Press release from the 53rd Cabinet session

At its 53rd session held today, chaired by Prime Minister Milojko Spajić, the Montenegrin Cabinet adopted the Information on the state of municipal debt on transfer loans and approved the Draft Protocol on the settlement of outstanding obligations for transfer loans with the municipalities of Bar, Herceg Novi, Ulcinj, Rožaje, Danilovgrad, and the Old Royal Capital Cetinje. The Ministry of Finance, in coordination with these municipalities, reconciled the debt amounting to a total of €24.6 million and established a dynamic repayment plan that will not jeopardize their fiscal stability. The Protocol with clearly defined repayment deadlines has been agreed upon with each municipality individually and is part of the Information.

The Cabinet adopted the Information on the results of negotiations and conclusion of a Loan agreement with the OPEC Fund for International Development for the Development Policy Loan, along with the Draft loan agreement. Following the 2024 Budget Law of Montenegro and the Decision on borrowing, the Ministry of Finance negotiated with the OPEC Fund, securing a loan amount of €50 million, with a repayment term of 10 years and an 18-month grace period. The loan carries a variable interest rate based on a six-month EURIBOR plus a 1% margin, payable semi-annually. The loan funds will be available until 31 December 2024. DPL loans, like this one, aim to support countries in implementing structural reforms that promote economic growth and poverty reduction. The Information recalls that the Cabinet previously accepted DPL loan agreements with the International Bank for Reconstruction and Development (IBRD) for €80 million and the French Development Agency (AFD) for €50 million, bringing the total loan amount to be secured through the DPL arrangement in 2024 to €180 million.

The Cabinet adopted the Information on the conclusion of a Loan agreement with the European Bank for Reconstruction and Development (EBRD) for the financing of the Energy Efficiency Improvement Project in Education Facilities in Montenegro, totaling €20 million. The overall project value is estimated at €24 million, with €4 million provided through an investment grant from the Regional Energy Efficiency Programme, funded by the European Western Balkans Fund. The project will cover energy efficiency upgrades in 24 educational facilities across the country, including improvements in building insulation, heating systems, lighting, renewable energy sources, and smart building technologies.

The Cabinet adopted the Information on amendments to the agreed minutes and loan agreement with the International Bank for Reconstruction and Development (IBRD) for the Development Policy Loan. In October 2024, the World Bank's Executive Directors approved an €80 million loan to Montenegro to strengthen fiscal sustainability and promote sustainable development. The amendments incorporate a Climate Resilient Debt Clause (CRDC), enabling loan repayments to be deferred in case of natural disasters, such as earthquakes or cyclones, allowing governments to focus on recovery efforts.

The Cabinet agreed on the Foundations for negotiations for a loan arrangement with the IBRD for the Decarbonization of Montenegro's Energy Sector Project, which aims to improve energy efficiency in public buildings and enhance the operational efficiency of the electricity distribution network. The total project value is estimated at €33.8 million, with €31 million financed by the IBRD and €2.8 million as the state's contribution.

The Cabinet adopted the Information on activities required for the acceptance of the proposed increase in Montenegro's quota with the International Monetary Fund (IMF) as part of the 16th General review of quotas. Montenegro's quota will increase from 60.5 million Special Drawing Rights (SDR) to 90.8 million SDR.

The Cabinet adopted the Information on the loan transfer agreement, securing funds from the European Investment Bank (EIB) to finance the Construction of a wastewater treatment plant, sewerage network, and improvement of the water supply system in the Municipality of Kolašin. The estimated value of the project is €12 million, with €4 million provided through an EIB loan and €8.3 million from an investment grant under the Western Balkans Investment Framework. The public call for this tender is expected to be announced in the fourth quarter of 2024.

For full press release in Montenegrin, please click here.