Europe willing to bail out Montenegro from €1 billion loan from China
A European financial institution has come forth in helping out Montenegro pay off a €1 billion loan to China. The Western Balkan country borrowed the sum from China in an effort to fund a highway but is now risking losing a part of its territory altogether as it is unable to return the loan.
Montenegro is building one of the most expensive highways in the world on Chinese credit. Forty bridges and 90 tunnels will be built and funded by China across the region.
“In Serbia, the same length of the segment with similar topography costs €16 million per kilometer, while here it is €26 million. I don’t understand this difference”, said Montenegrin PM Zdravko Krivokapic.
Paying off the Chinese loan is also a problem, raising fears that the country of 600.000 and its €4 billion GDP risks falling into the Chinese loan trap as seen in some other countries.
The project was initiated by former premier Milo Djukanovic in a bid to boost trade.
“I would have never signed this type of contract, but now that I am in the post of the minister, I want to guarantee that the job is done, the highway is built and eradicate financial risks”, says Mladen Bojanic, Minister of Investments.
The European Investment Bank and the International Monetary Fund refused to finance the project, but in 2014 China came forward proposing a €1 billion loan to build the first segment, while a Chinese company was put in charge of its construction.
“We will need Europe to pull us out of this trouble. I am sure that Europe will not allow it”, said a local.
China has invested billions in the region giving rise to concern on financial dependence from Beijing, which might complicate EU enlargement in the East as well as Montenegro’s efforts to join the bloc.
