Montenegro significantly increased capital expenditure during the first six months of 2026, but by the end of June the government had implemented only 27% of its revised annual capital budget, leaving the majority of planned investment to be executed in the second half of the year.
Capital expenditure rises during first half
The state spent €82.53mn on capital projects between January and June, representing an increase of €31.16mn, or approximately 61%, compared with the same period of 2025.
Despite the increase, the revised annual capital budget amounts to €306.33mn, leaving approximately €223.81mn still to be spent before year-end. The figures indicate stronger public investment activity but also a spending schedule concentrated in the latter part of the fiscal year.
Delays continue to shape implementation
Limited execution during the first half of the year is a recurring feature of Montenegro’s capital programme. Investment projects are frequently delayed by public procurement procedures, design revisions, property disputes, construction-season constraints and administrative appeals. As a result, capital payments are often concentrated toward the end of the year, when contractors submit certified work and government institutions seek to utilise the funds allocated in the annual budget.
This implementation pattern creates the risk that some projects will remain underfunded because administrative procedures are not completed before the fiscal year closes. It also raises the possibility of rapid year-end spending without equivalent progress in physical construction.
Budva bypass expropriation dominates southern spending
The largest individual contribution to capital expenditure in southern Montenegro was an €18.71mn payment for land expropriation related to the first phase of the Budva bypass. The payment highlights the importance of property acquisition during the early stages of infrastructure development, before major construction activities begin.
The Budva bypass is intended to ease one of Montenegro’s most persistent transport bottlenecks. Seasonal congestion through Budva and along the coastal highway affects tourism, freight transport, local residents and employees travelling between municipalities on the coast. Land acquisition alone does not increase transport capacity. The investment will depend on subsequent progress in final design, procurement and construction.
Motorway project awaits advance payments
The planned Mateševo–Andrijevica motorway section represents an even larger infrastructure commitment, with an estimated contract value of approximately €693.97mn. Only limited expenditure had been recorded under the relevant budget line by the end of June because the advance payment procedure had not yet been completed. Once mobilisation begins and advance payments are made, the motorway project is expected to make a significant contribution to capital-budget execution while increasing the importance of procurement oversight, cost control and long-term debt management.
Public investment supports broader economic development
Montenegro’s capital investment programme is expected to contribute to economic growth while private investment remains concentrated in tourism, real estate and selected energy projects. The government aims for public infrastructure investment to support wider economic diversification, particularly in northern Montenegro, where transport connections and municipal infrastructure continue to constrain industrial activity and tourism development.
Focus remains on project delivery
A key issue remains the difference between approved investment budgets and completed infrastructure. While government announcements frequently refer to total project values, businesses and local communities ultimately benefit from operational infrastructure. The distinction between budget allocations, signed contracts and completed projects remains an important factor in assessing the effectiveness of public investment.
Delays can increase overall project costs
Slow implementation may also increase construction costs as building materials, labour costs and imported inputs become more expensive over time. Where financing has already been secured, delays may also result in the state paying commitment fees or interest costs before infrastructure projects begin generating economic benefits.
A stronger public investment management framework would more closely align annual budget allocations with project design readiness, permitting status, land acquisition and procurement preparation, allowing projects that have completed these stages to receive priority funding.
More than €223mn remains to be invested
With approximately €223.81mn still available for the second half of 2026, the government faces an intensive implementation period. While a faster pace of expenditure would improve the annual capital-budget execution rate, the principal measure of progress will be the extent to which major infrastructure projects advance through measurable construction activity as part of Montenegro’s broader investment and development programme.
