Montenegro's leader sees slow economic recovery

Montenegro's economy will emerge from recession in mid-2010 and grow about 0.5% for the year after suffering a major slowdown in 2009, the prime minister told Reuters in an interview.After growing by 10.7% in 2007 and 7.5% in 2008, the former Yugoslav republic of 650,000 has...

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 E-mail article  Print  Save Additional News in English Još vesti na Srpskom Επιπλέον ειδήσεις στα Ελληνικά  Text

Montenegro's leader sees slow economic recovery



Adam Tanner - 09.12.2009

Montenegro's economy will emerge from recession in mid-2010 and grow about 0.5% for the year after suffering a major slowdown in 2009, the prime minister told Reuters in an interview.

After growing by 10.7% in 2007 and 7.5% in 2008, the former Yugoslav republic of 650,000 has seen investment slow, exports fall, and the global economic crisis shrink its GDP by about 4% this year.

"In our economic projections for 2010, the government foresees continued impact from the world economic crisis for the first six months in Montenegro, but then six months that could bring growth again," Milo Djukanovic noted. "By the end of 2010, we can realistically speak of growth from 0.5%."

Montenegro declared independence from Serbia in 2006 and enjoyed a boom in investment and growth as foreigners, including many Russians, rushed to invest in its scenic coastline and other opportunities.

The government expects to seek an international loan of at least 100 million euros in 2010, said Djukanovic, the dominant political figure in his country for two decades.

Montenegro's central bank has advocated turning to the IMF because its loans are cheaper than other options, but the government has been slow to embrace the idea.

INTERNATIONAL LOAN NEEDED

Privately, some officials say one obstacle is IMF scrutiny of Prva Banka, a bank in which Djukanovic's brother is a major shareholder and the prime minister holds around 2%.

"Today it is clear that we will need funds from some creditors in 2010 to balance out our expenses," Djukanovic reported. "We have the possibility of turning to the IMF, but we can also look to others," mentioning the World Bank and the European Bank for Reconstruction and Development.

To stop a run on its banks, Montenegro last year offered unlimited deposit guarantees until the end of 2009. That offer won't be repeated, the premier said, although the government will provide limited guarantees in line with EU standards.

In recent years, Djukanovic has lobbied Abu Dhabi to consider investing in multi-billion euro projects such as the development of a long beach in the country's south.

The proposed restructuring of Dubai World's debt won't directly impact the country as Montenegro has no investment from Dubai, but there are funds in two smaller private real estate development projects from Abu Dhabi.

Djukanovic, who underlined that he would personally hand in Montenegro's questionnaire to the European Union in Brussels on Dec.9 after applying for membership earlier this year, hopes to achieve candidate status in 2010.

The EU executive said in a progress report in October that Montenegro needed to show concrete results in consolidating the rule of law, particularly on judicial reform and the fight against corruption.

Even if the country completes EU negotiations within three years, as Djukanovic hopes, he does not expect to stay in office that long.

"I don't think it is necessary to carry out my whole mandate as prime minister," said the prime minister, who was re-elected for a four-year term earlier this year. "I have given enough to politics, more than 20 years."

Source: Reuters, Balkans.com Business News


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