1. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 20 – Enterprise and Industrial policy Bilateral screening: Chapter 20 PRESENTATION OF MONTENEGRO Brussels, 28 November 2012

2. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 20 - Enterprise and Industrial policy- Bilateral screening: Chapter 20 Presentation of Montenegro Brussels, 28 November 2012 Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy

3. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy ENTERPRISE FINANCING Jelena Jovetić, Msc Advisor Ministry of Finance jelena.jovetic@mif.gov.me

4. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy CONTENT FINANCING SYSTEM CURRENT PROJECTS ACHIEVED RESULTS FUTURE ACTIVITIES

5. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy FINANCING SYSTEM  Investment and Development Fund of Montenegro – IDF: Credit - Guaranty lines: Direct credits, Credits in cooperation with commercial banks, Guarantees; Factoring; Financing infrastructure and ecology projects.  Employment Agency of Montenegro Lending with goal of hiring unemployed.

6. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy IDF: CURRENT PROJECTS General principles  Special incentives: Reducing interest rate by 1% for projects which include: Realization in northern region, or less developed municipalities; Employment through investment more than 5 new workers - refunding difference in the interest rate; Reducing interest rate by 1,5% to investors who provide bank guarantee as collateral.

7. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy IDF: CURRENT PROJECTS Ii) CREDITS THROUGH AND WITH GUARANTEES FROM COMMERCIAL BANKS Clients: Entrepreneurs and small and medium enterprises, as well as agricultural manufacturers; Repayment period: up to 10 years, including grace period up to 24 months; Possibility of participation of commercial bank in financing investment. FIELD OF ACTIVITY AMOUNT OF CREDIT AWARDED BY IDF GRACE PERIOD REPAYMENT PERIOD (GRACE PERIOD NOT INCLUDED) INTEREST RATE PRODUCTION10.000€ to 1.000.000€Up to 2 yearsUp to 7 years6 % p.a. AGRICULTURAL AND FOOD PRODUCTION 10.000€ to 1.000.000€Up to 2 yearsUp to 8 years6% p.a. TOURISM AND HOSPITALITY 10.000€ to 1.000.000€Up to 2 yearsUp to 8 years6,5% p.a. SERVICES10.000€ to 1.000.000€Up to 1 yearUp to 6 years6,5 % p.a.

8. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy IDF: CURRENT PROJECTS Iii) DIRECT CREDIT ARRANGEMENTS Clients: Entrepreneurs and small and medium enterprises, as well as agricultural manufacturers; Special credit lines:  MIDAS project - credit line for agricultural manufacturers;  Credit line for women holders of investment;  Project “Your Idea–Your Business” - beginners in business up to 35 years of age. FIELD OF ACTIVITYAMOUNT OF CREDITGRACE PERIOD REPAYMENT PERIOD (GRACE PERIOD NOT INCLUDED) INTEREST RATE PRODUCTIONUp to 1.000.000€Up to 2 yearsUp to 7 years6% p.a. AGRICULTURAL AND FOOD PRODUCTION Up to 1.000.000€Up to 2 yearsUp to 8 years5,5% p.a. TOURISM AND HOSPITALITY Up to 1.000.000€Up to 2 yearsUp to 8 years6% p.a. SERVICESUp to 1.000.000€Up to 1 yearUp to 6 years6,5% p.a.

9. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy IDF: CURRENT PROJECTS TWO NEW CREDIT LINES: 1)Credit line through and with guarantee of commercial banks for working capital financing; 2)Credit line for direct working capital financing. PURPOSE: Procurement of raw material, intermediates and inventory and overhead financing. FIELD OF ACTIVITYAMOUNT OF CREDITGRACE PERIOD REPAYMENT PERIOD (GRACE PERIOD NOT INCLUDED) INTEREST RATE (3% BELONG TO BANK) Production, agricultural and food production, tourism and hospitality and services 10.000€ - 500.000€Up to 1 yearUp to 5 years6,5 % p.a.  Credit line through and with guarantee of banks for working capital financing: RF-  Credit line for direct working capital financing Production, agricultural and food production, tourism and hospitality and services 10.000€ - 300.000€Up to 1 yearUp to 5 years6,5 % p.a.

10. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy IDF: CURRENT PROJECTS Iiii)GUARANTEES  Clients: Commercial banks for credits awarded to entrepreneurs and SMEs;  Following activities can be financed: Trade (guarantee can be issued only in case of fixed assets procurement); New investments;  Terms: Participation of borrower in total investment value must be:  minimum 50% for start-up enterprises;  minimum 30% for SMEs that are already operating; Guarantees from 10.000€ up to 500.000€; Guarantee can not exceed 50% of principal amount; Repayment period: Up to 8 years; Commission fee: up to 0,5% quarterly; Grace period in accordance with terms and conditions of commercial bank, up to 2 years.

