What will be the price of money in future, the amount of interests in the first place, will depend on its availability and international trends and measures adopted by IMF, World Bank, European Central Bank… Availability of money at international level will depend on the pro-activity of key institutions in the country.
Representatives of the government are optimistic that international institutions will come out with favorable loans due to COVID-19 epidemic. Analysts are more careful and say everything will depend on the country and its ability to respond to new challenges.
Just a few days ago, Montenegro borrowed €250 million for a WB guarantee worth €80 million. According to the estimates, at least €100-150 million will be required to mitigate consequences of the epidemic.
Representatives of Montenegrin Commercial Bank have said that coronavirus pandemic has affected all financial markets at global level, making forecasts about long-term trends in money price difficult to make.
“Individual rating of the country also has an impact on the price of money. Standard &Poor’s has confirmed Montenegro’s B+/B rating but revised its estimates from stable to negative, which implies that Montenegro’s risk of pandemic is considerably higher”, bank representatives have said.
Increase or reduction in interest rate in banks are issues impacted by several factors.
“Banks take very responsible approach to interest rates policy. Role of banks is very important here, especially when it comes to the recovery of the economy. Availability of both national and international sources of financing will have the key impact on price formation, i.e. interest rates in the forthcoming period, as well as international trends and measures adopted by IMF, WB, ECB…”.
CKB representatives say that availability of money at international level depends on the proactivity of key institutions in the country.
In favor of proactive approach, Central Bank of Montenegro, in cooperation with international financial institutions, is considering the possibility of efficient approach to credit lines for countries mostly affected by COVID-19.
They say that activities taken by central banks have contributed to the stabilization of conditions.
President of the Committee on Economy, Finances and Budget, Mr Predrag Sekulić, was much more optimistic.
“I believe international financial institutions will provide additional packages of financial assistance and favorable loans”, Mr Sekulić said.
He reminds that ECB will come out with special financial packages for the EU states.
“in addition, US Federal Reserves will provide help, just like in 2008/2010 crisis”, Mr Sekulić says.
Mr Vasilije Kostić, economic analyst and professor, says we must not forget that those who place money do that for profit reasons.
“When uncertainty is the dominant characteristic of the external surroundings, then laws on functioning of economic systems drastically change. But we keep considering this new reality through old patterns and make strategic mistake –we observe changed circumstances n an unchanged way”, Mr Kostić points out.
For those who place money, safety of the capital is of paramount importance.
Mr Kostić explains that expectations for future are related to every country’s individual ability to respond to new challenges.
“Financing conditions for small economies might get worse in future, but not radically”, Mr Kostić says.
As far as major economies are concerned, the situation will be much different as their recovery depends entirely on themselves.
“The situation won’t be stable until the vaccine if found”, Mr Kostić explains.
