The Montenegrin government and China Exim Bank will sign on Thursday, Oct 30, the EUR 689mn credit contract for the financing and construction of the first priority section of the major Bar-Boljare motorway project, according to unofficial report of Portalanalitika.me.

The deal will be reportedly signed in the Chinese embassy in Podgorica by transport minister Ivan Brajovic, finance minister Radoje Zugic and representatives of Exim Bank. As previously announced, the Chinese loan is expected to have a 20-year maturity and five-year grace period plus a 2% fixed interest.

Once the contract is signed, the Montenegrin parliament could proceed with adopting the special law on the motorway construction - after which the building works could start. Brajovic said last month he believes the construction works could start by end-2014.

The priority 44-km motorway section of the future motorway will be built by Chinese firm CRBC. Construction works are expected to last four years. The complete cost of the section is EUR 809mn and the Montenegrin government is expected to provide the remaining EUR 121mn from other sources.

Bar-Boljare will link Montenegro’s Adriatic coast with its border with Serbia in the north – and will be part of a bigger motorway connecting Bar with the Serbian capital Belgrade. Serbia and Montenegro have said they might seek EU financing for this and other cross-border infrastructure projects.

China’s CRCB and its parent company CCCC won last year the tender to build the priority Smokovac (a Podgorica suburb)-Matesevo section of the full 169-km project with the support of the China Exim Bank loan. 

The World Bank and the IMF have warned that the project’s borrowing needs might destabilise Montenegro's fiscal position and result in a jump of its public debt.