EXECUTIVE SUMMARY 4 REAL SECTOR 5 1. Inflation 5 Montenegro’s consumer price deflation holds at 1% y/y in June 5 Montenegro's PPI stays flat y/y in June 5 Montenegro’s HICP deflation deepens to 0.6% y/y in June 5 2. Industry and Trade 6 Montenegro’s industrial output slows growth in June 6 Montenegro's industrial sales decline 22.2% y/y in June 6 Montenegro's retail sales grow by 3.5% y/y in June 6 3. Labour Market 7 Montenegro’s monthly average net wage grows 4.4% y/y in June 7 4. Tourism 7 Foreign tourist arrivals in Montenegro rise 5% y/y in June 7 FISCAL SECTOR 8 Montenegro sells out €16.4mn 182-day T-bills issue, yields fall 8 Montenegro’s 5-mo budget gap shrinks 57.4% y/y to €112.8mn 8 FINANCIAL INTERMEDIATION 8 Montenegro’s NPL ratio falls to 12.2% in May 9 Montenegro’s bank assets growth accelerates in June 9 Montenegro’s bank deposits growth cools further in June 9 Average lending interest rate in Montenegro falls to 6.72% in June 10 Mandatory reserves of Montenegrin banks rise 10.7% y/y to €243.8mn at end-June 10 Montenegro’s NPL ratio falls to 11.7% in June 10 Montenegro’s banking sector H1 net profit nearly doubles y/y to €14.2mn 11 EXTERNAL SECTOR 11 Montenegro’s H1 trade gap widens 15.7% y/y 11 STRUCTURAL REFORMS AND CORPORATE NEWS 12 Azerbaijan offers Montenegro €175mn loan for construction of Verige bridge 12 Montenegro needs €1.5bn by 2020 to meet EU environment protection criteria 13 Azerbaijan denies offering Montenegro €175mn loan for construction of Verige bridge 13 Montenegrin NGO Gradjanska Akcija files claim against tourism minister, Budva mayor on Buljarica land sale 14 KfW, Montenegro sign €25mn deal on Trans-Balkan Electricity Corridor 14 Montenegro’s government approves deal with Czech Skoda Praha for construction of new TPP unit 15 Qatari CDC International files sole bid in Buljarica land sale 15 Montenegro needs deal with Italy’s A2A on second unit of Pljevlja TPP, deputy PM Lazovic says 16 Montenegro’s Deputy PM Vujovic calls for investigation into tender for Buljarica land sale 17 Montenegrin parliament's economy committee approves new agreement with Italy’s A2A 18 ICSID cancels CEAC's claim against Montenegro on KAP bankruptcy 19 Italy’s Terna delays completion of submarine power link with Montenegro by two years 19 Montenegro fails to attract fourth mobile phone operator with €50mn sale of new radio frequencies 20 POLITICS 20 Montenegro’s prosecution probes party member appointments by Finance Minister Konjevic 20 Montenegro’s high court accepts agreement with son of former Serbia and Montenegro president Marovic on Budva affair 21 Disagreement over new deal with Italy’s A2A shakes Montenegro’s government 21 Montenegro’s opposition URA leaves government as parliament adopts deal with Italy’s A2A 23 Montenegro’s opposition to decide by mid-August whether to leave government 24 Montenegro’s high court sentences former mayor to 18 months in jail on Budva affair 24 Montenegro’s opposition ministers reportedly want to stay in government 25 Montenegro’s opposition URA exits government
This report covers the key macroeconomic and financial releases as well as the political events from Montenegro for the period of July 6-August 5, 2016. Montenegro’s opposition Reform Action (URA) decided to cancel its power sharing agreement between the ruling Democratic Party of Socialists (DPS) and three opposition parties, and to exit the government. Montenegro will need to invest around €1.5bn by 2020 to meet the criteria of the European Union in terms of environment protection and climate change. Montenegro’s government approved a draft agreement with Czech company Skoda Praga on the construction of the second unit at the Pljevlja thermal power plant at a session on July 11. Qatari CDC International was the sole company to file a bid in the tender for the sale of 4.9 square kilometres of land in the Buljarica municipality. CEAC Holding, owned by Russian businessman Oleg Deripaska, has lost an arbitration with the International Centre for Settlement of Investment Disputes (ICSID) against Montenegro on the bankruptcy of the country’s aluminium smelter KAP.
The budget deficit shrank 57.4% y/y to €112.8mn in the first five months of 2016 The number of foreign tourists visiting Montenegro increased by 5% y/y to 171,412 in June Industrial output increased by 6.1% y/y in June Bank assets rose 8.5% y/y to €3.51bn at the end of June