PODGORICA (Montenegro), July 21 (SeeNews) - Montenegro has repaid the first instalment of the loan extended by China's Exim Bank for the construction of the Bar-Boljare motorway, Montenegrin media reported on Wednesday.
"Montenegro paid 27.79 million euro of principal and interest, and the banks from its hedging arrangement paid to the state $37.44 million in principal and interest, which we redirected to the Chinese bank," public broadcaster RTCG quoted finance minister Milojko Spajic as saying.
Earlier this month, Montenegro signed an agreement to hedge about 1 billion euro ($1.2 billion) of debt owed to China's Exim Bank for the construction of Bar-Boljare motorway. With the hedging operation, Montenegro managed to lower the interest rate on the loan to 0.88% in euro from 2% in U.S. dollars and will be able to save about 8 million euro annually, Spajic said back then.
"If hedging had not been done, those 27.79 million euro would have amounted to 31.71 million euro. Also, interest alone would have amounted to 6.9 million euro, not the 3.06 million euro we paid," RTCG quoted Spajic as saying on Wednesday.
The country's economic development minister Jakov Milatovic said in April that Montenegro was in talks with the European Union for a potential refinancing of the loan, taken out in 2014 with a six-year grace period and a 14-year maturity.
Montenegro's economy contracted by 15% in 2020 due to the impact of the COVID-19 pandemic on tourism, the main source of income for the Adriatic country.
($ = 0.84925 euro)