Montenegro modernises financial legislation

By Olga Rosca
@olgarosca

Montenegro modernises financial legislation

EBRD supports amendments in line with international best practice

Montenegro has taken another important step in the reform of its legislative framework with the adoption of a new law on financial leasing, factoring, purchase of claims, micro-credit and credit-guarantee issues by the state parliament.

With the entry into force of the law, the legal and regulatory framework for these activities will be significantly improved and aligned with international best practices.

The adoption follows support by the EBRD’s Legal Transition Team in drafting the sections on factoring and leasing sections of the law. Both are attractive financial instruments which to date have not been sufficiently used by Montenegrin businesses.

Jaap Sprey, EBRD Head of Montenegro, said: “The EBRD has a well-established track record in supporting legal reform in areas such as promoting access to finance, particularly in assisting with the development of legal and regulatory systems for alternative financial structures such as leasing and factoring. The new law introduces the regulation and legislation needed to ensure the stability of the market and legal efficiency of transactions while not putting undue regulatory burden on the industry.”

Darko Radunović, Minister of Finance of Montenegro, added: “The new laws’ leasing provisions will provide for a more robust framework on leasing operations. The introduction of new legislation on factoring is expected to facilitate the development of the factoring business and guarantee stability of the market.”

Jelena Madir, EBRD Director, Legal Transition Team, stressed that the new law should create the environment for the development of factoring and leasing activities, which should ultimately facilitate and improve small and medium-sized enterprises’ access to finance.

Since the start of its operations in Montenegro, the EBRD has invested more than €500 million in the country through more than 50 projects. In Montenegro, the Bank focuses on enhancing the competitiveness of the private sector, supporting sustainable practices in the tourism and property sectors and promoting energy security and efficiency on a regional level.