China Eximbank provides $943.9 million preferential buyer's credit for Phase 1 of Bar-Boljare Highway Project (Linked to Project ID#42328)
Constant 2017 USD
Funding agency [Type]
Export-Import Bank of China [State-owned Policy Bank]
Transport and storage (Code: 210)
Export Buyer's Credit
On October 30, 2014, the Export-Import Bank of China signed a $943,991,500 preferential buyer's credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2014) 31 TOTAL NO. (325)] with the Ministry of Finance of Montenegro for Phase 1 of the Bar-Boljare Highway Project. The PBC carried the following terms: a maturity of 20 years, a grace period of 6 years, a fixed interest rate of 2%, a 0.25% management fee, and a 0.25% commitment fee. The Government of Montenegro issued a sovereign guarantee for the PBC and agreed to collect toll revenue to repay the lender. The proceeds of the PBC were to be used by the Ministry of Transport and Maritime Affairs of Montenegro to finance 85% of the cost (EUR 809,577,356.14) of a commercial contract [number 01-827/1] with China Road and Bridge Corporation (CRBC), which was signed on February 26, 2014. The Government of Montenegro agreed to pay for the remaining 15% of the project cost (~EUR 120 million) by collecting public revenue over a four year period (see 'Loan agreement on financing construction of priority part of Montenegro's first highway signed'). The PBC was financed with a $10 billion line of credit that the Chinese Government announced on April 26, 2012 to ‘support cooperative projects with for Central and Eastern Europe … in the infrastructure, technology, and green economy sectors’ (see Project ID#42328). The purpose of the project is to construct a 41-km long highway section from Podgorica (Smokovac) to Mateševo via Uvač, the first phase of what is planned to be a 169.2 km long highway between the Port of Bar in the south and Boljare on the Montenegrin-Serbian border in the north. The project involves the construction of 11 tunnels (measuring 18.3 kilometers in length) and 14 bridges and viaducts (measuring 6.25 kilometers in length), including the 960-meter long and 23.4-meter wide Moračica Bridge and the 5.891 km Vjeternik Tunnel (see '《人民日报》：中企助力黑山打通南北大动脉''). Upon completion, the highway is expected to cut the travel time the capital of Podgorica to the northern city of Kolasin to about 30 minutes and facilitate economic development alongside the transport corridor (see ''《人民日报》：中企助力黑山打通南北大动脉'). CCCC Highway Consultants Co., Ltd. and CCCC Second Harbor Engineering Co., Ltd. are the general contractors responsible for the design of the project. China Communications Construction Co., Ltd (CCCC) and CRBC are the general contractors responsible for the implementation of the project. However, CRBC and CCCC are obliged to reserve 30% of the work on the project for domestic construction companies (to be sub-contracted by CCCC and CRBC) (see ''Loan agreement on financing construction of priority part of Montenegro's first highway signed””). This project was officially launched on December 14, 2014 (see '黑山巴尔-博利亚雷高速公路项目正式启动'). However, construction did not begin until May 11, 2015 (see pg. 20 of 'INTERVIEW: Highway Construction Project Manager CRBC IS READY, THE HIGHWAY IS STRATEGICALLY IMPORTANT FOR THE COMPANY''). The first loan disbursement for the China Eximbank (worth $94,399,148.46) took place on April 29, 2015 (see ''Outstanding Balance Letters from Export-Import Bank of China to the Ministry of Finance Montenegro'). It was originally envisaged that construction would take place within 4 years of the loan signing date (October 30, 2014).However, as of January 2021, the project was still not complete. It has encountered a variety of challenges and delays. Prior to project implementation, China Eximbank hired several economic professors from the University of Montenegro to conduct an Economic Internal Rate of Return (EIRR) analysis and they judged the highway to be economically viable (see 'Chinese 'highway to nowhere' haunts Montenegro'). However, their EIRR estimate of 7.94% was later criticized on the grounds that it was inaccurate and inflated. Another challenge is that the China Eximbank loan was not hedged, so when the dollar appreciated against the euro, the cost of the project increased by approximately 20% for the Government of Montenegro (see pg.4 of 'Montenegro : 2018 Article IV Consultation-Press Release and Staff ReportASE AND STAFF REPORT' and pgs. 4, 22-23 of 'MONTENEGRO SELECTED ISSUES'). Finally, the International Monetary Fund and World Bank have opposed the project because of its implications for Montenegro's sovereign debt levels. The World Bank withdrew a $50 million budget support loan in response (see 'Montenegro, China's Exim Bank agree $1 billion highway deal'). Moody’s also downgraded the country’s government bond rating from stable to negative, primarily due to the receipt of the $944 million China Eximbank loan for Phase 1 of the Bar-Boljare Highway Project.
This project is also known as the Smokovac-Mateševo Section of Bar-Boljare Motorway Construction Project, the Smokovac-Uvač-Mateševo Section of the Bar-Boljare Highway Construction Project, and the Smokovac-Uvač-Mateševo Section of the North-South Expressway Project. The Chinese project title is 巴尔-博尔亚雷高速公路斯莫科瓦茨-马泰舍沃段. In the Chinese Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, it identifies a $912 million China Eximbank loan for this project. However, AidData records the face value of the loan ($943,991,500) that is specified in the actual preferential buyer's credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2014) 31 TOTAL NO. (325)] at the time of its signature.
Number of official sources
Number of unofficial sources
Receiving agencies [Type]
Montenegrin Ministry of Finance [Government Agency]; Montenegrin Ministry of Transport and Maritime Affairs [Government Agency]
Implementing agencies [Type]
CCCC Highway Consultants Co., Ltd. (中交公路规划设计院有限公司) [State-owned Company]; CCCC Second Harbour Engineering Co., Ltd [State-owned Company]; China Communications Construction Co., Ltd. (CCCC) [State-owned Company]; China Road & Bridge Corporation (CRBC) [State-owned Company]; Montenegrin Ministry of Transport and Maritime Affairs [Government Agency]
Accountable agencies [Type]