11.  In cooperation with Ministry of Agriculture and Rural Development of Montenegro, project “Rehabilitation of the consequences of natural disasters" is designed in order for co-financing forage procurement for agricultural manufacturers;  Total amount of funds determined for this purpose is 1,5 million €;  Terms and conditions: Repayment period 12 months; Interest rate 4% p.a. Repayment guarantees of the loan provides Ministry of Agriculture and Rural Development of Montenegro M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy IDF: CURRENT PROJECTS Iiv) SPECIAL CREDIT LINES CREDIT LINEAMOUNT OF CREDITGRACE PERIOD REPAYMENT PERIOD (GRACE PERIOD NOT INCLUDED) INTEREST RATE MIDAS PROJECTUp to 70.000€Up to 2 yearsUp to 8 years4,5 % p.a. Women holders of investment 10.000€ to 200.000€Up to 2 yearsUp to 6 years4,5 % p.a. “Your Idea – Your business” project (beginners in business) 10.000€ to 50.000€Up to 2 yearsUp to 6 years4,5 % p.a.

12. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy IDF: CURRENT PROJECTS II)FACTORING III)FINANCING INFRASTRUCTURAL, ECOLOGICAL AND RENEWABLE ENERGY PROJECTS Category % of repurchased receivables Maturity periodCommission feeInterest rate 1State - debtorUp to 100%Up to 365 days0,85%4,75% p.a. 2ProducersUp to 90%Up to 120 days0,85%5% p.a. 3RemainingUp to 90%Up to 120 days1%6% p.a. Priority is given to factoring where subject of arrangement is product of domestic origin, export of domestic products and services, and factoring where debtor is State. Terms and conditions for financing infrastructural, ecological and renewable energy projects: Max. amount 5.000.000€; Repayment period up to 10 years (including grace period up to 2 years); Interest rate 6% p.a.

13. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy Employment Agency of Montenegro: CURRENT PROJECTS  1999 – 2008 Self-employment Program;  Since 2008 Innovated Self-employment Program.  Target group consists of unemployed people, entrepreneurs and SMEs, while special incentives are designed for female entrepreneurs and development of entrepreneurship in less developed municipalities.  Credit terms and conditions: The amount of the credit per new employee is up to 5.000€; Loans are granted for generating maximum 3 new workplaces (the maximum amount of credit is 15.000€); Grace period up to 1 year; Loans are paid in semi-annual installments, with repayment period: 3 years for unemployed individuals (3+1), 2 years for entrepreneurs and small enterprises (2+1); Interest rate (p.a.): 3% for women holders of investment, 3% for projects in less developed municipalities, 4% for investments in less developed municipalities.

14. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy ACHIEVED RESULTS on November 7, 2012: Investment and Development Fund of Montenegro - IDF: 421 projects approved; Total IDF funds earmarked for this purpose amount to 34.349.892,90€, while commercial banks provided support for realization of the projects that were realized with their guarantees and participation with additional 6.936.090€; Women holders of investment: 18 projects. IDF funds earmarked for this purpose amount to 597,870.50€; Factoring: total purchased receivables amount to 10,72 mil. €. In 2012, 13 new factoring arrangements are signed and new factoring limits are approved – in total 6.755.000€. Employment Agency of Montenegro: 10.443 loans approved; Approved loans amount to 54.983.229,00 €.

15. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy Since 2009. credit support of commercial banks, based on guarantees of Government of Montenegro: European Investment Bank (EIB) - 90 million €, German development bank (KfW Bankengruppe)- 31 million €. Arrangements are made between commercial banks in Montenegro and above-mentioned financial institutions, which previosly approved projects suggested by banks. ACHIEVED RESULTS on November 7, 2012:

16. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy IDF: ACHIEVED RESULTS Awarded credits per regions Awarded credits per field of activity

17. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy EMPLOYMENT AGENCY OF MONTENEGRO: ACHIEVED RESULTS Awarded credits per regions Awarded credits per field of activity

18. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy EMPLOYMENT AGENCY OF MONTENEGRO: ACHIEVED RESULTS  Since September 1, 2008 according to Innovated program of self-employment, 1.810 credits have been approved, with total amount of 12.298.000€.  Credit structure: 1470 – to unemployed individuals (81,22%), 340 – to entrepreneurs and SMEs - legal entities(18,78%). 624 loans (40,23% of approved loans to unemployed individuals) for financing female entrepreneurship; 1379 loans (76,2% of total number of approved loans), with total amount of 8.930.500€ for development of entrepreneurship in less developed municipalities; 2.464 new jobs created.

19. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy ACHIEVED RESULTS CONTROL OF INVESTMENTS on November 7, 2012 Employment Agency of Montenegro : Funded: 1541 loans, total value 10.519.690€; Control performed for 1.122 loans:  668 or 59,45% completely properly used approved funds,  360 or 32,09 are in phase of fulfillment of the requirements,  95 or 8,46% inappropriately used approved funds and procedure of termination of contract is initiated (in most cases the procedure is initiated because predicted number of workers is not hired, or activity is not registered). IDF: Funded: 421 credits; Control performed for 298 projects:  266 or 89,26% properly used approved funds;  32 or 10,74% inappropriately used approved funds.

20. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 20: Enterprise and Industrial policy Chapter 20: Enterprise and Industrial policy FUTURE ACTIVITIES  Employment Agency of Montenegro: 2012: earmarked funds for realization of innovated program of self-empoyment amount to 500.000€;  Investment and Development Fund of Montenegro- IDF: Credit arrangement between the IDF and the EIB - 50 million €; Planned implementation through two financial arrangements of 25 million € (divided into several installments, not less than 5 million €); Strengthening cooperation with commercial banks; Implementation of guarantee scheme; Further development of factoring and introduction of new forms of factoring (factoring without recourse).

21. Thank you for your attention! QUESTIONS