FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2012
MONTENEGRO STOCK EXCHANGE
CAPITAL MARKET DEVELOPMENT AND ECONOMIC OUTLOOK
Political Information
Montenegro has continued to make progress in
addressing the political criteria. It has improved
its legal framework and has strengthened
its administrative and institutional capacity.
Regarding human rights and the respect for
and protection of minority groups, the legal and
policy framework is largely in place and broadly
corresponds to European and international
standards. The institutional framework is
largely adequate. However, there are gaps in
implementation in all fields. Macroeconomic Outlook
The fourth quarter of 2010, at a macroeconomic
level, was the one in which recovery from the
financial crisis was seen. Inflation is still at a very
low level, and in the labour market only slightly
positive trends can be seen so far regarding
any increases in wages. Although a decrease
was recorded in comparison with the same
period last year, the FDI volume is at quite a
high level considering the absence of any major
privatization takeovers in 2010 (unlike those
seen in 2009). Economic Freedom
According to the report ‘Economic Freedom of
the World’ published by the Heritage Foundation
and the Wall Street Journal, Montenegro’s
economic freedom score is 62.5, making its
economy the 76th freest in the 2011 index.
Its score has decreased by 1.1 points since
last year, primarily because of an explosion of
growth in government spending. Montenegro
ranks as 34 out of 43 countries in the European
region, and its overall score is above average in
the world.
The main concerns relate to the following
areas: effectiveness of anti-discrimantion
policies, freedom of expression and government
relations with the civil society as well as the
situation regarding displaced persons from
Croatia, Bosnia and Herzegovina and Kosovo.
Furthermore, Montenegro needs to intensify
its efforts to consolidate its rule of law, in
particular in the fight against corruption and
organised crime, which still remain a serious
problem. Montenegro plays a constructive role
in Maintaining regional stability and in fostering
good neighbourly relations with other Western
Balkan and EU countries. Banking Sector
Total bank assets amounted to EUR3,007.5
million at end-August 2010, EUR2,907.6 million
at end-September and EUR2,917.6 million at
end-October 2010. In comparison with last year,
total bank assets during these three months
were lower. Total bank deposits amounted to
EUR1,786.2 million at end-October 2010, thus
showing a month-to-previous-month growth of
0.2%. At end-September 2010, when compared
with August, the total amount of deposits had
decreased by 4.5%. Capital Market
The Montenegro Stock Exchange in Montenegro
began to operate as one in January 2011 after a
technical merger of the Nex and the Montenegro
Stock Exchange at the end of December 2010.
Following this event, the NEX Stock Exchange
ceased to exist as a legal entity.
The Prime Minister of Montengro Mr Milo
Djukanovic has stepped down, and new Prime
Minister of Montenegro is Mr Igor Luksic,
ex Minister of finance in the Government of
Montenegro.
Business Environment
The business environment in 2010 was
characterized by problems related to a lack of
liquidity, a lack of financial resources, and a
slowdown in the Montenegrin economy. The
major laws that influenced business, which
were adopted during the fourth quarter, were
Law on Excise, the Law on Financing for Local
Governments, the Labor Law and changes in
the level of the minimum wage.
Privatization and Investments
Montenegro still has not used all of its potential
for attracting new investment. There are three
big projects that lie ahead: the construction of a
highway, the construction of hydropower plants
on the River Moraca and the construction of
a new tourist resort on the Lustica peninsula.
Additionally, the World Bank’s new strategy
envisages a large amount of credit support
to Montenegro in the areas of agriculture,
health, higher education and science, and in
the remediation of environmentally problematic
issues. EBRD and IFC also plan to finance
some large projects in Montenegro: a power
network upgrade, the construction of a
highway bypass in Podgorica and to make
improvements to the water supply system in the
municipality of Danilovgrad.
Key Information Contacts
Securities Commission of Montenegro www.scmn.cg.yu
Central Depository Agency www.cda.cg.yu
Central Bank of Montenegro www.cb-cg.org
Ministry of Finance www.ministarstvo-finansija.cg.yu
Montenegro Statistical Office www.monstat.cg.yu
PAGE 92
Montenegro Officially Becomes an EU
Candidate Country
On Friday, December 17th, 2010, at a two-day
summit in Brussels, the European Council
backed a recommendation made by the
European Commission to grant candidate
status to Montenegro. However, this decision
does not guarantee an easy journey towards
joining the Union, since no date for the opening
of membership talks has been set yet. This is a
signal that the country, which has a population
of just 630,000, needs to speed up reforms.
Montenegro is the fifth candidate country in line
for membership, together with Croatia, Iceland,
Macedonia and Turkey.
Information obtained from the Exchange.