The jubilee, 10th Regional Summit of Governors, Finance Ministers and Tax Administration Directors, entitled “Financial and Monetary Stability in the Region in Uncertain Times of Prolonged Geopolitical and Economic Crisis”, was held from May 28 to 30, 2023 in the Splendid hotel in Bečići, Montenegro.

The Regional Summit of Governors, Finance Ministers and Tax Administration Directors, organized by the Serbian Association of Economists since 2019, is the biggest annual regional gathering dedicated to financial and monetary issues with the aim of fostering dialogue and improving cooperation between all financial institutions in the region.

This year, the Summit brought together the key creators of fiscal and monetary policy from all countries of the region, representatives of the most important international financial institutions, as well as C-level executives of the largest banks, companies and insurance companies. This year’s gathering of the financial and business elite was an opportunity to exchange opinions on the regional economic outlook in dramatically changed circumstances, characterized above all by high inflation, rising interest rates of the central banks of the leading world economies, economic slowdown, increased instability of the banking sector in the USA, and challenging geopolitical context, especially since the outbreak of the Russian-Ukrainian conflict in February 2022.

The world economy is expected to grow this year, while a drop in the inflation rate is evident – this is the message of this year’s Summit, which is opened by Aleksandar Vlahović, president of the Serbian Association of Economists and Radoje Žugić, governor of the Central Bank of Montenegro.

The president of the SAE presented macroeconomic trends as well as the projections for the period ahead. Although inflation is falling and the major economies’ performance is beating the expectations from 2022, numerous risks still persist such as the uncertainty surrounding the further course of the war in Ukraine, a potential “bubble burst” in the real estate market and the consequent negative spillover effects, or debt crises in over-indebted countries.

Speaking of the gross domestic product (GDP) in the Western Balkans, the president of the SAE pointed out that every country in the region has difficulty reaching a “robust” growth rate of 5% or more, and that the expected growth of 2.6% in 2023 would be primarily driven by increased consumption and public investments. Also, apart from global factors such as the war in Ukraine, the banking sector crisis or a possible slowdown in China’s growth, one of the major obstacles to more robust growth in the Western Balkans is related to underdeveloped institutions.  

The governor of the Central Bank of Montenegro, Radoje Žugić, emphasized that the key challenge faced by Montenegro is the high inflation rate, which has fallen from the last year’s 17% to around 8%. He emphasized that the banks in Montenegro had demonstrated resilience in the beginning of the crisis and came out of it with even stronger monetary instruments.

The Summit’s work conception was based on three panels. The first panel, entitled “Maintaining the Stability of Prices and the Banking System in Uncertain Times”, gathered the governors of the central banks of WB countries who discussed the topics such as inflation, the importance of coordinated action of fiscal and monetary policy in times of crisis, similarities between the current and the 2008 global financial crisis, rising interest rates, as well as the biggest challenges for central banks in the short and medium term.

On the second day of the Summit, the opening address is delivered by Stephanie Verena Eble, head of the IMF’s Regional Office for the Western Balkans, who pointed out that the IMF’s standpoint is that fiscal consolidation should be pursued, but without so frequent changes in fiscal rules. It is necessary to continue with the implementation of structural reforms and to serve investment needs. Also, it is necessary to open the market to competition and strengthen competition in order to avoid collusion and increase price transparency.

The head of the IMF’s Regional Office said that the state of public finance in the countries of the region was affected by global challenges – from the energy crisis, high inflation rates to the increase in interest rates. In this regard, she added that the arrangements with the IMF could enable access to "more affordable finance” and reminded that North Macedonia recently, as Serbia before, reached agreement on new fiscal arrangements with the Fund.

The second panel, entitled “Healthy Public Finance: The Key Precondition for Economic Growth and the Build-up of a Modern Market Economy in the Conditions of Prolonged Geopolitical Uncertainty”, was dedicated to finance ministers. Bearing in mind that the increase in interest rates is not beneficial to the economy or citizens, the participants agreed that there is a need to carry out certain policies.

The two-day summit in Bečići ended with a panel where the tax administration representatives of the countries of the region discussed the reforms and modernization of that service, whose efficiency largely determines the collection of budget revenues. At the third panel, entitled “Reform and Modernization of the Tax Authorities – Goals, Scopes and Limits”, it was concluded that one of the biggest challenges for the tax authorities in the region is the fight against the shadow economy and tax evasion.

The next summit is scheduled for June 13-15, 2024.