# Montenegro EU Admission Process Paved by Loan from Brussels
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-06-29
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Montenegro's EU Aspiration: Repaying China's Loan
Meta Description: Discover how China-funded highway project in Montenegro opens new opportunities, enhances tourism, and paves the way to EU membership.
URL: https://financedigest.com/montenegro-eu-admission-process-paved-by-loan-from-brusselshtml

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In 2014 China granted a loan to Montenegro for construction of a highway from the city of Bar to the border of Serbia. This highway is of great importance to Montenegro for many reasons. It opens the port of Bar to new financial opportunities, while connecting the northern part of the country with the rest of it.  Being recognized as a tourist destination, famous for its natural beauties, the completed highway will encourage many tourists visiting the [coastline of Montenegro to also explore](https://www.financedigest.com/new-tool-allows-you-to-explore-the-entire-british-coastline-from-your-sofa.html "New tool allows you to explore the entire British coastline from your sofa") its mountainous area up north.

Like most nations around the world currently, the [Central Bank](https://www.financedigest.com/governments-and-central-banks-risk-inflation-bank-of-england-has-done-its-bit-now-the-politicians-turn.html "Governments and central banks risk inflation, Bank of England has done its bit, now the politicians’ turn") of Montenegro certainly has a lot on its plate. As the [second quarter](https://www.financedigest.com/metro-bank-posts-second-quarter-of-profitability-on-mortgage-loans-demand.html "Metro Bank posts second quarter of profitability on mortgage loans demand") of 2021 draws to an end, that $809 million to China needs to be repaid. Podgorica [has already called upon Europe to assist](https://www.scmp.com/news/world/europe/article/3137748/montenegro-final-phase-talks-europe-refinance-us809-million-debt), in order to shrink the debt as much as it can. The EU has already [turned to Germany’s](https://www.financedigest.com/scientists-in-germany-turn-up-heat-on-seagrass-in-climate-change-fight.html "Scientists in Germany turn up heat on seagrass in climate change fight") Reconstruction Credit Bank (KfW) and the French Development Agency (AFD) – both state-owned development banks – and Italian state lender CDP to spearhead the financial aid to Montenegro. At a session of the Parliamentary Committee for Finances and Budget, Finance [Minister Milojko Spajic recently disclosed that discussions were in the final phase and that instead of a 2 percent interest rate](https://www.financedigest.com/german-inflation-rate-to-ease-over-course-of-2023-econ-minister.html "German inflation rate to ease over course of 2023 – econ minister") (USD) on the Chinese debt, the rate will be 1 percent in Euros. Montenegro will also be [granted a grace period of six years](https://www.financedigest.com/lilium-aims-to-build-400-air-taxis-a-year-seek-grants.html "Lilium aims to build 400 air taxis a year, seek grants"), with repayment spanning over 20 years.

This was not the way [decision makers](https://www.financedigest.com/senior-decision-makers-reveal-people-skills-are-an-employees-most-valuable-asset.html "Senior decision makers reveal people skills are an employee’s most valuable asset") in Montenegro had planned for things to happen, but it turned out fine. The fulfillment of this agreement will relieve a [whole lot](https://www.financedigest.com/dealing-with-sole-traders-debt-recovery-just-became-a-whole-lot-harder.html "Dealing with sole traders? Debt recovery just became a whole lot harder") of burden from the local economy. Having said that, one must [remember that the small Balkan nation had also applied to become a member state of the European Union almost 20 years](https://www.financedigest.com/extraordinary-rollercoaster-good-friday-talks-remembered-25-years-on.html "‘Extraordinary rollercoaster’, Good Friday talks remembered 25 years on") ago, when it was still in union with Serbia, and while it is a leading candidate, the process is not projected to be completed before 2025. This deadline has been confirmed by the new government of Montenegro, who has set the EU admission [process as one of the main priorities during its four year](https://www.financedigest.com/companies-that-dont-upgrade-their-financial-processes-this-year-will-get-left-behind.html "Companies that don’t upgrade their financial processes this year will get left behind") term.

**Highway to the EU** The new government of Montenegro is clear in terms of its foreign policy priority, which is pro-EU membership. However, that might require some reforms in terms of local laws and procedures. This policy corresponds with public opinion, as [recent polls show that 77.6% of Montenegrin citizens show a positive attitude toward](https://www.financedigest.com/ftse-100-inches-towards-recent-highs-as-bp-shines.html "FTSE 100 inches towards recent highs as BP shines") the European Union (compared to 66.1% in December 2019). The number of those with a negative attitude is decreasing accordingly – only 17.7% (compared to 24.3% in December 2019).

Furthermore, some countries like France, who were against the admission of new members in the past, are showing signs of acceptance toward the Western Balkan region, with increased political presence and concrete initiatives.

