The European Bank for Reconstruction and Development (EBRD) remains committed to supporting Montenegro on its path to European integration, focusing on renewable energy, infrastructure and support for small and medium-sized enterprises, said Remon Zakaria, head of the EBRD office in Montenegro, in an interview with Bankar.
He reminded that since 2007, the EBRD has invested over 908 million euros in 95 projects across Montenegro, with a focus on energy, transport and infrastructure. He also noted that over the past four years, the bank has contributed to mobilizing over 260 million euros in investment grants and technical assistance for project preparation and policy reforms.
Zakaria announced that the EBRD plans to continue supporting Montenegro in increasing renewable energy capacities and improving energy infrastructure, as well as developing key strategic projects in transport. He emphasized the importance of macroeconomic and political stability for attracting investments and supporting long-term economic growth, with a special focus on green transition and Montenegro’s European integration.
EBRD investments in Montenegro: Past and future sectors
Since 2007, the EBRD has invested over 908 million euros in 95 projects throughout Montenegro. In the last four years, the bank has also helped mobilize over 260 million euros in investment grants and technical assistance for project preparation and policy reforms. These grants were generously provided by the EU, EBRD and various bilateral donors (Austria, Italy, Sweden, Luxembourg, etc.). The bank’s investments have primarily focused on energy, transport and infrastructure—key sectors for driving Montenegro’s economic development. For instance, this year, the EBRD supported initial investments in the energy efficiency of public buildings in Montenegro. These projects will improve heating comfort and the interior quality for 24 schools and three hospitals, directly benefiting students, patients, teachers, and medical staff.
In the energy sector, the EBRD has partnered with Montenegro’s Electric Transmission System on the upgrade of the Brezna substation, a crucial project that will enable the integration of over 400 MW of new renewable energy capacity into the grid. In the transport sector, the bank supported the purchase of three modern trains by Montenegrin Railways, replacing a fleet more than 50 years old to improve passenger services. Energy and transport remain the backbone of economic growth, and the EBRD works closely with the government and key stakeholders to accelerate development in these areas.
In addition to infrastructure, the EBRD supports small businesses and entrepreneurs in Montenegro. Through local financial institutions, the bank has provided dedicated credit lines that combine EBRD financing with technical assistance and incentives for small and medium-sized enterprises, women-led businesses, youth-run companies, and for promoting green investments. Furthermore, through its Small Business Advisory program, the EBRD has assisted around 30 SMEs this year alone, and over 800 companies since the program’s inception. These advisory services focus on strengthening the knowledge and operations of small and medium-sized enterprises and enabling their growth.
EBRD’s priorities in Montenegro for the coming years
The EBRD remains dedicated to supporting Montenegro in increasing renewable energy capacities and improving energy infrastructure to foster a greener economy. The bank is actively working with state-owned companies and the government to prepare projects that will strengthen the electric grid and initiate investments in renewable energy. At the same time, it collaborates with public and private sector investors to deliver new renewable energy capacities, which are crucial for Montenegro’s sustainable future.
In infrastructure, the EBRD focuses on key strategic projects, including the reconstruction of the Golubovci-Bar railway, a vital link for facilitating efficient freight transport from the Port of Bar. The bank also supports the government in improving the next section of the Bar-Boljare highway, specifically the Mateševo-Andrijevica section, which is essential for improving connectivity and regional integration.
Zakaria’s message to the Montenegrin citizens is clear: the EBRD is here as a reliable partner in driving the country’s economic development. The bank works closely with key stakeholders on implementing impactful investments and policy reforms that will further support Montenegro’s ambition to join the EU by 2028.
Montenegro’s economic situation and challenges for sustainable growth
Montenegro’s economy has strongly recovered from the contraction caused by the pandemic, with growth stabilizing above 6% over the past two years, driven by robust tourism and ambitious capital investments. Government measures to increase personal incomes and stabilize inflation have also supported consumption, with average and minimum wages rising by 48.9% and 60.7%, respectively. However, growth slowed to 3.1% in the first three quarters of 2024 due to a weaker tourist season and declining production, although consumption and investments in real estate remained strong. The EBRD forecasts growth of 3.8% in 2024, followed by a decrease to 2.9% in 2025, partly due to increased electricity imports during the rehabilitation of the Pljevlja thermal power plant, which currently provides 40% of the country’s electricity. Public investments supported by the Western Balkans Growth Plan and related reforms could help accelerate growth.
In the long term, Montenegro’s key challenge is improving productivity. This requires improving education outcomes, enhancing workforce skills, and increasing employment for women and youth. As tourism remains the cornerstone of the economy, aligning wages and prices with service quality will be crucial to maintaining competitiveness, especially considering regional competition. Investments in infrastructure will improve access to the coast, but diversification and improving quality in tourism are also essential for sustainable growth. Accelerating Montenegro’s green transition is equally vital. With electricity largely relying on hydropower and coal, the country faces vulnerabilities from climate shocks, droughts, and EU carbon tariffs under the carbon border adjustment mechanism. To maintain competitiveness, Montenegro must expand its renewable energy sources beyond hydropower and prioritize energy efficiency improvements.
The role of macroeconomic and political stability in attracting investments
Macroeconomic foundations in Montenegro have proven resilient in the post-pandemic period, despite significant global geopolitical uncertainties and a slowdown in external demand. With Montenegro’s public debt higher than that of regional peers and ambitious public investment initiatives underway, ensuring prudent fiscal management will be crucial to maintaining investor confidence. Political stability and a strong commitment to the reforms necessary for EU accession, especially the full implementation of the newly adopted Reform Agenda, will play a key role in supporting investor confidence and promoting long-term growth.
European integration and the importance of progress in the process
The EBRD supports Montenegro in the necessary steps that will enable its European integration. The bank participates in the EU reform program, alongside other development partners, to provide technical assistance for the necessary reforms to increase renewable energy sources and integrate Montenegro into the European energy market, as well as support state-owned enterprises in improving corporate governance to align with best practices. EU integration could bring significant economic, political, and social benefits to Montenegro, including access to EU funds, increased foreign investment, and participation in the single market, which would promote trade and economic growth. It would also help strengthen democratic institutions, promote the rule of law, and improve regional stability. Citizens would enjoy freedom of movement, improved living standards, and more opportunities for education and cultural exchange. Furthermore, adopting EU environmental policies would lead to a cleaner, more sustainable environment, while deeper integration into EU tourist networks would further develop Montenegro’s economy.
EBRD’s green initiatives in Montenegro
The EBRD remains committed to supporting sustainable development in Montenegro. The bank works closely with the government to support the launch of renewable energy auctions that will attract international investors, stimulate competition, and ensure that energy is delivered at the best possible price. This will allow Montenegro to fully capitalize on its abundant renewable energy resources while creating jobs and diversifying the economy. Additionally, the EBRD collaborates with the Electric Power Company of Montenegro to support its green transition and energy supply diversification, strengthening the country’s energy security and sustainability.
The bank also promotes green investments for small and medium-sized enterprises and citizens through its SME Go Green program and green economic financial relief, which provides loans, grants, and technical assistance through local banks. These initiatives focus on improving energy efficiency in homes and businesses. Finally, the EBRD is exploring new ecological projects to improve waste management and promote further energy efficiency improvements in public buildings, helping Montenegro enhance its environmental standards and build a greener, more resilient future.
