Identifier
Created
Classification
Origin
06BELGRADE568
2006-04-12 09:41:00
UNCLASSIFIED
Embassy Belgrade
Cable title:
MONTENEGRO: ECONOMIC DEVELOPMENTS: MARCH 2006
how-toVZCZCXRO0529 RR RUEHAG RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG DE RUEHBW #0568/01 1020941 ZNR UUUUU ZZH R 120941Z APR 06 FM AMEMBASSY BELGRADE TO RUEHC/SECSTATE WASHDC 8347 INFO RUEATRS/DEPT OF TREASURY WASHDC RUCPDOC/USDOC WASHDC RUEHC/DEPT OF LABOR WASHDC RUEHZL/EUROPEAN POLITICAL COLLECTIVE
UNCLAS SECTION 01 OF 02 BELGRADE 000568
SIPDIS
SIPDIS
DEPARTMENT PASS TO OPIC, EXIM, TDA AND USAID
USDOC FOR 4232/ITA/MAC/OEERIS/SSAVICH
E.O. 12958: N/A
TAGS: ECON EFIN KPAO ETRD EINV EAID PGOV MW SR
SUBJECT: MONTENEGRO: ECONOMIC DEVELOPMENTS: MARCH 2006
Index:
MACROECONOMICS:
-- Public Debt Up in Euros, Down as Percent of GDP
-- Industrial Production Recovers Slightly
BUSINESS and TOURISM:
-- Tourism Predicted to Be 51.5 Percent of Exports
-- Ada Bojana to be Tendered
-- IKEA to Purchase Products From Montenegro, But No Stores
PUBLIC ECONOMY:
-- Unemployment Rises Slightly
-- Real Wages Rise
-- Government Offers Housing Loans
T-BILLS
STOCKS
MACROECONOMICS:
Public Debt Up in Euros, Down as Percent of GDP
--------------------------------------------- --
UNCLAS SECTION 01 OF 02 BELGRADE 000568
SIPDIS
SIPDIS
DEPARTMENT PASS TO OPIC, EXIM, TDA AND USAID
USDOC FOR 4232/ITA/MAC/OEERIS/SSAVICH
E.O. 12958: N/A
TAGS: ECON EFIN KPAO ETRD EINV EAID PGOV MW SR
SUBJECT: MONTENEGRO: ECONOMIC DEVELOPMENTS: MARCH 2006
Index:
MACROECONOMICS:
-- Public Debt Up in Euros, Down as Percent of GDP
-- Industrial Production Recovers Slightly
BUSINESS and TOURISM:
-- Tourism Predicted to Be 51.5 Percent of Exports
-- Ada Bojana to be Tendered
-- IKEA to Purchase Products From Montenegro, But No Stores
PUBLIC ECONOMY:
-- Unemployment Rises Slightly
-- Real Wages Rise
-- Government Offers Housing Loans
T-BILLS
STOCKS
MACROECONOMICS:
Public Debt Up in Euros, Down as Percent of GDP
-------------- --
1. (U) Public debt rose 4.5 percent in 2005, to Euros 704.4
million. As a share of GDP, public declined from 45.7
percent in 2004 to 42.7 percent. Seventy-seven percent of
the debt was inherited from the former Yugoslavia. For
2006, the Finance Ministry plans to repay Euros 151.6
million of the outstanding Euros 513.4 million in foreign
debt. It repaid Euros 105.3 million in foreign debt in
2005, and about 55 million in 2004.
Industrial Production Recovers Slightly
--------------
2. (U) Industrial production in the first two months of
2006 was 5.2 percent higher than in the same period in
2005, an annual growth rate of 4.7 percent. Industrial
production fell 1.9 percent in 2005, which the Central bank
of Montenegro attributes to poor performance by non-
privatized companies, especially energy and mining. The
Central bank cited tourism and banking as the engines for
Montenegrin economic growth.
BUSINESS and TOURISM:
Tourism Predicted to Be 51.5 Percent of Exports
-------------- --
3. (U) The independent World Trade and Tourism Council
(WTTC) projects that tourism will generate 51.5 percent of
Montenegro's exports in 2006, up 20 percent from last year.
