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Report on the State Debt of Montenegro as of 30
September 2010
The State debt of Montenegro as of 30th September 2010 amounts to EUR 1.279,2
million or 42,3% of the Gross Domestic Product (GDP). Internal debt amounts to EUR
361,5 million or 12,0% GDP, while external debt amounts to EUR 917,7 million or
30,3% GDP.
External Debt Trends During the First Three Quarters of 2010
During the first three quarters of 2010, the external debt increased by EUR 217,8
million in comparison to the end of 2009. The external debt amount increased due to
issue of the Eurobonds in the amount of EUR 200,00 million, disbursing of IBRD funds
for the Project “Health” in the amount of about EUR 0,6 million, Project “Energy
Efficiency” in the amount of EUR 0,5 million, and the Project “MIDAS” in the amount
of EUR 0,9 million, Hungarian loan in the amount of EUR 1,6 million, EBRD loan for
the Railway in the amount of EUR 2,1 million, IDA loan in the amount of about 1,5
million, loan for financing the “Purchase of special fire protection vehicles Project” with
the Austrian Bank – Steirmarkisiche und Sparkassen AG in the amount of EUR 12,9
million, EIB loan for Railway in the amount of EUR 7,0 million, EIB loan for the Project
of Waste Waters Management for the Municipality of Niksic, in the amount of EUR 1,0
million and EIB loan for the Project “Roads and Bridges” in the amount of EUR 3,0
million, commodity loan of the Government of Spain for the Recycling Center in
Podgorica in the amount of EUR 3,2 million, Polish loan in the amount of EUR 0,2, KfW
loan for the water supply project (phase II and III) in the total amount of around EUR 2,2
million, as well as the Hungarian Exim Bank loan for financing of the Project for
construction of school in Bar in the amount of EUR 0,3 million. The withdrawal of
commodity loan from Erste Bank Austria was recorded for financing projects of the
Health Fund in the amount of EUR 6,0 million. The stock of foreign debt partly increased
due to the increase in value of the U.S. Dollar, subsequently affecting the value of loans
in U.S. Dollars. The stock of foreign debt has been reduced based on timely repayment of
principal in the amount of about EUR 32,3 million.
The stock of external does not include the obligations in respect of unresolved
debt-related issues to Libya, Kuwait, Czech and Slovakia and UBS Bank in respect of
bonds issued within the London Club. Montenegro inherited this debt towards the
governments of these four countries based on the division of non-allocated debt (5.88%
out of 38% for Serbia and Montenegro) and in accordance with the Agreement on
Succession Issues from Vienna 29th June 2001, it has been resolved through positions
agreed within the Committee for Division of Financial Assets and Liabilities of the
former FRY. As to API bonds, it is expected that at the end of the year, the negotiations
will take place with the UBS Bank representatives, for the purpose of finding the options
for bilateral resolution of this issue. The total amount of the obligation in respect of
unresolved debt issues will most likely equal to about 1% GDP and it is included in the
projections of debt trend for the period 2010-2013.
The mentioned information on the stock of foreign debt implies the amounts of
disbursed loan funds in respect of individual loans.
Table 1. Data on the stock of foreign debt and the amounts of non - disbursed loan funds
Foreign Debt
Creditor
International Bank for Reconstruction and
Development (IBRD)
International Financial Organization (IFC)
Member states of Paris Club of Creditors
International Development Association (IDA)
European Investment Bank (EIB)
European Bank for Reconstruction and
Development (EBRD)
European Council Development bank
European Community
Credit Bank for Reconstruction – Germany
(KFW)
Austrian loan
Hungarian loan
Polish loan
Societe Generale - Education IT
French loan
EUROFIMA – debt of Railways
Czech EXIM – debt of Railways
Steiermarkische Bank und Sparkassen AG
Erste Bank
Credit Suisse Bank
Spanish loan for landfill construction
Exim Bank Hungary
EUROBOND
TOTAL:
Stock of Debt
Non –
disbursed
funds
178,9
5,7
123,3
57,4
72,4
29,7
20,3
0,7
5,5
0,6
12,2
10,1
14,0
11,6
1,1
8,5
26,0
37,7
22,0
30,0
76,2
3,9
0,2
200,0
917,7
50,5
8,4
35,0
0,5
0,1
1,0
4,0
129,8
Pursuant to the aforementioned, the total amount of available and non – disbursed
funds is of around EUR 129,8 million.
Foreign guarantees of Montenegro amount to of around EUR 251,7 million, or
8,3% of GDP, or 19,7% of state debt.
Table 2. Issued foreign guarantees
Amount of
lodged
principle up
to 31st March
2010.
