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After a two-year interval due to the pandemic, the ninth edition of the traditional Regional Summit of Finance Ministers, National Bank Governors and Tax Administration Directors was held from September 29th to October 1st at the Splendid Hotel in Bečići. The title of this year's Summit was "Financial and Monetary Stability of the Region in Conditions of Pronounced Geopolitical Risks". The Summit served as a gathering point for key fiscal and monetary policymakers from all the countries in the region, representatives of the most relevant international financial institutions and the key figures of the largest banks, companies and insurance industry from the entire region.

This year’s convention of the financial and business elite was an opportunity to exchange opinions regarding the regional perspectives following the recession caused by the pandemic, but also by challenges that the financial and real sector had been facing in the second half of the year, a recession whose inflation toppled decades-long records in many countries and which shall be marked by unprecedented surges of food and energy prices, as well as disrupted chains of supply.

On behalf of the organizer, the Serbian Association of Economists (SAE), the president of this organization, Mr. Aleksandar Vlahović, and Minister of Finance of Montenegro, Mr. Aleksandar Damjanović, addressed the participants at the opening of the Summit.

President of SAE remarked that the world was facing with the largest inflation hit in the last forty years, given that inflation in the USA was higher than 8%, approximately 9% in the EU, 12% in Serbia, 15% in Montenegro, with similar situations in other countries, as well.

“The inflation hit surpassed all credible expectations”, Vlahović said, adding that central banks are raising their interest rates to reduce the sudden surge of prices, but also that it was necessary to ensure that this would not threaten economic growth and push the economy into recession. High inflation rates, disrupted global supply chains, uncertainties in supply of energy sources such as gas and electricity and their high prices endanger not only industries that directly depend on these energy sources, but also the service industry and consumption.

The question now is how small countries such as the ones in the Western Balkans should respond to the challenges of the geopolitical and economic crisis that we are faced with today. In other words, we need to think of how to preserve the fiscal balance or fiscal deficit on a reasonable level, given the fact that compensating for the fiscal deficit by way of indebting would be very hard and very expensive in the upcoming period, Vlahović pointed out.

He added that one of the tasks of economic policies in countries of the region was to prevent excessive increase of foreign debt, given the fact that all the countries, except Bosnia and Herzegovina, had reached the threshold of acceptable national debt-to-GDP ratio.

It is very important that there is an exchange of opinion between countries in the region about how to design fiscal and monetary policies in the upcoming period, in times of major geopolitical and economic challenges, because economies of the Western Balkan countries are interconnected, and how to continue and expand their cooperation without major obstacles.

On behalf of his Ministry, which is also the institutional patron of the convention, Minister of Finance of Montenegro, Aleksandar Damjanović, said that these countries will not prosper without regional cooperation and exchange of practice and experience. Participating in the panel “Stability of Public Finance in Unstable Times”, Minister Damjanović said that enhancing dialogue and cooperation between all financial institutions of the region was more important than ever, adding that it was their role, being the creators and conveyors of financial and fiscal policies, to make a greater contribution to a faster economic development of the region, which would, ultimately, also contribute to its overall stability.

Head of Regional Representation for Western Balkans at the European Investment Bank (EIB), Alessandro Bragonzi, said during the plenary address that investing in green economy was the way to overcome the ongoing crisis caused by the COVID-19 pandemic, the energy crisis and the Ukraine war. He further added that this meant investing in digitalization, decarbonization and innovation, which would enable the transition to green economy, reminding the participants that the EIB and the EU provide funding for tackling these challenges through the Team Europe initiative.

On the same day, the second thematic panel of national tax administration directors was held under the title “Significance of Healthy Tax Administration in Ill Times”. All national tax administrations in the region have recorded the best scores in collecting taxes in the past few years, even historically speaking. Representatives of national tax administrations claim that inflation is not the only reason for this, albeit admitting that it did help to a significant extent to increase the volumes of taxes. The main topic discussed among the tax administration representatives was digitalization, which lead them, as it would appear, to their largest problem at the moment, which is the lack of IT experts.

During the second day of the Summit, on Saturday, the panel titled “Monetary Policy in an Inflation Setting” was held. It gathered representatives of central banks in the Balkan countries and it concluded this two-day convention.