World Bank2012-06-122012-06-122008-11https://hdl.handle.net/10986/7831In 2007, Montenegro was one of the world's fastest growing non-oil economies. The country reaped the benefits from its comprehensive, pre-independence reform program. After the international recognition of statehood had removed the lingering uncertainty over Montenegro's political status, investors reassessed the country's relative attractiveness as a site for business, responding positively to (i) the implementation of the privatization and structural-reform agenda; (ii) the provision of a low-tax, pro-business environment; and (iii) a clearly defined European perspective. In response, investment surged. Capital inflows from foreign direct investment (FDI), largely absent during the first half of this decade, reached a level of 30 percent of Gross Domestic Product (GDP) in 2006 and 40 percent in 2007, fueling domestic demand and stimulating economic growth. Real GDP grew at double-digit rates in 2007, an outcome that stands in stark contrast to the period of economic anemia characterizing Montenegro's pre-independence years. In this buoyant environment, commercial banks supported private-sector activities with very large increases in credit to the economy. These helped to finance higher imports of goods and services, leading to a rapid widening in the current-account deficit from 8.5 percent of GDP in 2005 to 40 percent in 2007. The economic dynamism, exceeding all (published) projections, resulted in an unexpected abundance of fiscal revenues and with generally effective control over public expenditures in 2007, a very substantial overall surplus.en-USCC BY 3.0 IGOACCESS TO CREDITARREARSASSET PRICESAVERAGE WAGESBALANCE SHEETBALANCED BUDGETBANK BORROWINGBANK CREDITSBANK DEBTBANK LENDINGBANKING INDUSTRYBANKING SECTORBANKING SERVICESBIG BANKSBINDING CONSTRAINTBOOM-BUST CYCLEBOURSESBROCHURESBUDGET CONSTRAINTSBUDGET DEFICITBUDGET DEFICITSBUDGETARY ALLOCATIONSBUSINESS CLIMATEBUSINESS CYCLEBUYERSCALCULATIONCAPITAL EXPENDITURESCAPITAL GAINSCAPITAL INFLOWCAPITAL INFLOWSCENTRAL BANKCENTRAL BANKSCOMMERCIAL BANKSCONCESSION ARRANGEMENTSCONSUMERCONTINGENT LIABILITIESCONTRIBUTIONSCOUNTRY RISKCREDIT CRUNCHCREDIT CRUNCHESCREDIT GROWTHCREDIT INCREASECREDIT LIMITSCREDIT LINESCREDIT MARKETSCREDIT RATING AGENCIESCREDIT REGISTRYCREDIT RISKCREDIT RISKSCURRENCYCURRENT ACCOUNTCURRENT ACCOUNT DEFICITCURRENT INCOMECURRENT PRICEDEBT FINANCINGDEBT-SERVICEDEBTSDECENTRALIZATIONDEFAULT RATESDEPOSITDEPOSITORDEPOSITSDEPRECIATIONDEVALUATIONDIVERSIFICATIONDOMESTIC BANKINGDOMESTIC BANKSDOMESTIC CREDITECONOMIC ACTIVITIESECONOMIC COSTSECONOMIC CRISESECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTSECONOMIC GROWTHECONOMIC POLICIESECONOMIC POLICYECONOMIC REFORMEMPLOYEE PENSIONEMPLOYMENT AGENCYENVIRONMENTAL SUSTAINABILITYEQUIPMENTEXCHANGE RATEEXPENDITUREEXPENDITURESEXTERNAL BORROWINGEXTERNAL CAPITALEXTERNAL INDEBTEDNESSEXTERNAL SHOCKSFINANCIAL CRISISFINANCIAL INSTITUTIONSFINANCIAL PERFORMANCEFINANCIAL POSITIONFINANCIAL SECTORFINANCIAL SITUATIONFISCAL CONSTRAINTSFISCAL DEFICITSFISCAL DISCIPLINEFISCAL POLICIESFISCAL POLICYFISCAL SURPLUSESFOREIGN BANKSFOREIGN CAPITALFOREIGN DEBTFOREIGN DIRECT INVESTMENTFOREIGN DIRECT INVESTMENTSFOREIGN INVESTORSFOREIGN LOANSFOREIGN MARKETSGOVERNMENT SPENDINGGROSS DOMESTIC PRODUCTHOMEOWNERSHUMAN DEVELOPMENTHUMAN RESOURCEHUMAN RESOURCESINCOME TAXINCOME TAXESINCOME-TAXINEQUALITIESINFLATIONINFLATION RATESINFRASTRUCTURE INVESTMENTSINSTITUTIONAL REFORMINSTRUMENTINSURANCEINTEREST INCOMEINTEREST RATESINTERNATIONAL CAPITALINTERNATIONAL CREDITINTERNATIONAL CREDIT RATINGINTERNATIONAL FINANCIAL CRISISINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL MARKETSINVESTMENT PLANINVESTMENT PLANSINVESTMENT PROGRAMINVESTMENT PROJECTSINVESTMENT VEHICLESLABOR MARKETLABOR MARKETSLAND TITLESLEGAL TENDERLENDERSLIQUIDITYLOANLOAN PORTFOLIOLOCAL GOVERNMENTLOCAL GOVERNMENTSLOW INCOMEMACROECONOMIC MANAGEMENTMACROECONOMIC STABILITYMACROECONOMIC STABILIZATIONMAINTENANCE COSTMARKET ECONOMYMARKET INDICESMARKET PRICESMARKET SIZEMATURITYMONETARY AUTHORITYMONETARY FUNDMORTGAGEMORTGAGE LENDERSMORTGAGESOUTSTANDING CREDITOUTSTANDING CREDITSPENSIONPERSONAL INCOMEPHYSICAL ASSETSPOLITICAL UNCERTAINTIESPORTFOLIOPORTFOLIO QUALITYPOVERTY RATEPOVERTY RATESPRIVATE DEBTPRIVATE INVESTMENTPRIVATIZATIONPRIVATIZATIONSPROBABILITYPRODUCTIVITYPUBLIC DEBTPUBLIC EXPENDITUREPUBLIC EXPENDITURESPUBLIC FUNDSPUBLIC INVESTMENTPUBLIC INVESTMENTSPUBLIC SPENDINGPUBLIC-PRIVATE PARTNERSHIPSPURCHASESRATES OF GROWTHRATES OF RETURNREAL ESTATERECEIPTSRECESSIONSRECURRENT EXPENDITURERECURRENT EXPENDITURESREFERENDUMREGULATORY FRAMEWORKRESERVERESERVE REQUIREMENTSRESERVESRESOURCE MANAGEMENTRESPONSIBILITIESRISK ASSESSMENTSALARIESSALARYSALESALESSAVINGSSOCIAL INSURANCESOCIAL WELFARESOLVENCYSOVEREIGN RISKSTOCK EXCHANGESTOCK EXCHANGESSTOCK MARKETSSTOCKSSWAPTAXTAX OBLIGATIONSTAX POLICYTAX RATETAX RATESTAX REGIMETAX SYSTEMTELECOMMUNICATIONSTRANSITION ECONOMIESUNEMPLOYMENTUNIONUNIONSVALUABLEWAGEWAGESWEALTH EFFECTWITHHOLDING TAXWORTHWorld Bank10.1596/7831