Creditor
Loan
Borrower
Year
Amount
Disbursed as
of 31 March
2010
EIB
European Roads
Project
Monteput
2004
24.000.000
24.000.000,00
24.000.000,00
EPCG
PC Airports
MNE
2002
11.000.000
8.023.090,00
7.811.472,00
2004
12.000.000
11.000.000,00
10.800.000,00
Commercial
Banks
2009
91.000.000
43.217.000,00
43.217.000,00
PC Airports
MNE
2003
11.000.000
10.235.127,00
7.246.974,00
PC Regional
Water Supply
Company
2007
8.000.000
8.000.000,00
7.666.666,67
PC Regional
Water Supply
Company
2008
7.000.000
7.000.000,00
6.708.333,33
2009
4.000.000
890.709,63
890.709,63
2009
15.000.000
650.000,00
650.000,00
EPCG
EPCG
2003
2007
3.580.000
16.000.000
3.531.897,31
2.572.039,37
1.871.831,97
2.572.039,37
EPCG
2007
5.400.000
536.000,00
536.000,00
2008
15.000.000
8.863.740,00
8.863.740,00
2009
2009
15.000.000
16.000.000
15.000.000,00
16.000.000,00
15.000.000,00
16.000.000,00
2009
49.680.000
49.680.000,00
49.680.000,00
2010
47.396.000,00
0.00
EIB
EIB
EIB
EBRD
EBRD
EBRD
EBRD
EBRD
KfW
KfW
Electro - Energy
System
Reconstruction
Airports
Modernization
Small and Medium
– sized Enterprises
through
Commercial Banks
Airports
Modernization
Construction of
the Regional
Water supply
System – south
extension, phase I
Construction of
the Regional
Water supply
System – south
extension, phase II
Railroad
infrastructure
Project – phase III
Urgent Railroads
Reconstruction
Infrastructure
Project II
PC Railways
of MNE
Railway
Infrastructure
AD
Podgorica
KfW
Perucica
Piva
Substation
Ribarevina
Filter replacement
in the TPP Pljevlja
and extension to
the substation
PodgoricaRibarevina
KfW
KfW
Opportunity bank
NLB
EPCG
Opportunity
bank
NLB
OTP
KAP
Purchase and
repair of ships
KAP
Montenegrin
Harbor’s
KfW
Exim China
Office
WTE
Wassertechnik
Abu Dhabi
Development
Fund
Credit Suisse
Deutsche Bank
Waste Water
Management
Project
Water supply
Project
Support to the
Steel Mil Niksic
Support to the
Aluminum Plant
Podgorica
Municipality
of Budva
Regional
Water Supply
Project
Steel Mil
Niksic
Aluminum
Plant
Podgorica
2010
29.250.000,00
0.00
2010
18.977.884,37
0.00
2010
26.300.000,00
26.162.358,65
26.162.358,65
2010
22.000.000,00
22.000.000,00
22.000.000,00
251.677.125,62
AS OF 31 SEPTEMBER 2010
257.361.961,96
As of 30th September 2010, deposits of the Ministry of Finance amounted to EUR
275,9 million, including 38,477 ounces of gold, thus the net amount of the state debt is
about 33,2% of GDP.
Graph 1 – STATE DEBT CURRENCY STRUCTURE
4%2% 5%
EUR
USD
CHF
OTHER
89%
Internal debt trend in the first three quarters of 2010
In the first three quarters of 2010, the internal debt decreased by EUR 78,8
million compared to the end of 2009. The decline in the internal debt in the first, second
and third quarter of 2010, was generated by the decline in debt based on restitution in the
amount of around EUR 21,8 million, and decrease in indebtedness amount of
municipalities in the amount of about EUR 14,2 million, repayment of loan with
commercial banks and non-financial institutions in the amount of about EUR 37,1
million, timely repayment of debt installments based on compensation to pensioners in
the amount of EUR 15,3 million, and timely repayment of the installment based on FX
savings in the amount of EUR 9,1 million. On the other hand, the internal debt increased
by EUR 16,9 million due to the borrowing in the amount of EUR 6,0 million for the
completion of construction works of the Police administration office building and
borrowing in the amount of EUR 5,0 million for restoration of cultural monuments in
Cetinje and the issuance of T-bills in the amount of EUR 5,9 million.
The total liability in respect of restitution amounts to EUR 79,1 million, which is
by EUR 21,8 million less than at the end of 2009. The debt decrease in respect of
restitution is caused by the sales of real estate of the Ministry of finance, timely
repayment of installment based on restitution and redemption of bonds FO01 and FO02
by the State in the stock exchange. The Government of MNE, in January 2009 has
initiated and in 2010 continued the redemption of restitution bonds in respect of the
compensation of former owners prior to maturity date, and up to now redemption was
made for about EUR 25,5 million of the value of bonds, providing the amount of around
EUR 5,5 million in 2009, and EUR 2,9 million in 2010.
