Montenegro entered 2026 with gross public debt of €5.13 billion, equal to 59.9% of projected GDP, while preparing financial reserves for significant refinancing obligations due in 2027. The government has reduced the debt stock, increased available deposits through borrowing operations and extended maturities, but the timing of future repayments remains a central element of public finance planning.
Debt stock and government reserves
At the end of March 2026, central government debt stood at €5.11 billion, representing 59.6% of GDP, based on a Ministry of Finance GDP projection of €8.56 billion for 2026. Gross public debt decreased by almost €55 million during the first quarter. At the same time, government deposits declined by €154.3 million to €650.5 million, including approximately €154.4 million held in gold.
As deposits fell faster than liabilities, net public debt increased by almost €100 million to €4.48 billion, equivalent to 52.3% of GDP. Net central government debt reached €4.46 billion, or 52% of GDP. The government expects gross debt could temporarily rise to around 68% of GDP during 2026 as it builds reserves for upcoming refinancing needs rather than financing additional current spending.
External debt dominates portfolio structure
Montenegro’s public debt remains largely concentrated in foreign liabilities. Foreign debt amounted to €4.80 billion, representing 94.1% of central government debt and 56.1% of GDP. Domestic debt totalled €302.6 million, accounting for 5.9% of the portfolio. International bonds represented the largest debt category, reaching €2.79 billion, equivalent to 32.5% of GDP and almost 55% of central government debt.
The country’s main bond obligations include a €750 million Eurobond issued in 2020, maturing in December 2027, a €500 million bond due in October 2029, a dollar bond issued in 2024 with an original value equivalent to €750 million, maturing in March 2031, and an €850 million seven-year Eurobond issued in March 2025, maturing in April 2032.
2025 bond issue extends repayment schedule
The €850 million Eurobond issued in March 2025 carried a coupon rate of 4.875%, almost one percentage point lower than Montenegro’s previous international bond cost. The transaction was used to refinance liabilities falling due in 2025 and extend a significant portion of the repayment schedule into the following decade.
In late 2025, Montenegro also secured a €450 million syndicated loan to strengthen fiscal reserves. The lender group included Merrill Lynch International, MUFG Bank, Société Générale, OTP Bank, Erste Group, AKA Ausfuhrkredit-Gesellschaft and Eurobank Private Bank Luxembourg. The five-year facility was priced at six-month Euribor plus 250 basis points, resulting in an initial all-in interest rate of approximately 4.5%. The loan includes semi-annual repayments, reducing exposure to a single maturity date while maintaining sensitivity to Euribor movements.
Interest and currency risks remain limited
Fixed-rate instruments account for 79.1% of central government debt, while variable-rate liabilities represent 20.9%, mainly linked to Euribor. Approximately 99.74% of Montenegro’s debt portfolio is effectively denominated in euros. Dollar exposure accounts for 0.22%, while SDR exposure represents 0.04%. The currency structure reflects cross-currency swaps covering the loan from China Exim Bank for the first section of the Bar–Boljare motorway and the dollar bond issued in 2024. The China Exim Bank loan remained Montenegro’s largest individual project liability, amounting to €543.1 million, or 6.3% of GDP, at the end of March 2026.
Multilateral and domestic debt composition
Among multilateral creditors, obligations to the International Bank for Reconstruction and Development (IBRD) stood at €247.5 million. Other major multilateral liabilities included €126.4 million under the second policy-based guarantee syndicated facility, €110.6 million owed to the European Investment Bank, €81 million to the European Commission, and €61.3 million to the European Bank for Reconstruction and Development. Domestic debt consisted mainly of €107.6 million in commercial bank loans, €99.9 million in domestic government bonds, €60.8 million in compensation liabilities, and €22.6 million owed to legal entities and companies. A €50 million domestic bond matured in April 2026. Two retail and corporate bonds issued in 2025, with a combined value of approximately €49.9 million, mature in November 2027.
First-quarter borrowing remains limited
During the first quarter of 2026, Montenegro concluded no new loan agreements and withdrew only €18 million from previously contracted facilities. The largest drawdown, €13.86 million, came from a facility provided by Bpifrance and Société Générale for patrol vessels for the Armed Forces. Additional withdrawals included €2.67 million from IBRD facilities supporting agriculture, rural development, fisheries, the Sava and Drina river corridors and Western Balkans trade and transport.
A further €1.46 million was drawn from Germany’s KfW for coastal water supply, wastewater infrastructure and the first phase of Podgorica’s wastewater collection and treatment programme. Principal repayments totalled €69.8 million during the quarter, including €62.5 million to non-resident creditors. Interest payments reached €71.8 million, bringing total debt service to €141.6 million.
Government prepares for 2027 refinancing obligations
The 2026 budget provides up to €710 million for debt repayment and capital expenditure, with €383.6 million scheduled to mature during the year. Deposits accumulated in 2025 will be combined with up to €500 million of new borrowing.
The government has also received authority for up to €1 billion in additional pre-financing for obligations due in 2027 and 2028. The measure strengthens liquidity ahead of the €750 million Eurobond maturity in December 2027, while increasing the cost associated with holding borrowed funds before they are required.
State guarantees support infrastructure financing
Outstanding state-guaranteed debt totalled €116 million, equivalent to 1.4% of GDP, at the end of March 2026. Foreign guarantees amounted to €104.8 million, while domestic guarantees stood at €11.2 million. During the quarter, Montenegro issued a €15 million guarantee for an EBRD loan to Crnogorski elektroprenosni sistem, the state-controlled electricity transmission operator. The financing supports increasing the transfer capacity of a 220 kV overhead line, linking government-guaranteed borrowing with investments in Montenegro’s electricity grid and regional transmission infrastructure.
Credit ratings remain below investment grade
Montenegro entered 2026 with sovereign ratings of Ba3 from Moody’s and B+ from S&P, both with positive outlooks. The ratings outlooks reflect stronger economic growth, institutional progress and Montenegro’s EU accession process, while the country remains below investment grade.
The government’s refinancing strategy has reduced currency exposure and limited interest-rate risks, while future financing conditions remain dependent on access to international capital markets and sovereign borrowing costs.
