Montenegro saves 6.8 million EUR this year through hedging arrangement with Chinese Exim Bank

, News

Montenegro has saved 6.8 million EUR in its budget this year, thanks to a hedging arrangement linked to a dollar-denominated loan from the Chinese Exim Bank for the construction of a key section of the highway. This arrangement was executed in January.

According to the Ministry of Finance, for the sixth loan installment due on January 21, 2024, Montenegro paid 33.69 million EUR, rather than the 37.24 million EUR that would have been required based on the Central Bank of Montenegro’s (CBCG) exchange rate on the payment date, January 19. This resulted in a savings of 3.6 million EUR.

Similarly, for the seventh installment due on July 21, 2024, the amount paid was 33.49 million EUR, compared to 36.67 million EUR based on the CBCG’s exchange rate as of July 19, resulting in a savings of 3.2 million EUR.

In total, the hedging arrangement has enabled Montenegro to achieve a cumulative saving of 6.8 million EUR this year. These savings are crucial for enhancing the country’s financial stability and improving public debt management, facilitating better budget planning and resource allocation for other development projects.

The Ministry of Finance also noted that this hedging strategy not only generates immediate savings but also illustrates the government’s capability to use financial tools to mitigate risks and optimize long-term financial commitments.

As of July 22, 2024, Montenegro has repaid 223.24 million USD of the principal to the Exim Bank of China, leaving an outstanding debt of 688.5 million USD.

error: Content is protected !!