In 2008, the Government adopted the Decision on redemption of foreign currency
exchange savings of the citizens for 2016 and 2017, and up to now the redemption was
made for bonds in the amount of EUR 1,22 million, out of which EUR 0,5 million and in
the first and the third quarter EUR 0,04 million.
Consolidate debt of municipalities amounts to of around EUR 64,0 million,
according to the latest data provided by municipalities, being indicated in the Table in
two ways:
the stock of foreign debt comprises the debt of municipalities based on
Agreements signed by the Government of Montenegro with foreign creditors, and Subloan agreements with municipalities, in the amount of EUR 17,6 million (the amount of
disbursed funds);
the stock of internal debt, as well as the debt of local self – government units to
creditors, in the amount of EUR 46,4 million.
In November 2008, the Ministry of Finance adopted the Instruction on the content of the
request for borrowings of municipalities and fulfillment of financial requirements for
their borrowings, which in details determines the procedure of borrowing for local selfgovernments.
Table 3. Domestic guarantees issued in 2009 and 2010
Creditor
NLB Montenegrobank
Podgorička bank
Hipotekarna bank
NLB Montenegrobank
Erste Bank
Borrower
Bauxite Mines A.D.
Nikšić
Pobjeda A.D.
Podgorica
Montenegro Airlines
Amount
5.000.000,00
Montenegro Airlines
MNE Fund for
Housing
1.800.000,00
3.800.000,00
2.970.000,00
2.700.000,00
Construction
Railway Transport
of Montenegro
Erste Bank
Pobjeda A.D.
Podgorica
Erste Bank
Regional
Watersupply System
Hipotekarna Bank
MI - RAI Group
Niksic
NLB Montenegrobanka Gradir Montenegro
doo Nikšić
NLB Montenegrobanka Gradir Montenegro
doo Nikšić
NLB Montenegrobanka Gradir Montenegro
doo Nikšić
TOTAL DISBURSED UP TO 30
SEPTEMBER 2010:
Erste Bank
7.000.000,00
3.500.000,00
7.000.000,00
800.000,00
900.000,00
700.000,00
2.000.000,00
38.170.000,00
The State debt of Montenegro including public enterprises amounts to EUR
1.587,9 million or 52,5% of GDP. The amount of liabilities of enterprises in majority
state ownership was calculated based on guarantees issued by the Government, data of
the Central Bank and data provided by enterprises.
Table 4. – Debt servicing in the first three quarters of 2010
Budgetary Item
Repaid in the
first three
quarters of 2010
4611 – Repayment of
principal to residents
4612 – Repayment of
principal to nonresidents
4630 – Repayment of
liabilities from previous
years
4151 – Repayment of
interests
4152 – Repayment of
interests to nonresidents
TOTAL:
37,1
32,3
82,6
5,0
18,3
175,3
State Debt Trend and Sustainability the Period 2006 - 2009
Table 5. – Stock of State Debt in the period from 2006 – 2009
Year
2006
2007
Amount (in
million €)
701,1
737,2
2008
2009
894,7
1.140,2
Table 6: Debt Trend Outlook in the Period from 2010 - 2014.
Debt Type
GDP %
External Debt
GDP %
Internal Debt
GDP %
Total:
GDP %
2010
3025
911.15
30.12
352.9
11.67
1264.05
41.79
2011
3170
1037.02
32.71
322.22
10.16
1359.24
42.88
2012
3363
1117.66
33.23
256.72
7.63
1374.38
40.87
2013
3585
1153.86
32.19
189.92
5.30
1343.78
37.48
2014
3822
1101.86
28.83
150.62
3.94
1252.48
32.77
Pursuant to the public debt trend projections, the stock of public debt will amount
to 41,79% of GDP. The increase in public debt, which in comparison to the end of 2009
amounted to 38% of GDP, will be generated due to the issue of the Eurobonds in
September 2010.
A mild increase in public debt up to 2012 is forecasted in the following period,
pursuant both to the GDP and macroeconomic trends, whereas the stock of debt will
decrease. The increase in external debt will be primarily generated by the additional
budgetary borrowing in the amount of EUR 150,00 million. Additional borrowing in the
amount of EUR 110, or EUR 72, 00 million is envisaged in 2011, 2012 and 2013, while
in 2014, under the assumption of economic recovery additional borrowing will not be
required. In the aforementioned period 2011 – 2014, will be generated the decrease in
internal debt against new liabilities.
Aforementioned projections were developed pursuant to the borrowing plan for
the needs of the budget, planned disbursing of funds, or entering new credit arrangements
(internal and external debt), as well as with the envisaged repayment of internal and
external debt.
Ms. Ana Banović, Independent Advisor II,
Ms. Mersija Purisic, Independent Advisor I,
Mr. Dragan Darmanović, Head of the Debt and Cash Management Division