**Shifting economy** This has been a rough year for the EU. It has been struggling for a while now with [financially assisting its weaker links](https://www.financedigest.com/31972social-engineering-in-the-financial-services-people-are-the-weakest-link-in-the-security-chain.html "Social engineering in the Financial Services : People Are The  Weakest Link in the Security Chain"), such as Greece, Romania and Portugal. [Brexit and its economic](https://www.financedigest.com/the-politics-economics-and-investment-implications-of-brexit.html "The politics, economics and investment implications of Brexit") consequences have made matters worse – and that’s before even taking the pandemic into account. Brussels is going to be extra [careful when it picks](https://www.financedigest.com/airless-pump-market-to-grow-by-1-8x-as-demand-in-personal-care-cosmetics-industry-picks-up-pace-future-market-insights.html "Airless Pump Market to Grow by 1.8x as Demand in Personal Care & Cosmetics Industry Picks Up Pace: Future Market Insights") the new economies it lets into the EU, and the Balkan region is at a disadvantage in that sense.

True, Montenegro is a bit better off than its neighbors, being the least affected of all [former Yugoslav countries by the dissemination of the union thirty years](https://www.financedigest.com/death-of-former-pope-benedict-overshadows-new-year-at-vatican.html "Death of former Pope Benedict overshadows New Year at Vatican") ago. However, its economy is still in [transition from agriculture and services to finance](https://www.financedigest.com/3-key-ways-you-can-transition-from-finance-to-fintech.html "3 key ways you can transition from finance to fintech") and information. Montenegro has a long way to go, in order to catch up with [Western Europe](https://www.financedigest.com/western-europe-medical-recruitment-market-is-estimated-to-be-valued-at-us-21-22-billion-by-the-end-of-2028.html "Western Europe Medical Recruitment Market is estimated to be valued at US$ 21.22 Billion by the end of 2028"), economically.

Podgorica is trying hard, that must be said. These days, the Ministry of Public Administration, [Digital Society and Media is working](https://www.financedigest.com/how-digital-signage-and-avoip-solutions-can-enhance-the-return-to-work.html "How Digital Signage and AVoIP Solutions Can Enhance the Return to Work") on a four-year plan to attract foreign investments. Montenegro is also going to be among the first [countries in the world to adopt the digital nomad visa – a program encouraging people to combine travel](https://www.financedigest.com/best-countries-to-travel-to.html "Best countries to travel to") with work in the tech and information sectors.

The world-renowned investment firm Colliers International has been a global supporter of this program, and its Montenegro branch CEO Milovan Novakovic said, “research predicts that by 2035, one billion people will [work remotely](https://www.financedigest.com/remote-working-tips-to-help-it-last-longer.html "Remote working tips to help IT last longer"). If Montenegro regulates the visa program, a special [benefit would be improving tourism](https://www.financedigest.com/uk-tourism-sector-already-reaping-the-benefits-of-brexit.html "UK TOURISM SECTOR ALREADY REAPING THE BENEFITS OF BREXIT"). [Digital nomads will no longer come](https://www.financedigest.com/constructive-digitization-to-let-the-tissue-diagnostic-market-come-of-age.html "Constructive digitization to let the Tissue Diagnostic Market come of age") for just a couple of weeks, but for a few months or even a whole year.”

**Bank on it** The banking sector in the country is also doing its share in the effort to attract foreign investments. Adriatic Bank, for example, has recently [opened an investment banking](https://www.financedigest.com/how-can-open-banking-help-smbs-navigate-the-cost-of-living-crisis.html "How can Open Banking help SMBs navigate the cost-of-living crisis? ") division, after receiving all necessary permits from authorities. Most [banks in the nation](https://www.financedigest.com/swiss-national-bank-makes-another-large-draw-on-fed-swap-line.html "Swiss National Bank makes another large draw on Fed swap line"), including Adriatic, offer non-resident accounts to people and legal entities.

Another one of Montenegro’s banks, CKB Banka (recently merged with Podgoricka Banka), has also signed a partnership agreement with the [European Bank](https://www.financedigest.com/token-inc-launches-london-office-to-answer-demand-from-european-banks.html "Token, Inc. Launches London Office to Answer Demand from European Banks") for Reconstruction and Development (EBRD), as part of a project to finance energy efficiency for households in the country. “We are pleased that Montenegro has joined the [Green Economy Financing](https://www.financedigest.com/how-is-green-finance-reshaping-the-banking-industry.html "How is green finance reshaping the banking industry?") Facility family,” remarked the local head of the EBRD.

It is important to mention that, while not being a member of the EU and the Eurozone, Montenegro has unilaterally adopted the [Euro as its currency](https://www.financedigest.com/euro-having-a-laugh-a-quarter-of-brits-take-the-wrong-currency-on-holiday.html "Euro having a laugh: a quarter of Brits take the wrong currency on holiday") almost twenty years ago, by replacing the previously used Deutsche Marks.

**The future** Despite the fact that hardship is expected, financial analysts predict that Montenegro will sooner or later become a member nation of the European Union. Among the candidates today, it is certainly considered a leader, and the [financial and social situation in this small](https://www.financedigest.com/funding-options-bids-for-backing-to-help-small-businesses-take-control-of-their-finances.html "Funding Options bids for backing to help small businesses take control of their finances") Balkan nation is overall reassuring for Brussels. Thus, the question occupying Montenegrins these days is not ‘if’, but rather ‘when’.

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