Montenegro has achieved significant budget savings of 11.94 million euros, thanks to a hedging arrangement applied to its dollar-denominated loan from the Chinese Exim Bank for the construction of the priority section of the Bar-Boljare highway, according to the Ministry of Finance.
The arrangement, executed in January 2024, further demonstrates the country’s ability to utilize modern financial tools to optimize public debt and reduce fiscal risks, the Ministry added.
On January 21, the Ministry of Finance settled the eighth installment of the loan to the Chinese Exim Bank for the priority highway section, resulting in savings of 5.22 million euros.
“Instead of the 38.6 million euros that would have been paid at the average exchange rate of the Central Bank of Montenegro on the payment date, thanks to the hedging arrangement, only 33.38 million euros were paid,” the Ministry stated.
This saving is part of the continued positive effects of the hedging arrangement concluded on January 17, 2024, with renowned European and American banks, which already resulted in savings of 6.8 million euros in 2024.
In total, Montenegro has now saved nearly 12 million euros thanks to this arrangement, strengthening the state budget and creating room for better planning and implementation of other development projects.
The implementation of the hedging arrangement, the Ministry emphasized, reflects not only a responsible approach to managing public debt but also the country’s willingness to use financial instruments to reduce risks and optimize long-term financial obligations.
To date, Montenegro has repaid 256 million US dollars in principal to the Chinese Exim Bank, leaving an outstanding debt of 655.7 million US dollars (approximately 603.4 million euros, according to the average exchange rate agreed upon with the banks). This success further affirms Montenegro’s credibility in the international financial markets and serves as an example of how innovative public finance policies can yield tangible benefits for citizens and the country’s economic development, the statement concluded.
