Montenegro is projecting continued economic expansion through 2029 as public investment, European Union-linked financing and high-end tourism development remain important drivers of activity. The government’s latest medium-term framework forecasts real GDP growth of 3.1 per cent in 2026, followed by 3.0 per cent in 2027, 3.2 per cent in 2028 and 3.1 per cent in 2029.
Labour-market indicators have also strengthened. Registered unemployment declined to 7.84 per cent in May, the lowest rate recorded since independence, while the average net monthly wage reached €1,012. Fixed-capital investment rose 11 per cent in 2025, strengthening the basis for construction, infrastructure activity and domestic demand.
The fiscal position remains more demanding despite the continued expansion. Montenegro expects €3.577 billion in public revenue in 2026, equivalent to 41.6 per cent of GDP, while the overall deficit is forecast at 3.7 per cent of GDP. The current budget is in surplus, but capital spending, interest payments and refinancing needs leave the overall fiscal balance negative.
The government estimates that up to €710 million will be required during 2026 for debt repayment and capital financing. This includes €383.6 million in maturing obligations. Under the budget, the state is authorised to undertake as much as €500 million in new borrowing, with additional financing supported by deposits accumulated during 2025.
A larger refinancing requirement is scheduled for the following year. Around €1.17 billion of debt is due to mature in 2027, prompting the government to retain authority to raise up to an additional €1 billion to establish a refinancing reserve covering 2027 and 2028.
Early borrowing would reduce the amount of debt that needs to be rolled over when the 2027 maturities fall due. At the same time, raising funds in advance could increase cash-carrying costs if Montenegro borrows while European benchmark interest rates remain relatively high.
Montenegro’s improving EU-accession outlook can support its credit spread, although stronger credit ratings and closer political convergence with the European Union do not necessarily translate into lower total borrowing costs. The country remains a relatively small and less liquid euro-denominated sovereign issuer and does not have its own currency or a central-bank refinancing mechanism. The government maintains that the fiscal deficit is being driven by capital projects rather than current consumption. The central credit consideration is therefore whether the borrowing finances assets capable of increasing Montenegro’s export and revenue-generating capacity.
Procurement, construction progress and the eventual economic returns from investments in highways, railways, energy networks, hospitals and water systems will determine how those capital expenditures translate into economic capacity.
