Montenegro to borrow up to EUR 358mn in 2014, equalling to 10.2% of GDP

By bne IntelliNews February 7, 2014

Montenegro will borrow up to EUR 358mn in 2014 to service its debt and finance its budget gap and capital investments in various sectors, the government decided at its regular meeting on February 6. The reading equals to 10.2% of the full-year GDP forecast, according to IntelliNews calculations.

The country will borrow up to EUR 118mn from the Council of Europe Development Bank (EUR 10mn), EUR 20mn from the EIB, EUR 20mn from the EBRD and EUR 68mn from the World Bank, according to information published on the government’s website. The funds will be used to finance projects in the fields of road and water infrastructure, health and public administration.

The bulk of next year borrowing, EUR 240mn, will be used to finance the country’s budget gap, service its debt and create fiscal reserves. According to the 2014 budget law, Montenegro plans to lower its budget gap to EUR 71mn (1.99% of GDP) this year from an estimated EUR 128mn (3.9% of GDP) in 2013, due to expected higher budget revenue. The 2014 debt repayments needs are estimated at EUR 150mn, according to the country’s the Pre-Accession Economic Programme (PEP) for 2013-2016. The government public debt stood at EUR 1.89bn at end-November 2013 and is forecast to increase to some EUR 2bn in 2014. 

According to the PEP, Montenegro plans to consider the option of borrowing more than the planned EUR 240mn in 2014, hoping for better terms to refinance its two Eurobond issues maturing in 2015 and 2016. Without debt restructuring, the country will need some EUR 450mn for refinancing the budget deficit and debt in 2015 and around EUR 380mn in 2016.

Montenegro also plans to issue state guarantees of EUR 25mn this year, the document reads. The total size of issued state guarantees stood at EUR 272mn at end-Sep 2013, equivalent to 8.2% of GDP.

In addition, the state will take over EUR 6.1mn worth of liabilities of national carrier Montenegro Airlines and state TV and radio broadcaster RTCG.

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