Moody’s and Standard & Poor’s upgraded Montenegro’s sovereign ratings in September, as the government increases infrastructure spending and prepares for a major Eurobond repayment in 2027. Moody’s raised Montenegro’s rating from Ba3 to Ba2, maintaining a positive outlook. Standard & Poor’s upgraded the country from B to B+, also retaining a positive outlook.
The European Commission attributed the improvements to macroeconomic stability, stronger government effectiveness and progress on reforms related to EU accession. These developments coincide with higher infrastructure expenditure and preparations for the upcoming Eurobond repayment.
The upgraded ratings could broaden Montenegro’s investor base, support narrower credit spreads and improve borrowing terms for the sovereign and state-linked borrowers. In the country’s small, euroised economy, the ratings also influence how banks, infrastructure lenders and foreign investors assess country risk.
The upgrades come as Montenegro’s fiscal guidelines project public debt temporarily approaching 68% of GDP by the end of 2026. The government plans to accumulate deposits ahead of the 2027 Eurobond repayment, while continuing to sign new loan agreements. Capital expenditure is 50% higher year on year.
The government’s financing requirements therefore combine infrastructure investment with preparations for a major debt maturity. Stronger sovereign ratings provide additional context for investors assessing the projected increase in gross debt, which is partly linked to building liquidity ahead of the repayment rather than reversing fiscal consolidation.
The effect of the upgrades will depend on how Montenegro manages its borrowing and investment programme. Longer maturities, lower financing costs and carefully selected infrastructure projects could help translate the improved sovereign standing into economic growth. If borrowing increases faster than project quality and export capacity, the benefits of the higher ratings would be more limited. For lenders, the upgraded ratings provide a more favourable starting point for assessing Montenegro’s financing prospects, while project quality and fiscal discipline remain important considerations.
