## IMF Executive Board Approves US$ 83.7 Million in Emergency Support to Montenegro to Combat COVID-19 Pandemic

_IMF News, June 24, 2020_

## Source details

**Canonical URL:** [IMF Executive Board Approves US$ 83.7 Million in Emergency Support to Montenegro to Combat COVID-19 Pandemic](https://www.imf.org/en/news/articles/2020/06/24/pr20246-montenegro-imf-executive-board-approves-us-83-7m-emergency-support-combat-covid19)

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## Bibliographic details
- Published: June 24, 2020

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### Approval and financing instrument
- The Executive Board approved SDR 60.5 million (about $US 83.7 million or Euro 74 million, 100 percent of quota) in emergency assistance for Montenegro.
- The financing was provided under the Rapid Financing Instrument (RFI).
- The RFI provides rapid financial assistance to member countries facing urgent balance of payment needs without the need for a full-fledged economic program or reviews.

### Economic outlook and impact of COVID-19
- The global outbreak of COVID-19 has weakened the outlook for Montenegro’s economy and created immediate financing needs.
- Tourism accounts for around a fifth of the economy.
- GDP is projected to decline by nearly 9 percent in 2020 (11.7 percentage points below the pre-virus baseline).
- GDP is expected to grow by 5.2 percent in 2021 and gradually converge to potential.
- Montenegro could experience the largest contraction since independence.

### Immediate policy response by Montenegrin authorities
- Authorities are implementing a package of fiscal and financial sector measures to sustain economic activity, including:
  - Measures to preserve employment.
  - An extension of social benefits.
  - Provision of liquidity to the economy.
- The immediate challenge is to mitigate the effects on the economy and households most affected by the crisis.

### IMF assessment and policy recommendations (statement by Mr. Tao Zhang, Deputy Managing Director and Acting Chair)
- The COVID-19 shock has created urgent balance of payments and fiscal financing needs.
- Authorities implemented swift and decisive measures to contain and mitigate the spread of the pandemic, enabling a relatively speedy reopening of the economy.
- Given uncertainties around the recovery of tourism globally, the economy could take a few years to fully rebound to pre-pandemic GDP levels.
- Fiscal and financial sector policies have been accommodative in response to the pandemic.
- A sizable temporary increase in the fiscal deficit to accommodate higher public healthcare needs and targeted transfers to firms and households affected by the pandemic is appropriate.
- Starting next year, authorities need to:
  - Restore fiscal space and steadily lower public debt by resuming their ambitious fiscal consolidation program started in 2017.
  - Avoid large capital outlays — with particular restraint in launching and implementing large projects which could jeopardize debt sustainability.
- Financial sector policy guidance:
  - Policy measures to ease the strain on borrowers should be continually recalibrated as circumstances evolve.
  - Authorities should stand ready to take additional measures to preserve financial sector stability, if necessary.
  - When conditions permit, authorities should resume their planned asset quality review of the banking system.

### Role of IMF financing and external partners
- The IMF emergency assistance under the RFI will help provide resources to address urgent balance of payments needs and support essential healthcare expenditures.
- The support of other international financial institutions and development partners is expected to close remaining financing gaps, ease the adjustment burden, and preserve Montenegro’s long-term economic growth.

### Contacts and additional resources
- IMF Communications Department — MEDIA RELATIONS
  - PRESS OFFICER: Gediminas Vilkas
  - Phone: +1 202 623-7100
  - Email: MEDIA@IMF.org
  - @IMFSpokesperson
- Related links provided on the original release include:
  - IMF Lending Tracker (emergency financing request approved by the IMF Executive Board)
  - Policy tracker: economic responses to COVID-19 by 193 countries
  - IMF Executive Board calendar

*Press Release No. 20/246 — June 24, 2020.*

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## References

- [https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)
- [The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)
- [Montenegro and the IMF](http://www.imf.org/external/country/MNE/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Rapid Financing Instrument](https://www.imf.org/en/About/Factsheets/Sheets/2016/08/02/19/55/Rapid-Financing-Instrument)
- [https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker](https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker)
- [https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19](https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19)
- [https://www.imf.org/external/NP/SEC/bc/eng/index.aspx](https://www.imf.org/external/NP/SEC/bc/eng/index.aspx)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2020/06/24/pr20246-montenegro-imf-executive-board-approves-us-83-7m-emergency-support-combat-covid19_