17 Apr 15
Montenegro Raises Petrol Price to Pay Highway Loan
The Montenegrin government is to introduce a new fuel tax in order to cut the budget deficit and pay off a huge loan it took to build a highway.
The Montenegrin government decided on Thursday to increase fuel prices to help repay a loan of almost 700 million euro for the construction of the Bar-Boljare highway.
All types of fuel will rise by up to seven euro cents per litre but the government’s statement did not specify when this would happen.
The expected annual revenue as a result of the move will be approximately nine million euro, the government said.
Petrol and diesel prices in Montenegro are already among the highest in the region. Unleaded Eurosuper brands 98 and 95 currently cost 1.24 and 1.2 euros per litre.
After the fuel price hike, increases in the prices of alcohol, carbonated drinks and cigars can be expected as the government also plans to adopt new excise regulations.
Under the government’s economic reform programme, adopted in February, amendments to the Law on Excise Tax are planned for the second quarter of 2015.
In October last year, 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 40-kilometres-long priority section of the Bar-Boljare highway.
The Europena Commision and the International Monetary Fund have warned that investment in the highway presents a burden for the budget of Montenegro.
The IMF said the highway could see Montenegro’s national debt spiral upwards because it took such a big loan.
Source: Balkan Insight (Montenegro)