Montenegro increased capital-budget spending substantially during the first half of 2026, but the government had still executed only 27 per cent of its revised annual programme by the end of June.
The state spent €82.53mn on capital projects during the six-month period. This was €31.16mn, or approximately 61 per cent, more than in the first half of 2025.
The annual capital budget, however, stands at €306.33mn, leaving almost €223.81mn to be spent during the remainder of the year. The figures point to an acceleration in public investment but also to a heavily back-loaded implementation schedule.
Low first-half execution is not unusual in Montenegro. Capital projects are frequently delayed by procurement procedures, design revisions, property disputes, construction-season limitations and administrative appeals. Payments then become concentrated towards the end of the year as contractors submit certified works and ministries attempt to use the allocated budget.
That pattern creates two risks. Some projects may remain underfunded because institutions are unable to complete the necessary procedures before the end of the fiscal year. Others may experience a sudden surge in spending without corresponding certainty that the underlying physical works have progressed at the same pace.
The largest single influence on capital expenditure in the southern region was a payment of €18.71mn for land expropriation connected with the first phase of the Budva bypass. The payment demonstrates how property acquisition can dominate early project spending before significant construction begins.
The bypass is intended to relieve one of Montenegro’s most persistent transport bottlenecks. During the summer season, traffic through Budva and along the coastal highway affects tourists, residents, freight operators and employees travelling between coastal municipalities. Progress on the scheme would therefore have economic value beyond the construction sector.
Expropriation spending, however, does not by itself deliver additional road capacity. The value of the allocation will depend on whether land acquisition is followed quickly by final design, contracting and construction.
The planned Mateševo–Andrijevica motorway section presents an even larger execution challenge. The contract value is estimated at approximately €693.97mn, making it one of Montenegro’s largest infrastructure commitments.
Relatively little expenditure had been recorded on the relevant budget line by the end of June because the advance-payment procedure was still under way. Once mobilisation and advance payments begin, the motorway could materially increase capital-budget execution, but it will also raise questions about procurement supervision, cost control and long-term debt sustainability.
Montenegro’s capital programme is expected to support growth at a time when private investment remains concentrated in tourism, real estate and selected energy projects. Public infrastructure should provide the foundation for wider economic diversification, particularly in the north, where weak transport connections and municipal services continue to constrain industrial and tourism development.
The gap between approved budgets and completed assets remains the central issue. Government announcements are often measured in total project values, while investors and local communities experience development through operational infrastructure. The distinction between an allocated budget, a signed contract and a completed project is commercially important.
Slow execution can also increase costs. Construction prices, wages and imported-material expenses may rise during delays, forcing authorities to revise contracts or reduce project scope. Where financing has already been secured, the state may incur commitment fees or interest before the infrastructure begins generating an economic benefit.
A stronger public-investment management system would connect budget approval to design maturity, permitting status, land availability and procurement readiness. Projects that have completed these stages could receive priority, while less-developed schemes would remain outside the annual spending plan until they are technically capable of moving forward.
With more than €223mn still available for the second half, the government faces a demanding implementation period. A rapid increase in expenditure would improve the headline execution rate, but the more relevant test will be whether Montenegro can demonstrate measurable construction progress on the projects that dominate its borrowing and development strategy.
