Credit Rating of Montenegro Lowered

In its latest report, the American credit rating agency Standard and Poor’s (S&P) lowered the credit rating of Montenegro from B+ to B, with a stable outlook.

The data on the credit rating were published on March 5, the Vijesti portal reports.

– We estimate that the tourism-based Montenegrin economy dropped by 15.5% last year, and the payment balance and the fiscal positions weakened together. The recovery of the tourist sector is expected to be only gradual, based on the global vaccination progress – the report says.

The agency estimates that the Montenegrin government debt in the medium term would amount to slightly below 80% of the gross domestic product (GDP).

– This is nearly 20 percentage points more compared to our projections from before the pandemic and is at the level we deem raised, considering that Montenegro has no independent monetary policy – the report says.

The agency says that over 80% of the gross debt is external, whereas net borrowings from abroad are now the biggest source of financing of the persistently large external deficits of Montenegro, which means that the fiscal and the external disbalances are increasingly dependent.

– Accordingly, we are lowering our long-term ratings of Montenegro to B from B+. The outlook is stable – the report says.

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