ANNUAL REPORT JUNE 2010
FEDERATION OF EURO-ASIAN STOCK EXCHANGES
MONTENEGRO STOCK EXCHANGE
ECONOMIC AND POLITICAL DEVELOPMENTS
Political History
On 21 May 2006 Montenegro organised a
referendum on independence, in line with the
provisions of Article 60 of the Constitutional
Charter of Serbia and Montenegro. The
modalities for referendum were agreed by
political parties following a mediation mission
of Mr Miroslav Lajcak, the personal
representative of the High Representative for
CFSP Javier Solana. The referendum was
conducted in line with OSCE and Council of
Europe commitments. On 31 May 2006 the
Republic Referendum Commission
confirmed the results, according to which
55.5% of voters expressed their support for
independence. On 3 June 2006 the
Montenegrin Parliament adopted the
“Declaration of Independence”.
Recognising legitimacy of the whole process
the EU Council adopted on 12 June 2006
Conclusions where the EU and its Member
States decided to develop further their
relations with the Republic of Montenegro as
a sovereign, independent state.
In the Declaration of Independence,
Montenegro confirmed that it applies and
adheres to international treaties and
agreements to which the State Union of
Serbia and Montenegro was a party and
which are relevant for Montenegro.
Montenegro started the process of joining
international organisations. In June 2006 it
became a member of the UN and of the
OSCE. In July and August it acceded to a
number of organisations including ILO, ITU,
ICRC et al. Since May 2007, Montenegro is
also a member of the Council of Europe.
Bilateral discussions on settling pending
issues between Serbia and Montenegro are
being held in a constructive atmosphere and
agreements have been reached on key
issues, notably on financial assets and
membership in IFIs.
induced a widening of the trade deficit to
62% of GDP.
The stagnation on the domestic capital
market resulted in a significant outflow of
portfolio investments. Overall, the current
account deficit widened, driven by a strong
inflow of imports while its coverage by net
FDI declined, increasing vulnerability to
external shocks.
Since independence Montenegro has been
putting in place the legal and institutional set-
up required by its new competences as an
independent state. On 19 October 2007
Montenegro adopted a Constitution that is
broadly in line with international standards
and the recommendations of the Council of
Europe and its Venice Commission. The
Constitution was adopted by the Parliament
with the required qualified majority.
Montenegro unilaterally uses the Euro as
legal tender, without participating in the Euro
area. Consequently, its monetary policy is
limited to operation of liquidity management.
To counter the international financial crisis
the Montenegrin authorities have taken a
series of measures, including higher capital
adequacy requirements for domestic banks,
an unlimited coverage for deposits insurance
as well as a guarantee scheme for intra-
banking lending. Public Debt expanded to
33.6% of GDP in 2008, as the share of
domestic debt rose in the total.
Economic situation
Economic growth remained strong in 2008,
expanding well above 8% in real terms,
boosted by strong inflows of FDI and robust
domestic demand. Services, notably tourism,
financial intermediation and real estate,
remained the main driver of growth,
generating some 70% of gross value added
(GVA). Around 20% of total growth was
attributable to industrial output and
construction. On the demand side,
consumption remained solid as retail sales
grew by around 10% in real terms in 2008.
Exports of goods decreased in 2008,
reflecting the weak competitiveness of local
products but also the volatile international
price of aluminium, which accounts for
almost half of total exports. FDI inflows
combined with a robust domestic demand
The WTO accession process will require
further reforms. To that end the Montenegrin
authorities established new centres for
metrology, standardisation and intellectual
property, which should also serve the
purpose of alignment of Montenegro's
foreign trade regime and customs policy with
the EU requirements.*
* Information provided by MSE.
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
GDP IN CURRENT PRICES
(EUR billions)
INFLATION
(%)
10
9
8
7
6
5
4
3
2
1
0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
02
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