FDI statistics in Montenegro new presentation of data Mira Radunović

1. FDI statistics in Montenegro new presentation of data Mira Radunović Head of Balance of Payments Division The Central Bank of Montenegro

2. LEGAL FRAMEWORK • Law on Central bank of Montenegro (“Official Gazette of Montenegro”, no 40/10, 46/10, 6/13) • Law on Official Statistics and Statistical System (“Official Gazette of Montenegro”, no 18/12) • Law on Current and Capital Operations with Abroad (“Official Gazette of the Republic of Montenegro”, no. 45/05, and “Official Gazette of Montenegro”, no 62/08, 40/11) • Decision on statistical data to be submitted to the Central bank of Montenegro for the purpose of compiling the Balance of payments of Montenegro(“Official Gazette of Montenegro”, no 61/12); • Decision on keeping separate records on foreign current and capital transactions and their reporting to the Central bank of Montenegro (“Official Gazette of Montenegro” no 38/10); • Decision on the amount of cash that may be brought into or leave Montenegro without declaring(“Official Gazette of Montenegro” no 38/10). The Central Bank of Montenegro

3. FDI in Montenegro • FDI is an important issue in Montenegro • InwardFDI are more important than outward. • 10% ownership rule is applied according to BPM5/BPM6 and BD4 methodology • ITRS - primary data source for the compilation of FDI The Central Bank of Montenegro

4. Chart – Net FDI flows in Montenegro The Central Bank of Montenegro

5. FDIs as drivers of economic growth, but also as the factor of the trade and current account deficit Chart – FDI vs import of goods Chart – FDI vs CA and trade deficit The Central Bank of Montenegro

6. Foreign Direct Investment- flows • The Central bank compiles FDI statistics -flows using information from ITRS. • Separate ITRS codes for transactions in direct investments by residents abroad and non-residents in MNE (equity and debt). • FDI comprises not only the initial transaction establishing the relationship between the investor and the enterprise,but also all subsequent transactions between them and among affiliated enterprises. • Intercompany debt transactions between affiliated enterprises are recorded as a direct investment – other capital. • Reports on transactions in cash from the Custom office. • The data are cross-checked by using information from various sources as enterprises, media, etc. The Central Bank of Montenegro

7. Foreign Direct Investment- flows (cont.) In accordance to BPM6 and BD4 FDI data: • Includes intercompany lending, except between financial institutions (the data could be provided for stock); • Covers fellow enterprises. The Central Bank of Montenegro

8. Foreign Direct Investment- stock data • In 2010 CBM launched direct reporting system by companies for FDI stock data - both inwards and outwards. • All legal entities with foreign capital and legal entities owning a company abroad are obligated to submit reports to the CBM about the stock and changes in capital annually; • Geographical breakdown is available. • Included data on reinvested earnings. • Also available data on transactions between fellow enterprises (mainly intercompany debt). The Central Bank of Montenegro

9. New presentation of FDI dataASSETS/LIABILITIES PRINCIPLE The Central Bank of Montenegro

10. Plans for future • To improve questionaires for inward and outward FDI • Include questions regarding flows and DI relationship • Reverse investments • Create a newreporting system based on electronically submission of data • To include data on RIE in BOP The Central Bank of Montenegro

11. Thank you for attention! The Central Bank of Montenegro