Standard & Poor’s (S&P) has raised Montenegro’s credit rating from B to B+, maintaining a stable outlook, according to a statement from the Ministry of Finance.
This upgrade marks the second improvement in the country’s credit rating within a span of 10 months, following a positive adjustment in March, when S&P changed Montenegro’s economic outlook from ‘stable’ to ‘positive.’
The S&P report attributes the rating upgrade to several key factors, including a significant reduction in public debt, robust nominal GDP growth, and ongoing progress in structural reforms related to Montenegro’s EU accession process. The recovery of the tourism sector has notably strengthened Montenegro’s balance of payments position.
The Ministry of Finance views this upgrade as recognition of the government’s successful economic policies and efforts. It also serves as motivation for continued economic development and upcoming reforms aimed at improving living standards and ensuring financial stability.
The S&P report highlights that Montenegro’s credit rating is supported by strong growth prospects, long-term benefits from EU-related structural reforms, and relatively low debt servicing costs. S&P analysts have noted that the government’s focus on advancing EU accession negotiations and combating corruption is encouraging. This support enhances Montenegro’s appeal as an investment destination, with ongoing projects in real estate, energy, and hospitality continuing to attract capital. The report also anticipates that fiscal performance could surpass targets, driven by higher tourism revenues and additional EU grants related to the accession process.
The forecast indicates that Montenegro’s budget deficit will average three percent of GDP by 2027, with only a slight increase in net debt during this period. Debt servicing costs are expected to remain low, with interest expenses averaging around five percent of revenue. The continued construction of the Bar-Boljare highway is expected to be funded by EU grants and concessional loans, easing the burden on public finances. The banking sector remains robust, with strong liquidity and stability, primarily supported by domestic deposits.
Overall, the upgrade in Montenegro’s credit rating is seen as a testament to the country’s fiscal stability and economic reforms. It enhances Montenegro’s position with international financial institutions, bolsters the safety of its banking sector, increases its attractiveness as an investment destination, and improves its negotiating stance in the EU accession process.
