The government of Montenegro is in the final stages of negotiations with the World Bank for a loan of up to €18 million aimed at modernizing the national forestry sector. This initiative seeks to enhance institutional capacity and improve the competitiveness of the domestic wood industry over the next decade, as reported by government sources.
The proposed financing will be formalized through the International Bank for Reconstruction and Development (IBRD), which is the lending arm of the World Bank. The project, titled “Montenegro’s Forests For Shared Prosperity,” focuses on implementing sustainable forest management practices, improving fire prevention and response strategies, and enhancing regulatory frameworks that govern forest resources and the wood value chain.
This financing agreement is pending approval from the World Bank’s Board of Directors in the upcoming months. It includes a repayment period of 15 years with a two-year grace period, accompanied by a variable interest rate linked to six-month EURIBOR plus a margin. Additional costs related to loan processing and undrawn funds are also anticipated.
For the past two years, Montenegro’s Ministry of Agriculture, Forestry and Water Management has collaborated with World Bank experts to prepare this project. Officials have indicated that this funding is expected to promote sustainable forest resource management, improve economic outcomes in forestry and wood processing, and boost sector profitability.
According to official budget documents, approximately €4.95 million of the loan will be directed towards enhancing public policies and institutional capabilities. This includes modernizing measurement and traceability systems for forest assets and supporting the newly established state forestry enterprise “Crna Gora Šume.” An estimated €9.5 million is designated for increasing resilience against wildfires and rehabilitating forest ecosystems, while the remaining funds will focus on capacity building in certification, standardization, and project management.
The initiative will engage various national institutions, including the forestry and hunting administration, the emergency services directorate of the Ministry of Internal Affairs, Montenegrin statistical agency Monstat, and the University of Montenegro, which will provide education and training related to sustainable forest practices.
Government representatives have announced plans for public consultations and detailed project presentations for stakeholders in the coming weeks. This effort aims to enhance transparency regarding loan terms and implementation strategies prior to final Board approval.
The collaboration with the World Bank aligns with broader objectives to support rural livelihoods, mitigate wildfire risks, and reinforce Montenegro’s environmental governance framework in line with sustainable forest management principles and international standards set by lenders.
