Montenegro MPs Row Over Huge Highway Loan

28 Nov 14

Montenegro MPs Row Over Huge Highway Loan

Montenegrin parliamentarians held a heated debate over whether the country should borrow 687 million euros to build a 40-kilometre-long highway section.

Dusica Tomovic


Montenegro’s parliament on Thursday discussed new legislation about the building of the Bar-Boljare highway, the most expensive project ever in the country, which has divided opposition MPs and the government.

Although it is almost certain that the law will pass by the end of this week because the ruling coalition has a majority in the parliament, the opposition demanded a referendum vote over the decision which will further burden the deeply troubled Montenegrin economy.

The government however sees the construction of the highway, which will link the capital Podgorica with underdeveloped north region, as equally important as gaining independence in 2006.

Under the new legislation, the Chinese companies engaged in the construction of the priority Smokovac-Matesevo section of the highway will not pay any taxes in Montenegro or customs duties for the import of materials and equipment.

The Chinese will pay three times less excise taxes on fuel imports and in case of disputes over construction and financing contracts, the competent courts will be in Beijing.

In October, the government signed a loan arrangement with the Chinese Exim Bank worth 687 million, which will cover part of the total 809 million euro required for the construction of the priority section.

During the debate in the parliament on Thursday, the opposition joined the civil sector which has urged the government for months to publish all studies, evaluations and reviews of relevant financial institutions which have been carried out in connection with the Bar-Boljare highway.

“The public has the right to know and to get all the relevant information,” said an MP from the opposition party Positive, Goran Tuponja.

But the ruling DPS-SDP coalition rejected claims that the project is too expensive for the state and it could jeopardise the macro-economic stability of the country.

In his address to the parliament, the Montenegrin Minister of Transport, Ivan Brajovic, said that the highway, as the country’s most important development project, will improve Montenegro’s economy and reinforce connections between different parts of the country.

Last week the EU’s new Enlargement Commissioner, Johannes Hahn, said investment in the Bar-Boljari highway presented a” burden for the budget of Montenegro”, but added that the state needed to decide itself on the issue.

The International Monetary Fund has warned in May that the construction of the highway could see Montenegro’s national debt spiral upwards after taking out such a big loan.

Source: Balkan Insight (Montenegro)