Moody's says Montenegro's long-term debt rating is currently stable.

By bne IntelliNews June 1, 2012
International credit rating agency Moody's said that Montenegro's Ba3 government bond rating reflects slower economic growth and a rising government debt burden. The government has however taken steps to improve the institutional environment in preparation for EU accession talks and as the country proceeds towards membership the operating environment will enhance further. Therefore, based on economic and institutional developments, Moody's confirms that the outlook for the government's long-term debt rating is currently stable. Montenegro has recovered from the sharp downturn following the global economic crisis but real GDP growth has not returned to its pre-crisis levels yet. Although deposits are slowly picking up after the steep fall, the banking system prospects remain cloudy. Non-performing loans are still at high levels, although the NPL ratio has started to trend downwards. Credit growth has yet to accelerate but given euro area uncertainties it will likely remain subdued in 2012. The government has made efforts to tackle the deteriorated fiscal position. However the government faced a significant call on government guarantees and an unanticipated increase in pension beneficiaries in 2011, which kept the government debt high and rising. Moody's does not anticipate a significant reduction in public debt over the next year as slow revenue growth and elections in 2013 may complicate the task of fiscal consolidation.

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