Montenegro’s government is in advanced negotiations with the World Bank for a new up to €18 million loan aimed at modernising the national forestry sector, strengthening institutional capacity and boosting the competitiveness of the domestic wood industry over the next decade, according to government sources.
Under the proposed financing, to be formalised with the International Bank for Reconstruction and Development (IBRD) — the World Bank’s lending arm — Montenegro plans to implement a comprehensive programme titled “Montenegro’s Forests For Shared Prosperity”. The project is designed to support sustainable forest management practices, enhance fire prevention and response mechanisms, and improve regulatory frameworks governing forest resources and the wider wood value chain.
The financing agreement, which remains subject to approval by the World Bank’s Board of Directors in the coming months, envisages a 15-year repayment period with a two-year grace period and a variable interest rate tied to six-month EURIBOR plus a margin. The structure also includes modest fees on loan processing and undrawn funds.
Montenegro’s Ministry of Agriculture, Forestry and Water Management has been working on project preparation with World Bank specialists for the past two years, with government planners stating that the funding is expected to improve the sustainability of forest resource management, strengthen economic outcomes in forestry and wood processing, and increase sector profitability.
Official budget documents outline that about €4.95 million of the loan would be allocated to strengthening public policies and institutional capabilities, including modernised measurement and traceability of forest assets and support for the newly established state forestry enterprise “Crna Gora Šume”. Around €9.5 million is earmarked for enhancing resilience to wildfires and rehabilitating forest ecosystems. The remaining funds are planned for capacity building in certification, standardisation and project management.
Officials say the initiative will involve multiple national institutions, including the forestry and hunting administration, the Ministry of Internal Affairs’ emergency services directorate, Montenegrin statistical agency Monstat, and the University of Montenegro through education and training programmes connected to sustainable forest practice.
Government statements indicate that public consultations and a detailed project presentation for stakeholders will be organised in the coming weeks, with a view to increasing transparency around loan terms and implementation plans ahead of final Board approval.
The planned engagement with the World Bank aligns with broader efforts to support rural livelihoods, reduce wildfire risk and strengthen Montenegro’s environmental governance framework in accordance with sustainable forest management principles and international lender standards.
