Programmatic Financial Sector Development Policy Loan

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The objective of the Programmatic Financial Sector Development Policy Loan (FSDPL) Program for Montenegro is to strengthen the banking sector, which is a critical pre-condition for sustainable economic recovery and balanced private sector-led growth. This document describes the first in the series of FSDPLs to Montenegro in support of a comprehensive banking sector reform program. The main areas of reform are: (i) maintaining market confidence; (ii) strengthening the bank liquidity framework; (iii) assessing and addressing banking sector vulnerabilities; (iv) enhancing the regulatory framework; and (v) problem bank restructuring. The program supported by the operation would be implemented primarily by the Ministry of Finance (MoF) and the Central Bank of Montenegro (CBCG). The operation is in the amount of €59.1 million (US$85 million equivalent). The second FSDPL is planned for early FY13 and would be in the amount of US$20 million equivalent.