The annual growth in tourist receipts for the next decade
is predicted to be 10.2 percent, and for the third year in
a row Montenegro's growth rate is first globally. Tourism
employment is expected to grow 5 percent annually, until 25
percent of the workforce is in tourism by 2016.
Ada Bojana to be Tendered
--------------
4. (U) The Minister of Tourism announced that an
international tender for the lease of Ada Bojana will be
opened in early April, and stay open for three months. Ada
Bojana is an island on the coast by Albania, and was a
nudist resort in past decades. The GoM is looking to
replace that with a number of four- and five-star hotels.
Interest has been shown by American and western European
investors.
IKEA to Purchase Products From Montenegro, But No Stores
-------------- --------------
5. (U) IKEA has announced that it is interested in resuming
purchasing finished and semi-finished wood products from
Montenegro. If the Montenegrin suppliers can meet IKEA's
environmental and other standards, the contract would last
at least three years. However, IKEA confirmed that they do
not plan on opening any stores in Montenegro for at least
several years.
PUBLIC ECONOMY:
Unemployment Rises Slightly
--------------
6. (U) The GoM said unemployment rose 0.2 percent, to 18.6
percent. Unemployment a year ago was 22.2 percent. Labor
BELGRADE 00000568 002 OF 002
Ministry officials said that the real unemployment,
calculated by international standards, was between 12 and
15 percent.
Real Wages Rise
--------------
7. (U) The average net monthly wage in February was Euros
230, up 12.2 percent from January. Retail prices rose 0.3
percent, and the consumer basket for a family of four rose
0.7 percent to Euros 266.
Government Offers Housing Loans
--------------
8. (U) The GoM has decided to offer subsidized housing
loans to the public. Loans range from Euros 5,000 to Euros
30,000, with a period of 20 years and an annual interest
rate of 4 percent -- monthly payments will be Euros 90 to
180. Banks will receive a subsidy of 2.4 percent from the
Government on the loans.
T-BILLS
9. (U) One auction of Treasury bills, with a total face
value of EUR 1.3 million, was held in February (note: data
lags by one month). The average weighted annualized
interest rate for the auction held in February amounted to
0.46 percent. The lowest accepted interest rate at the
auctions held in February was 0.45 percent while the
highest accepted interest rate was 0.49 percent.
Participants at the auctions included local banks.
STOCKS
10. (U) The NEX20 index of the Nex Montenegro Stock
Exchange ended the month of March steady, at 10,262.40. The
Moste index of Montenegroberza rose 1.4 percent to 487.727
in March. The steadiness in the markets, after the sharp
(400%) growth in 2005, reflects the completion of major
privatizations and a lull before the next tranche. Major
components of the NEX20 include the privatized Telekom CG
and Jugopetrol; major components of the Moste include
aluminum smelter KAP and vineyard Plantaze. Note: The
Montenegrin exchanges are still nascent, and the level of
capitalization represented is small although rising (NEX
capitalization at the end of 2004 was Euros 495 million; at
the end of November 2005 it was Euros 1,410 million).
POLT
SIPDIS
SIPDIS
DEPARTMENT PASS TO OPIC, EXIM, TDA AND USAID
USDOC FOR 4232/ITA/MAC/OEERIS/SSAVICH
E.O. 12958: N/A
TAGS: ECON EFIN KPAO ETRD EINV EAID PGOV MW SR
SUBJECT: MONTENEGRO: ECONOMIC DEVELOPMENTS: MARCH 2006
Index:
MACROECONOMICS:
-- Public Debt Up in Euros, Down as Percent of GDP
-- Industrial Production Recovers Slightly
BUSINESS and TOURISM:
-- Tourism Predicted to Be 51.5 Percent of Exports
-- Ada Bojana to be Tendered
-- IKEA to Purchase Products From Montenegro, But No Stores
PUBLIC ECONOMY:
-- Unemployment Rises Slightly
-- Real Wages Rise
-- Government Offers Housing Loans
T-BILLS
STOCKS
MACROECONOMICS:
Public Debt Up in Euros, Down as Percent of GDP
-------------- --
1. (U) Public debt rose 4.5 percent in 2005, to Euros 704.4
million. As a share of GDP, public declined from 45.7
percent in 2004 to 42.7 percent. Seventy-seven percent of
the debt was inherited from the former Yugoslavia. For
2006, the Finance Ministry plans to repay Euros 151.6
million of the outstanding Euros 513.4 million in foreign
debt. It repaid Euros 105.3 million in foreign debt in
2005, and about 55 million in 2004.
