This report covers the key macroeconomic and financial releases as well as the political events from Montenegro for the period of March 6 – April 5, 2015.

The European Union (EU) opened on Monday, March 30, two new chapters in Montenegro’s negotiations – on taxation (chapter 16) and on external relations (chapter 30).

The European Investment Bank (EIB) will provide a €70mn in credit lines to Montenegro's Investment and Development Fund (IRF) to support its operations.
The international environmental organisation CEE Bankwatch Network said that the electricity generated by the planned second unit at Montenegro’s sole thermal power plant TE Pljevlja will not be profitable. Meanwhile, Montenegro’s government has signed an interim agreement with A2A for the Italian company to continue managing the power utility EPCG for three more months. A2A’s contract expired on March 31, but the two sides are still negotiating their future cooperation, with the government saying the goal of the interim deal is to create the framework for further negotiations on a future longer-term contract.
Montenegro plans to invest €780.6mn in regional development projects in 2015. Most of the funds will be invested in the Smokovac-Matesevo section of the key Bar-Boljare motorway (€206mn).

Key points:

• The budget deficit expanded 12.93% y/y to €40.1mn in the first two months of 2015 due to higher spending and lower revenue growth
• The consumer prices accelerated their annual growth to 0.6% in February from 0.2% y/y in January
• Industrial production increased by 5.9% y/y in February, reversing a 3.4% y/y contraction in January
• Unemployment rate decreased to 18.1% in Q4 2014 from 19.5% a year earlier - labour force survey
• Bank assets rose 4.9% y/y to €3.12bn at end-February, slowing from a 6% annual growth the month before