Rome: Montenegro and IFAD sign Agreement on financing project of cluster development and transformation of rural areas

Rome, Italy (12 May 2017) – Deputy Prime Minister and Minister of Agriculture and Rural Development Milutin Simović and Minister of Finance Darko Radunović signed earlier today, at the headquarters of the International Fund for Agricultural Development (IFAD) in Rome, an Agreement on financing the project of cluster development and transformation of rural areas in Montenegro.

IFAD approved to Montenegro, as its member, very favorable loans (repayment period of 15 years, grace period of three years, interest rate 0.7%) in the amount of 3.9 million EUR and the grant in the amount of 1.9 million EUR for the improvement of agricultural production and infrastructure in rural areas of Montenegro. The total value of the project is 13.6 million EUR, including contribution of the Government of Montenegro and the local governments.

Montenegro became a member of IFAD in February 2015, after which it asked for the funds to finance a development project. Through series of missions organised in Montenegro, representatives of the Fund became familiar with the development potentials of the country. The funds for this project were approved at a session of the Executive Board of the Fund in April 2017.

In accordance with the priorities of the Government of Montenegro, support of IFAD is in line with the development strategy, which is aimed at improving the living standards and economic environment in rural areas in the north of Montenegro and at contributing to the creation of conditions to reduce migration. It is anticipated that the project is implemented in the next six years in the municipalities of Nikšić, Šavnik, Žabljak, Mojkovac, Bijelo Polje, Berane and Petnjica.

In order to achieve the defined objectives, the project was conceived through two main components:
- support for cluster development in several areas, participation of about 3,000 farm households is planned;
- improvement of about 30 roads in rural areas, construction of about 15 reservoirs for agricultural purposes, construction of 12 water supply systems. This component will be implemented in 57 villages.

The benefits of this project will be comprehensive. Target groups are residents of rural areas who are engaged in agriculture on a smaller scale and who are below the necessary threshold to get support through agricultural budget and EU subsidies, smaller agricultural producers, but also larger producers, cooperatives and associations.

One of the main goals of the project is to contribute to the strengthening and achieving market competitiveness of as many as possible small farms in the north of Montenegro by engaging in profitable and sustainable clusters. Improving conditions in rural areas will mean an opportunity for the further development of producers who have already reached a certain level of competitiveness and who are bearers of development in their communities.

The project will be implemented by the Ministry of Agriculture in cooperation with the municipalities involved in the project, as well as other institutions relevant for the implementation process.

Deputy Prime Minister Milutin Simović and Minister of Finance Darko Radunović met with President of IFAD Gilbert Houngbo and Director of IFAD for Europe Khalid Bouzar. At the meeting Montenegrin officials presented the current economic situation and development potentials of Montenegro with a special emphasis on the agricultural sector.

PR Service of the Ministry of Agriculture and Rural Development