loans and grants

Montenegro asks for EU help to pay Chinese loan

Reuters
Montenegro asks for EU help to pay Chinese loan

DOLLARS. A picture illustration shows $100 banknotes taken in Tokyo, August 2, 2011.

File photo by Yuriko Nakao/Reuters

'[The previous government] has brought the country into a position of dependence on China,' says Montenegro's Deputy Prime Minister Dritan Abazovic

The European Union should help Montenegro repay a 1-billion-euro ($1.18-billion) loan to the Export-Import Bank of China for the construction of a motorway linking it with the Serbian border, the country’s deputy prime minister said on Friday, March 26.

A 2014 loan for the first phase of the highway linking the port of Bar on Montenegro’s Adriatic coast to landlocked neighbor Serbia, came with an annual interest rate of 2% and a 6-year grace period.

The first tranche of the loan is due in 2021, but the road is still under construction.

“A request was made to the financial institutions of the EU to consider…models of assistance to our country, in order to combat any unhealthy foreign influence,” Dritan Abazovic told parliament.

“It is logical and responsible…to think about replacing such a loan with a more favorable one,” he said.

Montenegro is a candidate to join the EU and a NATO member.

The Chinese loan raised Montenegro’s debt to over 80% of economic output and contributed to the government raising taxes and partially freezing public sector wages in 2018 to get its finances in order.

Abazovic also said the previous government loyal to long-serving President Milo Djukanovic made a “bad deal” with China.

“[The previous government] has brought the country into a position of dependence on China,” he said.

China sees most of the Western Balkans, a region comprised of Serbia, Montenegro, Bosnia, North Macedonia, Kosovo, and Albania, as part of its One Belt, One Road initiative to open trade links to Europe.

Beijing has so far invested billions of euros in the region, mainly in the form of soft loans for infrastructure and energy projects. – Rappler.com

$1 = 0.8495 euros