Combined net profit of Montenegro’s banks at €23.78mn in 2014 10
NPL ratio up to 16.55% in January – c-bank 10
NPL ratio falls to 15.87% in December – c-bank 11
Central bank mulls capping lending interest rates 11
EXTERNAL SECTOR 11
Trade gap flattens y/y in January 11
2014 net FDI inflow rises 9.3% y/y to €353.9mn 12
STRUCTURAL REFORMS AND CORPORATE NEWS 12
UAE’s Etihad Airways reportedly interested to buy Montenegro’s flag carrier 12
Montenegro to call tender for €23.5mn local roads upgrade in Q2 – EBRD 13
Italy’s A2A reportedly claims completion of all obligations as manager of Montenegro’s EPCG 13
Orascom, Montenegro sign deal on Mamula lease project 13
Spain's Fersa Energias sells 46MW wind park project in Montenegro to UK Vestigo Capital for €2.9mn – report 14
Montenegro said to launch privatisation of power utility EPCG in Q2 14
Montenegro to invest €120mn in road upgrades over three years 15
Government reportedly considers introducing economic citizenship 15
Liberal Party proposes consumer bankruptcy law 15
NGOs say Montenegro should abandon plans for 250MW thermal power unit 16
Telenor units in Serbia and Montenegro see combined operating profit down 10% in 2014 16
Airport operator ACG, EBRD launch talks on €20mn loan for construction of second terminal 17
EBRD to invest €100mn in Montenegro in 2015 17

Number of pages: 18
Release Date: Fri, 06 Mar 2015