Montenegro’s government has approved final terms for a proposed €13 million borrowing arrangement with Erste Bank to finance a maritime tugboat and a firefighting aircraft. The equipment is intended to strengthen emergency response in the Bay of Kotor and address the country’s exposure to seasonal wildfires.
The government approved the arrangement in principle on 20 October and reviewed the final financing terms on 5 November, according to the government. The Finance Ministry agreed the terms with the proposed lender, which comprise an €8 million loan for a multipurpose tugboat and a €5 million loan for an aircraft to be operated by Montenegro’s Interior Ministry.
Both loans would carry a fixed annual interest rate of 4% and a one-off processing fee of 0.1% of the total loan amount. Principal would be repaid over 48 months after each loan enters repayment, while funds would be available for withdrawal over 12 months. Government approval of the terms does not confirm that either loan contract has been signed or that funds have been disbursed.
The government intends to borrow for the equipment rather than rely entirely on existing annual budget allocations. The arrangement would add sovereign lending exposure for Erste Bank and create debt-service obligations for the government. The assets’ economic value is principally linked to public safety and avoiding potentially substantial disaster-related losses.
Equipment and procurement
The proposed tugboat would serve the Bay of Kotor, where cruise ships, commercial vessels and recreational traffic create complex operating requirements. It is intended to assist vessels entering and leaving the bay and support responses to vessel fires, marine pollution and evacuations. The government previously instructed the relevant maritime authorities to begin the procurement process, which is expected to progress before the end of 2026.
The aircraft investment addresses Montenegro’s exposure to seasonal wildfires, particularly during high temperatures, drought and increased tourism activity. Estimated aircraft-related expenditure includes approximately €850,500 in import VAT and a further €99,500 for customs procedures, registration, insurance and pilot training.
Actual procurement prices, delivery schedules and operating costs will determine the final financial requirements. The immediate priorities are completing the financing documentation, procuring the equipment and ensuring the responsible institutions have sufficient personnel, maintenance budgets and operating infrastructure.
