Montenegro is actively enhancing its refinancing strategy as it approaches a significant sovereign maturity wall in 2027, with an estimated refinancing requirement of between €1.17 billion and €1.2 billion. While the country’s public debt remains stable relative to its GDP, the government is focusing on managing the timing of its financing needs rather than just the overall debt ratio.
As of March 2026, Montenegro’s gross public debt was recorded at €5.13 billion, which corresponds to 59.9 percent of projected GDP. The central government debt was slightly lower at €5.11 billion, or 59.6 percent of GDP, based on a Ministry of Finance GDP projection of €8.56 billion for the year.
During the first quarter, gross public debt decreased by nearly €55 million. However, a decline in government deposits, which fell by €154.3 million to €650.5 million, complicates the narrative. The deposits included around €154.4 million in gold holdings.
This decrease in deposits outpaced the reduction in gross liabilities, leading to an increase in net public debt by almost €100 million, bringing it to €4.48 billion, or 52.3 percent of GDP. Net central government debt reached €4.46 billion, equivalent to 52 percent of GDP.
The distinction between gross and net debt will be crucial as Montenegro prepares for future refinancing needs. New borrowing is expected to raise gross debt levels significantly, even if the funds are kept in government deposits, thereby mitigating immediate refinancing risks. The government anticipates that the gross debt ratio may temporarily rise to about 68 percent of GDP during 2026, primarily due to reserve accumulation for 2027.
The country’s debt portfolio is predominantly external, with foreign liabilities totaling €4.80 billion, representing 94.1 percent of central government debt and 56.1 percent of GDP. Domestic debt constitutes only €302.6 million, or 5.9 percent of the total portfolio.
The largest component of this external debt comprises international bonds amounting to €2.79 billion, which is equivalent to 32.5 percent of GDP. Montenegro’s reliance on international capital markets remains significant, although multilateral and bilateral lenders also play vital roles in specific projects.
The repayment schedule includes four external bonds, with a notable €750 million Eurobond issued in 2020, maturing in December 2027, and a subsequent €500 million bond maturing in October 2029. Additional bonds include a dollar bond from 2024 worth approximately €750 million, maturing in March 2031, and an €850 million seven-year Eurobond issued in March 2025, due in April 2032.
The Eurobond issued in 2025 features a coupon rate of 4.875 percent, which is nearly one percentage point lower than earlier international bond costs, allowing for a refinancing strategy that extends repayment timelines into the next decade.
A further step taken by the government was securing a €450 million syndicated loan arranged in late 2025 aimed at bolstering fiscal reserves, facilitated by several financial institutions including Merrill Lynch International and Société Générale. This five-year facility has a pricing structure linked to six-month Euribor plus 250 basis points, resulting in an initial all-in rate around 4.5 percent.
The majority of Montenegro’s debt is fixed-rate, accounting for 79.1 percent, while variable-rate liabilities make up 20.9 percent. Although falling eurozone benchmark rates could potentially lower costs for variable-rate components, future refinancing costs will still depend on sovereign spreads and prevailing European yields.
The country has effectively minimized currency risk; approximately 99.74 percent of its debt is denominated in euros, with minimal exposure to dollars and SDRs at just 0.22 percent and 0.04 percent, respectively.
This structure is influenced by cross-currency swaps related to loans from China Exim Bank for infrastructure projects like the Bar–Boljare motorway, with this Chinese loan being Montenegro’s largest individual liability at €543.1 million, or about 6.3 percent of GDP.
The distribution of multilateral debts shows obligations mainly towards the International Bank for Reconstruction and Development at €247.5 million, followed by lesser amounts owed to other institutions such as the European Investment Bank and European Commission.
The domestic portfolio largely consists of commercial bank loans and domestic government bonds totaling around €107.6 million. Additionally, two retail and corporate bonds issued in 2025 amounting to approximately <span€49.9 million mature in November 2027.
No new loan agreements were finalized during the first quarter; however, Montenegro drew only <span€18 million from existing contracts, including funds from Bpifrance and Société Générale for military patrol vessels and additional amounts from IBRD facilities for various development projects.
Total principal repayments reached around<span€69.8 million in the quarter, while interest payments were slightly higher at<span€71.8 million , resulting in total debt service costs reaching<span€141.6 million for that period.
The budget for 2026 allocates up to<span€710 million for debt repayments and capital expenditures, with<span€383.6 million scheduled to mature within that year.
The Montenegrin government has also authorized up to<span€1 billion for pre-financing obligations due in 2027 and 2028, reducing liquidity risks associated with upcoming Eurobond maturities but introducing potential negative carry due to interest payments on borrowed funds before their actual need.
Total guarantees remain moderate at around<span€116 million or<span€1.4 percent of GDP as of March’s end, with recent guarantees tied to infrastructure financing initiatives.
The sovereign credit ratings are currently positioned at<spanBaa3 from Moody’s and<spanB+ from S&P with both retaining positive outlooks amid ongoing developments towards EU accession.
This fiscal landscape underscores Montenegro’s ongoing vulnerabilities related to its narrow domestic capital market and reliance on external investors while highlighting the importance of maintaining liquidity as it navigates upcoming financial obligations.
