October 30, 2014 / 4:06 PM / in 3 years

Montenegro, China's Exim Bank agree $1 billion highway deal

PODGORICA, Oct 30 (Reuters) - Montenegro and China’s Exim Bank have signed an 800 million euro ($1 billion) deal to finance a stretch of highway linking the port of Bar with Serbia, despite opposition to the deal from the International Monetary Fund (IMF) which said it threatened fiscal stability.

Exim Bank will provide a loan for 85 percent of the total with a six-year grace period and repayment of 20 years. Montenegro’s government will secure the remaining 15 percent.

The government had in late February sealed an agreement with China Road and Bridge Corp (CRBC), part of China Communications Construction Co, to build the 40 kilometre (25 mile) section of the 120 kilometre highway.

But a week later, the World Bank withdrew a $50 million budget support loan to Montenegro, saying the highway deal would add to an already high debt level of 58 percent of national output. The International Monetary Fund warned the deal threatens fiscal stability.

1 US dollar = 0.7922 euro Reporting by Petar Komnenic; Writing by Ivana Sekularac; Editing by David Holmes

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