Montenegro, Recent Economic Developments, International Investment Position

In 2019, the Central Bank of Montenegro has published for the first time the net international investment position (NIIP) of Montenegro, which is a difference between external financial assets (receivables-assets) and external financial liabilities and capital (liabilities).

According to the international investment position, Montenegro is a net debtor, because it has a negative position, which amounted 8.6 billion euro (increase of 3.8 percent), according to the preliminary data in 2020, or 206.2 percent of GDP. At the end of 2020, total external receivables of residents were 3.4 billion euro, and liabilities 12 billion euro.

Compared to the end of 2019, the negative net international investment position at the end of 2020 increased by 316 million euro, mainly due to increase in financial liabilities (by 695.7 million euro), while it was offset to certain extent by contemporaneous increase in financial assets (by 379.8 million euro). Preliminary data indicate that there is an increase in negative net position across all investment instruments, if compared to 2019, but the largest change is recorded under other investments, where the net position (assets less liabilities) was increased by 443.1 million euro (an increase of 12 percent), primarily due to increase in net credit liabilities (by 451.4 million euro). Increase on the side of assets during 2020 was generated mainly from the increase in the Central Bank of Montenegro reserves and portfolio investments. Analysis of the assets composition by financial instrument, shows that the Central Bank of Montenegro reserves have a dominant share (51.8 percent of total assets), as well as the currency and deposits – as part of the other investments categories, with a share of 28.6 percent. The analysis of categories of the total external financial liabilities of Montenegro shows that the highest share goes to other investments of 44.3 percent (5.3 billion euro) and foreign direct investments of 38.7 percent (4.6 billion euro), of which the major instruments are the equity investments with 55.2 percent (2.6 billion euro). During 2020, the other investments recorded a sizeable growth of 9.1 percent or by 442 million euro. Loans have a dominant place as the most important financial instrument on the side of liabilities with an annual increase of 463.8 million euro and stock of 4.5 billion euro (with share of 37.5 percent in total liabilities), as well as currency and deposits which amounted 774.7 million euro at the end of 2020 (with share of 6.5 percent). The share of liabilities on the account of portfolio investments amounted to 2 billion euro (share of 16.9 percent), of which the biggest portion goes to sovereign liabilities resulting from Eurobonds.

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