The extension of Montenegro’s key highway from Mateševo to Andrijevica is set to be a pivotal infrastructure initiative. This project is not only a transportation venture but also a significant test of the country’s fiscal discipline and regional development policies. Construction is anticipated to commence in the first half of the year, prompting discussions regarding the economic viability of the undertaking.
This highway segment will cover approximately 23–25 kilometres, traversing some of Montenegro’s most challenging mountainous regions. Preliminary estimates place the cost between €500–550 million, which translates to a unit cost exceeding €20 million per kilometre. This positions the project as one of the largest infrastructure investments in Montenegro’s history, especially when viewed in relation to its GDP.
The strategic rationale behind the highway is evident. It aims to connect the underdeveloped north-east region of Montenegro with the central corridor, thereby reducing travel times and enhancing logistics reliability. Additionally, it seeks to bolster tourism and agribusiness in areas that have experienced significant population decline. However, initial traffic forecasts predict an average daily volume of only 6,000–8,000 vehicles, which falls short of what would be necessary for commercial toll feasibility.
This situation raises fiscal concerns given that Montenegro’s public debt is nearing 70% of GDP. Engaging in large-scale borrowing on non-concessional terms could heighten refinancing risks. Unlike the Bar–Boljare section, which benefited from favorable long-term financing conditions, any new debt incurred may face higher interest rates due to current global economic trends.
For this highway project to succeed economically, it will require complementary investments. Without additional funding directed towards industrial zones, tourism facilities, and improved cross-border connectivity with Serbia, there is a risk that the road could become an expensive transit route rather than a driver of development. Historical evidence from similar infrastructure projects in the Western Balkans indicates that transport improvements alone do not effectively counter demographic decline without being part of a comprehensive regional strategy.
The financing model will play a critical role in this context. A blended approach that incorporates concessional loans, limited EU grants, and phased construction could alleviate some fiscal pressures. Moreover, maintaining strict execution discipline is vital; cost overruns of 10–15% could lead to an additional financial burden of €50–80 million, significantly impacting Montenegro’s overall debt trajectory.
The Mateševo–Andrijevica highway represents more than just a road; it embodies a crucial financial decision with long-lasting implications for economic growth, debt sustainability, and regional integration.
