Montenegro has submitted a request for €97.3 million in support under the European Union’s Reform and Growth Facility after reporting the completion of 34 reform milestones from its latest implementation assessment.
The government’s fourth semi-annual report covers 41 reform measures with a combined value of €117.02 million. Montenegrin authorities assessed 34 milestones worth €97.32 million as fully completed, while seven measures valued at €19.70 million were classified as partially completed. The reported amount remains subject to review by the European Commission, which will evaluate legislative changes, administrative evidence, operational capacity and measurable outcomes before approving any payment.
European Commission Review Determines Final Payment
The reported completion of reforms represents a government assessment rather than an approved transfer of funds. Payments under the EU Reform and Growth Facility depend on verified implementation of milestones, continued macroeconomic stability, sound public financial management and compliance with broader governance requirements. For milestones due by June 30, 2026, the government reported that nine of 10 measures were completed, while one was partially fulfilled.
The report also includes progress on 25 delayed milestones from previous assessment periods. These include:
- Two measures originally due in February 2025
- Five measures due in June 2025
- 18 measures scheduled for completion in December 2025
All seven measures carried over from February and June 2025 are now reported as completed. Of the 18 measures originally planned for completion by the end of 2025, 12 have been completed and six remain partially completed. Authorities also reported early completion of five milestones scheduled for December 2026 and one milestone originally planned for June 2027.
Funding Structure Includes Grants and Loans
The value of the completed measures, €97.32 million, represents more than 25% of Montenegro’s total €383.5 million allocation under the facility. Montenegro received 7% pre-financing of its programme allocation in May 2025, meaning subsequent milestone payments are adjusted to reflect the advance payment.
Based on the government’s current valuation, the theoretical amount related to the 34 completed milestones would be approximately €90.5 million after applying the adjustment. The final payment will depend on the Commission’s assessment, the structure of individual milestones and the division between budget support and investment financing.
Montenegro’s 2024–2027 allocation of €383.5 million consists of:
- €110 million in grants
- €273.5 million in concessional loans
Loans represent more than 71% of the total package, meaning the facility provides financing support but also creates future repayment obligations that must be considered in medium-term debt planning.
Around €178.5 million is allocated for direct budget support, while €205 million is intended for infrastructure investment, mainly through the Western Balkans Investment Framework.
Reform Programme Moves Toward Larger Financial Impact
The European Commission previously approved Montenegro’s assessment covering 20 reform milestones worth €44.2 million.
From that amount:
- €20.6 million was allocated for state budget support
- €23.6 million was assigned to infrastructure
The latest request is more than double the size of the earlier approved assessment, indicating a transition toward larger funding tranches with greater relevance for public investment and government financing.
State-Owned Enterprises, Energy and Digital Reforms Included
Among the completed measures, the government reported reforms related to risk management and internal audit systems at state-owned enterprises. Improved financial controls at public companies are particularly relevant in sectors such as infrastructure, transport and energy, where state-owned entities often participate in major investment projects.
Montenegro also reported progress in connecting its electricity market with the European market. The reform includes alignment with European energy market structures, although effective integration requires continued development of cross-border capacity, transparent congestion management, reliable market operations and compliance with European balancing and trading rules.
These elements affect electricity pricing, renewable energy investment conditions and Montenegro’s ability to use hydropower resources within regional energy markets.
Other completed measures reported by the government include:
- Introduction of an electronic cadastre
- Measures targeting the informal economy
- Alignment with European digital identity requirements
- Adoption of an air-quality management strategy
- Operational establishment of national and government computer incident response teams
Business Digitalisation Still Requires Full Implementation
The electronic cadastre reform has potential relevance for real estate transactions, infrastructure development and bank collateral assessments. Digital property records can reduce administrative delays and improve access to verified ownership information, but the economic impact depends on data accuracy, institutional connectivity and consistent use by courts, notaries, banks and municipalities.
The government also reported progress on business registration digitalisation, including the creation of an electronic registration module within the Integrated Revenue Management System and online tax payment functionality. The system is not yet fully operational because authorities and banks have not completed arrangements regarding transaction charges. Technical work is continuing on connecting Montenegro’s business register with the European Business Registers Interconnection System.
Until the platform becomes fully functional, companies and investors cannot access the complete benefits of remote company registration and electronic payment of taxes, fees and other public obligations.
Regulatory Procedures and Cybersecurity Capacity Remain Challenges
Montenegro’s Reform Agenda requires new legislation to include public consultations with businesses, civil society and local authorities, as well as assessments of economic and administrative impacts. The government acknowledged that ministries continue to face difficulties applying these requirements consistently.
Regulatory impact assessments are important for businesses because changes in licensing rules, labour obligations, municipal charges or sector requirements can directly affect project costs and investment returns. Montenegro has also established the Cybersecurity Agency under the Law on Information Security, adopted initial internal regulations and started supervisory activities.
The agency is not yet fully staffed, creating questions about its capacity to perform all responsibilities required under domestic legislation and the EU’s NIS2 cybersecurity framework. The issue is particularly relevant for sectors relying on critical digital systems, including energy companies, banks, telecommunications operators, transport companies and digital public services.
Rule of Law Measures Remain Part of Funding Conditions
Several partially completed reforms relate to rule of law and fundamental rights. Montenegro has not yet established a unified database covering at least 95% of domestic violence cases reported to police or social work centres, along with three crisis centres planned under recommendations linked to the Istanbul Convention.
Additional measures involve investigations into alleged mistreatment of detainees, prisoner complaints and structured activities outside cells, including work, education, recreation and sport. Almost €7 million is linked to two of these measures.
The government has also reported improvements in investigations, indictments, court decisions and confiscation of assets connected with organised crime and corruption. The European Commission will assess the sustainability and quality of these results, including whether they are supported by final judgments, enforceable confiscation decisions and institutional independence.
Reform Agenda Covers 130 Milestones
Montenegro’s Reform Agenda contains 130 milestones covering:
- Business environment and private-sector development
- Digitalisation
- Green transition and energy
- Human capital
- Rule of law
- Fundamental rights
The latest funding request indicates faster implementation after earlier delays, but it also places greater importance on the European Commission’s verification process.
The requested €97.3 million represents the value assigned by Montenegro to completed reform evidence, rather than funds already approved. The Commission’s assessment will examine whether digital systems operate in practice, institutions have sufficient capacity, consultation mechanisms influence legislation and rule-of-law reforms produce measurable results.
