Bloomberg News

Montenegro May Rely on IMF, EBRD, EIB for 2012 Borrowing Needs

October 24, 2011

Oct. 24 (Bloomberg) -- Montenegro may turn to international financial institutions for money in 2012 and steer away from commercial borrowing because of market vulnerability in Europe, Finance Minister Milorad Katnic said.

The Adriatic Sea nation may rely on groups such as the World Bank, the European Investment Bank, the European Bank for Reconstruction and Development and the International Monetary Fund if Europe’s debt crisis worsens as the nation of 650,000 people seeks to maintain the “stability and credibility” of its economic policy, Katnic said in an e-mailed statement today.

The smallest of the six former Yugoslav republics will need to borrow between 150 million euros ($207.6 million) and 200 million euros next year to finance its budget needs and the government hoped to sell a new Eurobond in 2012 if market conditions were right, Katnic told Bloomberg News in a Sept. 27 interview.

The ongoing debt crisis in Europe may mean that the “international market next year may shut down for financing,” he said in today’s statement. International financial institutions may be there to provide “financial, technical and analytical” support to the tiny Balkan state which wants to avoid “nervous” foreign markets and rising borrowing costs amid Europe’s debt crisis, he said.

The organizations, which provide longer-term and cheaper financing, are also ready to “support the banking sector, through capital increases and credit support to commercial lenders,” which is “especially important if the banks are faced with reduced support from their owners,” Katnic said, without naming any bank.

Montenegro sees its economy growing at least 2.5 percent this year while it tries to cut the budget deficit to 2 percent of gross domestic product in 2012 from an estimated 3 percent this year.

“Any bigger budget deficit could mean more and costlier borrowing” and even a loss of credibility and the “main challenge in 2012 will be to reduce the gap,” he said in the statement today.

--Editor: Douglas Lytle

To contact the reporters on this story: Gordana Filipovic in Belgrade at Misha Savic in Belgrade at

To contact the editors responsible for this story: James M. Gomez at;

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