Of the 750 million, they also return expensive old loans

Montenegro borrowed another 750 million euros to compensate for the deficit in the state coffers for the next year.

A larger part of this amount is announced for the return of old unfavorable debts that include previous bonds and expensive commercial loans, and the rest is announced for the growth and recovery of the economy, which should also include helping the economy.

Yesterday, the Ministry of Finance issued state bonds on the international market in that amount, for a period of seven years and with an interest rate of 2,875 percent, and they were all sold, it was confirmed to "Vijesta" from several sources.

How much is due

About 400 million euros of old debts will be due for collection in the next year, of which 240 million should be paid in March.

Exactly how much money from this issue will be used to pay back debts will be known after the new executive authority holds talks with foreign creditors from whom it has expensive loans and calculates what it will take to close everything.

One of these loans was taken from Kredit Suvis banka and the state's gold reserves were pledged for it. This loan was pointed out by the State Audit Institution (DRI) in one of its earlier reports, warning of huge expenses that go to interest.

"The interest rate achieved for this issue is one of the best for B bonds", explained the source of "Vijesti".

The settlement of this issue will be on December 16, and until then trade can still be carried out.

The total interest of investors was around three billion euros.

"Montenegro got an economic future today. Mass layoffs, salary and pension cuts and other scenarios that were predicted for the new government were avoided in the best way for Montenegro. Money has been provided to repay unfavorable old loans and invest in our growth and recovery", announced Finance Minister Milojko Spajić, and it is expected that he will explain to the public what the good part of the loan that does not refer to the old debt will actually refer to.

Minister Spajić announced that he will pay the unfavorable loans of the old government, and that he will direct the rest to "growth and recovery", he remains to specify what specifically

Officials of the Social Democrats (SD) and the Social Democratic Party (SDP) - former ministers, Damir Šehović and Raško Konjević criticized the new assignment, asking if it was the first "reform move", where a good part of the loan would go... Šehović and Konjević are from parties that were long-term members of the government with the DPS.

Montenegro is already 3,7 billion euros in debt.

How the show came about

The bond issue was preceded by talks with potential investors from all over the world the previous two days as part of a global virtual conference in the organizations of the state of Montenegro, which engaged the international financial institutions Erste Group, City Group, Societe Generale and BofA Securities as the organizers of this project.

The job of the arranger is to help the country in organizing the auction and selecting the market, i.e. investors who are interested in Montenegrin government securities.

The Deputy Prime Minister recently stated that the debt could reach around 700 million euros, instead of 500 million, if the two airports in Tivat and Podgorica are not given under concession. In his exposé, the Prime Minister announced a debt of half a billion

The country was represented at that virtual conference by Spajić and his associates, Minister of Economic Development Jakov Milatović and Vice Governor of the Central Bank of Montenegro (CBCG) Nikola Fabris.

According to the knowledge of "Vijesti", the preparation for the bond market entry was done jointly by the old and new teams of the Ministry of Finance, within a short period of time after November 23.

The new government took office on Monday, and the bond procedure takes at least four to five weeks.

They promised regular salaries, pensions and social security

"Vijesti" previously announced that the draft budget prepared by the team of former Finance Minister Darko Radunović projected that the state will lack at least 530 million euros in the next year, and that figure includes old debts that are coming due and the budget deficit.

The figure of half a billion euros in debt was also found in the exposé of Prime Minister Zdravko Krivokapić, while the final amount will be known in the budget proposal.

The government announced the budget proposal by December 20.

Deputy Prime Minister Dritan Abazović stated that perhaps the debt will go up to 700 million euros, instead of 500 million, if the two airports in Tivat and Podgorica are not given under concession.

Prime Minister Krivokapić announced on Monday, after the constitutive session of the Government, that there will be regular payment of salaries, pensions and all social benefits.

Higher interest

The maturity of this seven-year issue is three years less compared to the last bonds issued in September last year, while the interest rate of 2,875 percent in this crisis year is higher compared to last year's issue, when 2,55 percent was reached. Higher interest is expected due to the high level of growth of the public debt, which will exceed 90 percent of the gross domestic product this year.

The previous bond issues were mostly around EUR 500 million. "There is enough money on the international financial market, so it is not a problem to realize the bonds. The issue of bonds is based on the "benchmark size" principle, which implies a minimum amount of EUR 500 million", explained the source of "Vijesti".

At the end of September last year, Montenegro realized a bond transaction on the international market under the most favorable conditions up to that time. They were realized in the amount of 500 million euros, with a maturity period of 10 years at an interest rate of 2,55 percent. This represents the longest maturity period and the lowest achieved interest rate in the period so far. The investor's offer was 1,8 billion euros, while more than 190 investors from different parts of the world expressed interest.

The Deputy Prime Minister recently stated that the debt could reach around 700 million euros, instead of 500 million, if the two airports in Tivat and Podgorica are not given under concession. In his exposé, the Prime Minister announced a debt of half a billion

Last year, in mid-April, the government issued government bonds worth 190 million for a period of seven and five years on the domestic market. Bonds maturing in seven years with an annual interest of 3,5 percent were sold for 50 million euros and another 25 million bonds maturing in five years, and in the second series at the end of May, the remaining bonds in the amount of 140 million euros for five years were issued, of which 67,8 million euros were sold.

Budget rebalancing in April?

According to the knowledge of "Vijesti", an agreement was reached that the draft budget prepared by the previous leadership of the Ministry of Finance should be adapted to the new organizational structure of the Government with a smaller number of ministries: "And that the budget should be rebalanced by April".

According to earlier announcements, the Government should have a proposal by December 20, on which the Parliament of Montenegro will express its opinion.

Radović: The most desirable option is the international market

Milivoje Radović, a professor at the State Faculty of Economics, assessed that the most desirable thing was to provide the missing money on the international financial market.

"What needs to be taken into account when securing the missing funds is the price and maturity of the loans. The maturity would be a minimum of seven years with a grace period that corresponds to the dynamics of budget inflows and an interest rate that would be lower than 2,5 percent. I think that we should avoid, as much as possible, bilateral and commercial borrowing and go for the financing of the public debt through the issuance of bonds", Radović's assessment in a statement to "Vijesti" a few days before yesterday's show, which we are publishing today.

Radović emphasized that the most expensive option would be the sale of state assets, although he also believes that borrowing on the domestic market is not advisable in this state of the economy.

"Especially in the long term, for the simple reason that money is directed to the state, instead of the private sector, which often leads to an increase in the price of money - an increase in interest rates and a decrease in the liquidity of the economy," pointed out Radović.