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Montenegro's fiscal position stays vulnerable to motorway costs - Moody's

Author Radomir Ralev
Montenegro's fiscal position stays vulnerable to motorway costs - Moody's Source:

PODGORICA (Montenegro), March 5 (SeeNews) - Montenegro's debt burden will likely decrease, but the Bar-Boljare motorway construction project continues to pose challenges to the country's fiscal position, Moody's said.

The "Moderate" fiscal strength of Montenegro reflects the government's debt burden which will likely decrease after its peak of 69.5% of gross domestic product (GDP) in 2018, the rating agency said on Monday in an announcement of a periodic review of issuers including Montenegro.

However, the Bar-Boljare highway continues to pose challenges to Montenegro's fiscal position, while the "Moderate (+)" susceptibility to event risk, reflects risks posed by the banking sector, Moody's said.

The country's "Low (+)" economic strength credit profile reflects the very small size and limited diversification of its economy that generates a moderate level of GDP per capita.

Montenegro's "Moderate" institutional strength, reflecting regulatory and administrative weaknesses that constrain the operating environment. However, in preparation of EU accession several legal, administrative, and procedural reforms are underway, Moody's noted.

“The review did not involve a rating committee, and this publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future," Moody's noted.

The Bar-Boljare motorway, built by China Road and Bridge Corporation (CRBC), is part of pan-European Corridor XI, a ferry/motorway corridor linking Italy's Bari to Romania's Bucharest via Montenegro's Bar port and Serbia's Belgrade. The completion of the priority section of the motorway is expected for the second half of 2019. The overall costs of that section are estimated at 929 million euro ($1.052 billion).

($ = 0.8829 euro)