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AFP: Montenegro emerges from recession, needs reforms: IMF

Published date: 24.02.2011 14:38 | Author: AFP

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Montenegro emerges from recession, needs reforms: IMF

February 22, 2011

Montenegro's economy has emerged from recession but the government has to accelerate reforms in order to continue a positive growth, an IMF official said Tuesday.

"Montenegro has emerged from the crisis and recession but now faces a twin-task -- one tackling still heavy legacy burdens and accelerating forward-looking reforms," Gerwin Bell, head of the International Monetary Fund (IMF) mission visiting Montenegro told reporters.

The Montenegrin government projects growth of 2.5-3.0 percent while Bell put it at around 2.0 2011 after an estimated 1.1 percent last year.

"After contracting for 22 months, industry began growing again in the second half of 2010 and tourism registered a strong rebound during summer," Bell said.

He said "the recovery is projected to gain momentum," notably with increased demand for Montenegro's "industrial exports, new tourism projects and increased confidence in (its) financial system.

"The crisis has taught us that, given Montenegro's small size and its high (degree of) openness, any weakness must be quickly redressed, otherwise, large dislocations can occur," Bell said.

Montenegro, a tiny Adriatic republic with a population of only 650,000, "should return to the policies that introduce flexibility, strengthen the banking sector and consolidate the budget," Bell said.

"The key (to) ... economic growth is to create new jobs and (that) is in hands of private investment," he said.

Montenegro's economy had flourished largely thanks to foreign investment, mostly in the real estate along its part of the Adriatic coast, since it declared independence from a loose federation with Serbia in mid-2006.

Analysts say the country needs serious reconstruction of its economy, which has so far relied heavily on tourism and associated property speculation.