The government of Montenegro has finalized a framework agreement with the French Development Agency (AFD) to facilitate two potential loans aimed at supporting important reforms. This announcement follows the government’s approval of the outcomes from negotiations regarding the agreement with AFD.
The framework agreement sets forth the terms and principles for future collaboration between the lender and the borrower. It’s important to note that this agreement does not compel the lender to grant loans but allows for potential loan approvals contingent on meeting all specified conditions and procedures.
Under this agreement, the first loan, a Development Policy Loan (DPL), is projected for this year at an amount of 50 million euros, with a second loan of the same amount anticipated for the following year.
Loan details
During official discussions with representatives from the French Development Agency, it was confirmed that the total loan amount is set at 50 million euros, to be repaid over ten years with a grace period of 18 months. Repayment will occur semi-annually, starting on April 30, 2026, and concluding on October 30, 2034. The interest rate will be established at the time of loan disbursement, with the Ministry of Finance opting for either a fixed or variable rate based on the terms provided. Should a variable rate be chosen, it will include the six-month EURIBOR plus a fixed margin of 0.8 percent.
The announcement also highlighted that long-term loans for policy reforms are financial tools provided by international financial institutions, such as the World Bank, to support countries in implementing necessary political and institutional reforms. These loans aim to facilitate structural changes that stimulate economic growth and alleviate poverty. Funding from the French Development Agency is an integral part of this support for developmental policies.
Progress in renewable energy projects
Additionally, the government has approved a report on the progress of renewable energy projects. It was noted that there are currently 29 active concession agreements for the construction of small hydropower plants (mHE), which enable the development and operation of a total of 42 mHE facilities. Out of these, 33 projects have been completed, resulting in a total installed capacity of 52.6 MW and a planned production of 182.4 gigawatt-hours (GWh). Due to various challenges inherited from previous periods, the relevant ministry emphasized the need to closely evaluate each case and develop suitable long-term solutions.
The government also discussed the second phase of the tender process for the concession of Montenegro’s airports. Due to organizational changes within the government, a new decision regarding the Tender Commission for the concession of Podgorica and Tivat airports was made, as the previous commission comprised members whose terms had expired or who were no longer employed in the administration.
