Professor Vasilije Kostić, economic analyst, said in the interview for Vikend novine that Government’s response to the current crisis was efficient, acting responsibly and with devotion. As far as any arrangement with IMF or any other financial institution, Mr Kostić thinks that nothing should be ruled out as world practice is not familiar with the situation.
You are one of the several most prominent economists who was received by Prime Minister. The meeting took several hours. What was the epilogue?
Mr Kostić:The key epilogue is that we agreed with the concept of the measures adopted by the Government.
In addition, we got acquainted with serious objective limitations to the realization of the intended response to the crisis and the required action and involvement of all social factors in its addressing.
We also considered the vision of the future social and economic development of Montenegro.
I would tell that we inaugurated “ a very good practice” that could be of great importance for the Government.
Can you comment on the measures adopted so far? Do you agree with the EB that Montenegrin economy could slip into recession given the fact that it is vulnerable due to tourism?
Mr Kostić: The overall impression is that the Government is very committed and very responsible in its actions and its response to the crisis is efficient.
I will reiterate what I said in the meeting. I am more than satisfied with fast and efficient response of the Government and the first set of measures.
“It’s better to be fast than be better”, that’s the principle of efficient strategy.
Measures were well designed and they targeted the liquidity and jobs.
In what other ways can the country help the economy?
Mr Kostić: The Government is working in a very narrow maneuver space and has very few instruments at its disposal.
In a situation like that, without emission function, the possibility is borrowing, but how? Many of those who design measures neglect operational component and the problem it might provoke, which is: Funds must be provided immediately. If that’s not possible, you cannot fix the damage.
If measures could be stronger and more horizontal, it would be much better, but you must work with what you have.
I think there’s a little delay with the second set of measures, but providing consensus is very important for the homogenization of the society. Hopefully, the third set of measures will be incentive.
Do you agree with the WB and IMF assessments that Montenegrin economy could slip into recession?
Mr Kostić:: If this lasts, the world economy will slip into recession and that’s for sure.
The Government has announced new package of measures for the economy and re-balancing the Budget. Should arrangement with the IMF be considered as an option?
Mr Kostić: I partly already answered this question. Nothing should be ruled out as possibility.
I am always skeptical when it comes to model estimates of growth and decline in economy.
Many countries have already eased measures. In Italy and Austria, for example, shops are working now. Should Montenegro start thinking about that too?
Mr Kostić: Professional epidemiologists should be the main in this situation. However, if the economy isn’t opened soon, our ability to implement measures against the virus will become weaker.
Therefore, in my opinion, maybe gradual opening should be considered, with regard to epidemiologists’ opinion, of course.
Banks must be partners in the maintenance of the economy
What steps Montenegrin commercial banks could take?
Mr Kostić: IMF and its credit lines will have one of the most important roles when it comes to companies. I believe guarantee fund of the country will be necessary in some form because majority of companies will have problems with the collateral. Banks too could have a very important role in maintaining substance of Montenegro’s economy.
Banks must be partners in protecting the economy now.
