Finance Minister Žugić: Construction of highway to contribute to Montenegro’s economy recovery and growth

Podgorica, Montenegro (11 July 2013) – At today’s working breakfast with media representatives, Finance Minister Radoje Žugić explained the plans for the construction of the priority section of the Bar-Boljare highway (Smokovac-Uvče-Mateševo) and the ways in which the project will impact on Montenegro’s economic recovery and growth.

He underlined that the construction of the highway’s priority section will directly boost economic development, primarily in the sector of construction, by engaging Montenegro’s construction industry, equipment and materials, as well as in other sectors, such as tourism, trade, financial and insurance services, transport and production.

In addition, the project will have a direct impact on employment, by creating new jobs for domestic workers. The government will try to ensure that Montenegro’s production capacities are involved to the greatest possible extent, Minister Žugić emphasised.

The highway, according to Minister Žugić, will start bringing direct income from tolls from the moment it is put into operation, thus helping lower the high level of public debt caused by the loan which will be taken for its construction.

The highway project, in his words, will also result in better exploitation of the resources in the north, better integration between northern and southern parts of the country, as well as in increased cross-border cooperation. It will also make a great contribution to resolving the traffic bottle-neck through the Platije Canyon, he noted.

The Finance Minister expects the construction of the highway to boost economic activity, improve macroeconomic and fiscal indicators, and increase macroeconomic stability.

The average economy growth rate during the implementation of the project, i.e. during the period of paying off the loan, is forecast at 3.6%, he added. In addition to the construction of the highway, several major investments in tourism, continuation of activities related to the construction of a submarine energy cable, and the second block of the thermal power plant, as well as a set of other minor projects, will provide strong impetus for further economic growth and recovery, Minister Žugić stated.

The construction of the highway's priority section Smokovac – Mateševo is expected to start by the end of 2013, and estimated to finish in a 4-year period, he noted.

Government of Montenegro has selected the Chinese companies CCCC International (China Communications Construction Company) and CRBC (China Road and Bridge Corporation) as best bidders for the construction of the Bar-Boljare highway priority section. The negotiations are to be continued with the aim of concluding final agreements regarding the project design, construction, and financing. The offered price for the construction of the priority part of Montenegro’s greatest infrastructural project is EUR 809.577.356,14.

The priority section is planned to be funded through the Chinese EXIM Bank’s preferential loan, which includes a 20-year repayment period, a five-year grace period, and 2% of fixed interest rate.