The most prominent advocate of the Perper, director of the Hipotekarna [Mortgage] Bank Slavko Drljevic, claims that directors of most companies in Montenegro predict that their companies have no chance of surviving to the end of this year. “We should see what would be the balance sheet if all debts were repaid. The results would be devastating, and no one is looking into that”.
There is not enough money in Montenegro. Only last year the export-import deficit was 387 million Euros. On other words, every resident of Montenegro has imported goods for 1,000 Euros and exported goods for only 190 Euros.
Drljevic, the director of the bank that focuses on the local market, claims that money remains outside legal channels, that neither last nor this year it was deposited in the bank accounts in the country. He warns: “The money has left the country and large inventories of goods bought with these funds have appeared”. Claiming that the “obtained goods, whose structure cannot be discerned, are now waiting to be sold, although I don’t see how that can happen,” Drljevic concludes his unfavorable forecast for the future.
According to him, the way out is the adoption of a Montenegrin currency – the Perper. “Monetary limits under which we are forced to live this year were imposed from abroad,” Drljevic explains, “and are forcing us to seriously consider the introduction of our own currency. The Euro would be its basis, the Central Bank would get the right to print money, which would spur economic development”.
Director of Podgoricka Bank Mladen Rabrenovic does not share Drljevic’s opinion. Rabrenovic supports the Euro. “The Euro still gives the clearest, most accurate and best picture. The essence of the problem is in the recovery of the local economy, securing of long term investment and competitive economy”.
Rabrenovic emphasizes that the basic question is not the choice between two foreign currencies (the Dinar and the Euro) or a new local currency. “If there is no development, no competitive programs and positive export-import balance, the problem of outflow of money cannot be resolved by printing new money. Such solutions have already been tried,” Rabrenovic warns.
Prime Minister Djukanovic agrees. Tthe problem with the outflow of Euros is that Montenegro cannot compete in the global markets. It is necessary to prepare a program for boosting of exports as soon as possible”.
Now, it is an old secret that when someone does not how to resolve something, the usual “solution” is to form a working group that is supposed to propose a “plan”. Of course, only optimists would expect that the plan would turn into practice in the near future.
Officials from the opposition parties, People’s and Serb People’s Parties, Predrag Popovic and Andrija Mandic, propose the re-adoption of the Dinar. “By switching the Euro for the Dinar, the Central Bank would get 150 million Euro that could be used to boost development”. They believe that “the state is obliged to take levers of the monetary policy and use exchange rates to balance local and global prices, which cannot be done as long as we keep the Euro for a local currency”.
Their former colleague, now the director of the Center for Studies in Economics and Sociology, Predrag Drecun, retorts: “Certain amateurish proposals in support of adoption of the Dinar are sad”. His opinion is that Montenegro cannot survive with hard currency that immediately reveals every deficit. Results of his expert analysis point towards the re-adoption of the Dinar, with conclusion that the negative experiences from the past with the Dinar stem from malleable governors. “A currency is not soft of hard,” Drecun says, “those who control it are. In Serbia, Dinkic [Governor of the National Bank of Serbia] has demonstrated that he can resist political pressure and make sure that the Dinar remains stable”.
Drljevic denounces the Dinar in Montenegro as “a sickness, a debilitating virus”. Why is so it dangerous? “Such a Dinar has never made anyone happy, and can only create chaos in our economy. Adoption of the Dinar would be the end of independence for Montenegro”. Rabrenovic also opposes the re-adoption of the Dinar. “As far as we are concerned Dinar is a foreign currency, because Montenegro cannot influence the emission. It would be the worst possible solution, because the Dinar is backed up by a weak economy, and all of its weaknesses would affect Montenegro without Montenegro having any influence on them.”
Nebojsa Medojevic, coordinator of the “Group for Changes” is uncharacteristically emollient. He emphasizes that the decision the Dinar of the Euro is political in nature and that, at least in the Balkans, economic parameters seldom come into play. “If in relatively near future we join the EU, we don’t need the Dinar. If we want our own currency, we need to carefully consider what we would gain and lose by that”. Medojevic believes that all state income must be in Euros. “We should not give in there, because that would strengthen our position in negotiations with the EU”. According to Medojevic, the answer whether the Dinar should be accepted as legal tender in Montenegro, after the harmonization of regulations, should be left to banks and entrepreneurs. “We should not protect privately owned companies from currency risks, all of them have the experience from currency manipulations in 1993, but we should make it easier for them to do business and harder to smuggle”.
Director of Entrepreneurship Center Petar Ivanovic assesses that the Euro took a scan of Montenegrin economy and revealed a lot that is unfavorable. “The illusion that we have solid companies and capable managers has been shattered. But, instead of focusing on problems and causes, we are seeking an alibi for failure. Neither Dinar nor Perper would reduce the budget and external trade deficit! That can only be achieved by reducing domestic consumption and increasing exports,” Ivanovic asserts.
Ivanovic is convinced that by printing the Perper Montenegro would usher in a significantly higher inflation. “I am not surprised,” he says, ”by the calls for the introduction of a new currency coming from banking and business circles who made a killing during the Dinar hyperinflation in the early eighties. They kept their savings in foreign currency, in foreign banks. I am sure that the same would happen if we introduced Perpers or switched back to the Dinar”. Drljevic’s proposal to tie Perper to Euro Ivanovic dismisses with a question: “Does he propose that in order to create a smoke screen, to propose a suitable governor of the central bank, or for the interests of the banking lobby and the lobby of companies that only know how to base profits on monopolistic trade and political connections?”
The Euro, Ivanovic claims, is good for all those prepared to compete in the global market. “No currency will bring us happiness and wealth if we do not roll up our own sleeves”.
The last decade has disproved the prejudice that Montenegrins are lazy. Some earned millions, other managed to survive, but either way they proved that they are not ashamed to take any job and work for 16 hours a day if necessary. This year, the time has come to pay bills for an excessively postponed transition. As a prominent businessman with connections in the DPS told Monitor, those who worked to survive will be lucky to keep any job, even without a salary [employees tolerate late or non-existent salaries because official employment provides state-mandated benefits, such as health insurance]. Those who made millions in risky and dangerous, but highly profitable ventures, face bankruptcy. Those who survive – will live to tell!