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Montenegro eyes 180 mln euro in development loans in 2024

Jun 21, 2024, 12:20:29 PMArticle by Iskra Pavlova
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June 21 (SeeNews) - The Montenegrin government said it plans to take development policy loans (DPL) worth 180 million euro ($193 million) from the World Bank, the French development agency AFD and the OPEC Fund for International Development, in order to cover part of its 2024 budget needs.

Montenegro eyes 180 mln euro in development loans in 2024
License: Creative Commons BY-NC 2.0

Montenegro already has a DPL arrangement with the World Bank worth up to 160 million euro to be disbursed in two tranches. The first tranche of 80 million euro is scheduled for 2024, the government said in a statement on Thursday.

The AFD and the OPEC Fund have also expressed interest in providing loans of 50 million euro each, the statement read.

As a result, earlier this year the finance ministry launched talks with the two institutions.

The government initiated negotiations with AFD in May. Preliminary discussions with the OPEC Fund indicate that it may approve a loan for a 10-year period, offering a grace period of one to three years, and a variable interest rate linked to Euribor with a 1.00% margin.

According to Montenegro's 2024 budget, the government is authorised to borrow up to 650 million euro to address current-year funding gaps. Additionally, an additional 500 million euro may be borrowed to refinance maturing debt and establish fiscal reserves for 2025, according to the statement.

In March, the finance ministry sold a US dollar-denominated bond issue worth $750 million, equivalent to 688 million euro, on the international market to cover budget needs. As a result, the legally-prescribed amount that the government could borrow this year has dropped to some 463 million euro.

In order to secure this amount, the government has turned to the World Bank, the AFD and the OPEC Fund.

In January, the Montenegrin parliament approved the 2024 state budget with a fiscal deficit equivalent to 3.1% of GDP. The budget targets revenues of 2.717 billion euro and expenditures of 2.952 billion euro.

Last year, Montenegro turned to a budget surplus of 10 million euro, equivalent to 0.2% of GDP, compared with a 250 million euro deficit in 2022.

The economy of the tiny Adriatic state is expected to expand by 3.8% in 2024, slowing down from the 6.0% growth in 2023.

($ = 0.933 euro)

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