Industrial Production Recovers Slightly
--------------
2. (U) Industrial production in the first two months of
2006 was 5.2 percent higher than in the same period in
2005, an annual growth rate of 4.7 percent. Industrial
production fell 1.9 percent in 2005, which the Central bank
of Montenegro attributes to poor performance by non-
privatized companies, especially energy and mining. The
Central bank cited tourism and banking as the engines for
Montenegrin economic growth.
BUSINESS and TOURISM:
Tourism Predicted to Be 51.5 Percent of Exports
-------------- --
3. (U) The independent World Trade and Tourism Council
(WTTC) projects that tourism will generate 51.5 percent of
Montenegro's exports in 2006, up 20 percent from last year.
The annual growth in tourist receipts for the next decade
is predicted to be 10.2 percent, and for the third year in
a row Montenegro's growth rate is first globally. Tourism
employment is expected to grow 5 percent annually, until 25
percent of the workforce is in tourism by 2016.
Ada Bojana to be Tendered
--------------
4. (U) The Minister of Tourism announced that an
international tender for the lease of Ada Bojana will be
opened in early April, and stay open for three months. Ada
Bojana is an island on the coast by Albania, and was a
nudist resort in past decades. The GoM is looking to
replace that with a number of four- and five-star hotels.
Interest has been shown by American and western European
investors.
IKEA to Purchase Products From Montenegro, But No Stores
-------------- --------------
5. (U) IKEA has announced that it is interested in resuming
purchasing finished and semi-finished wood products from
Montenegro. If the Montenegrin suppliers can meet IKEA's
environmental and other standards, the contract would last
at least three years. However, IKEA confirmed that they do
not plan on opening any stores in Montenegro for at least
several years.
PUBLIC ECONOMY:
Unemployment Rises Slightly
--------------
6. (U) The GoM said unemployment rose 0.2 percent, to 18.6
percent. Unemployment a year ago was 22.2 percent. Labor
BELGRADE 00000568 002 OF 002
Ministry officials said that the real unemployment,
calculated by international standards, was between 12 and
15 percent.
Real Wages Rise
--------------
7. (U) The average net monthly wage in February was Euros
230, up 12.2 percent from January. Retail prices rose 0.3
percent, and the consumer basket for a family of four rose
0.7 percent to Euros 266.
Government Offers Housing Loans
--------------
8. (U) The GoM has decided to offer subsidized housing
loans to the public. Loans range from Euros 5,000 to Euros
30,000, with a period of 20 years and an annual interest
rate of 4 percent -- monthly payments will be Euros 90 to
180. Banks will receive a subsidy of 2.4 percent from the
Government on the loans.
T-BILLS
9. (U) One auction of Treasury bills, with a total face
value of EUR 1.3 million, was held in February (note: data
lags by one month). The average weighted annualized
interest rate for the auction held in February amounted to
0.46 percent. The lowest accepted interest rate at the
auctions held in February was 0.45 percent while the
highest accepted interest rate was 0.49 percent.
Participants at the auctions included local banks.
STOCKS
10. (U) The NEX20 index of the Nex Montenegro Stock
Exchange ended the month of March steady, at 10,262.40. The
Moste index of Montenegroberza rose 1.4 percent to 487.727
in March. The steadiness in the markets, after the sharp
(400%) growth in 2005, reflects the completion of major
privatizations and a lull before the next tranche. Major
components of the NEX20 include the privatized Telekom CG
and Jugopetrol; major components of the Moste include
aluminum smelter KAP and vineyard Plantaze. Note: The
Montenegrin exchanges are still nascent, and the level of
capitalization represented is small although rising (NEX
capitalization at the end of 2004 was Euros 495 million; at
the end of November 2005 it was Euros 1,410 million).
POLT