Montenegro takes EUR 100m loan from Credit Suisse, World Bank guarantees secure very favourable terms

Podgorica, Montenegro (19 July 2012) – Finance Minister Milorad Katnić signed earlier today on behalf of the Government of Montenegro a loan agreement with Credit Suisse Bank and the International Bank for Reconstruction and Development (IBRD) worth EUR 100 million, guaranteed by the IBRD, a World Bank Group institution.

By concluding the said arrangement, Montenegro has ensured budget funds, Minister Katnić said following the signing ceremony, noting that Montenegro has ensured “around 85% of funds envisaged by the budget for this year.” As proposed by the revised budget, he continued, the funds will be used for financing the budgetary expenditure, but also capital budget projects and servicing the outstanding commitments. He noted that it is good that Montenegro was able “already in the first half of the year to ensure financing for the entire budgetary year and also some reserve for early next year.” Mr Katnić underlined that Montenegro has confirmed to be a good partner to the World Bank and that the agreement confirms the quality of country’s reforms.

The arrangement that has been agreed envisages seven-year loan repayment period, and, as Jane Armitage, the World Bank Regional Coordinator for Southeast Europe, underlined the World Bank “guarantee is allowing the Government of Montenegro to take a loan from Credit Suisse on extremely attractive terms,” over long maturity and at very favourable rates.

Ms Armitage said that the WB has decided to go “ahead with this policy-based guarantees” reflects their “confidence and support for the Government in light of some very strong reforms that they have done on the financial sector to improve the stability of the banking sector in this time of economic crisis.” She also noted that, in addition to “very strong reform in the financial sector” on which the WB has been working closely for some years with Montenegro, the WB was able to provide the loan guarantee as an “endorsement of the strong macro-economic policy framework that the Government has adopted in the last few years.”

The Minister stressed that the World Bank support means more than money. This partnership firstly supports the credibility of Government policies and marks this institution’s trust in Montenegro, Mr Katnić noted adding that WB support is very important in the time when the global markets are increasingly unsafe.

The Ministry of Finance has previously negotiated with the World Bank (WB) representatives the terms of obtaining a guarantee for a EUR 100 million loan. 

The WB Board of Directors unanimously approved such arrangement in late June thus green-lighting the tender for offers for a loan arrangement worth EUR 100 million.

In the required timeframe, Minister Katnić said at the press conference following the signing ceremony, four banks submitted the offers and based on the analysis by the Finance Ministry, Credit Suisse bank was chosen and negotiations were started with them regarding the terms of the arrangement.