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            MONTENEGRO: COUNTRY PARTNERSHIP STRATEGY

                               CHAIR'S SUMMING UP

                            Meeting of Executive Directors
                                  January 31, 2011

      The Executive Directors discussed the Country Partnership Strategy (CPS) for
Montenegro.

        Directors welcomed the country's progress in restoring macroeconomic stability
and improving the climate for private investment and recognized Montenegro's broadly
appropriate response to the severe impact from the 2008­09 global financial and
economic crises. In looking forward, Directors underlined the crucial importance of
ensuring that economic development will be achieved in a fiscally and environmentally
sustainable manner. Some Directors suggested that despite the relatively low levels of
poverty, care needs to be taken that welfare and social inclusion remain priorities during
CPS implementation.

       Directors expressed broad support for the CPS and noted that the strategy, over its
FY11­FY14 horizon, foresees a substantial portfolio consolidation. They encouraged the
Bank to continue to provide knowledge and advisory services in areas of its comparative
advantage, including through enhanced coordination with the EU and other development
partners. In this regard, Directors highlighted the importance of the regional dimension
and appreciated the focus on innovation and catastrophe insurance. The need for the
Government and the Bank to pay careful attention to implementation issues throughout
the CPS period, to ensure adequate fiduciary capacity and broad stakeholder consultation,
was suggested by some Directors.

        Directors appreciated the positive role that the Bank and other IFIs have played in
supporting Montenegro's efforts to modernize and strengthen the financial sector,
including its legal and regulatory framework. In this context, they urged the Montenegrin
authorities to implement measures required to restructure a domestically-owned bank
and, by completing the first phase of financial sector reforms, remove a key obstacle
towards improving the economy's long-term competitiveness. The importance of
maintaining adequate access to financing for the private sector, especially SMEs, was
highlighted.

        Several Directors expressed satisfaction that the CPS included a focus on legacy
environmental clean-up, emphasizing the importance of addressing the legacy issues of
pollution and industrial waste around the aluminum plant and other companies in the
industrial sector. They noted the efforts under the energy efficiency project to encourage
private sector investment in energy efficiency.

        Finally, Directors felt that program risks had been adequately identified and their
mitigation appropriate. They looked forward to the CPS Progress Report in 2013.