On July 21, 2025, Montenegro’s Ministry of Finance (MF) made its ninth loan repayment to China’s Exim Bank for the first section of the Bar–Boljare highway. Thanks to a hedging arrangement, the state saved €620,000 on this installment, the ministry announced.
Without the hedge, the payment would have been €33.8 million, based on the Central Bank of Montenegro’s exchange rate. However, due to the hedging, the actual payment amounted to €33.18 million. Since the start of the hedging agreement, total savings for the state budget have reached €12.6 million.
The hedging arrangement, initiated in early 2024, converted the original $754 million loan into €693.7 million at a favorable average exchange rate of 1.087 USD/EUR and at a significantly lower interest rate of 0.98%, compared to the originally contracted 2%. This measure has improved debt predictability and reduced budgetary pressure.
Looking ahead, a revised fixed interest rate of 1.46% will take effect in January 2026, still below the original borrowing cost.
Finance Minister Novica Vuković emphasized that long-term debt stability remains a priority, especially amid global economic uncertainty. He noted that hedging provides both predictability and direct budgetary savings.
The initial hedging agreement was signed in 2021, with an exit clause triggered in 2023 by the previous government, generating an additional benefit of around $64 million for the state budget at that time, due to favorable USD/EUR exchange rates.
