The government is negotiating with the World Bank (WB) for a loan of up to 18 million euros to finance the project "Montenegro's Forests for Shared Prosperity", which envisages the modernization of the forest management system, strengthening fire protection, and improving the wood industry in the period from now to 2032.
The project envisages strengthening institutional capacities and improving regulations in the forestry sector, modernizing the measurement and traceability of forest resources, supporting the work of the new state-owned enterprise "Montenegro Forests", investing in the prevention, monitoring and recovery of damage from forest fires, as well as programs to improve certification, standardization and competitiveness of the domestic wood industry.
This debt is foreseen in this year's state budget.
The Ministry of Agriculture, Forestry and Water Management told "Vijesti" that they have been preparing the project with the World Bank for the past two years, and that the goal is to improve the sustainability of forest resource management, strengthen the economy in forestry and the wood industry, and increase the profitability of the sector.
"The contract can be signed after the project is approved by the Board of Directors of the World Bank, a decision on which is expected in the coming months. We can talk about the precise date of project implementation after the decision of the Board of Directors of the World Bank, or after the preparation of the Operational Manual for project implementation," this government department told "Vijesti".
As stated, the Government's negotiating team, consisting of representatives of that department and the Ministry of Finance, conducted the negotiation process with representatives of the World Bank in accordance with the Government's conclusions from the session of February 5, 2026.
The information on the starting point for these negotiations, which the Government adopted last week, states that the project will also benefit the Ministry of Agriculture, the Forestry and Hunting Management Administration, Monstat, the Ministry of Internal Affairs (MUP), private forest owners, while the University of Montenegro (UCG) will also operate educational programs through it. The loan agreement would be signed with the International Bank for Reconstruction and Development (IBRD), which is an integral part of the World Bank.
According to the government document, the loan with the IBRD provides for a repayment period of 15 years with a two-year grace period, with a variable interest rate consisting of six-month EURIBOR increased by a variable margin, which currently amounts to 0,55 percent. There is also a one-time loan processing fee of 0,25 percent of the total amount, as well as a fee on undrawn funds of 0,25 percent, the calculation of which begins four years after the loan approval.
The Ministry did not specify how much money from the loan will be allocated to the newly formed company "Montenegro Forests", stating that the implementation of the project and the distribution of funds are defined by the investment and public procurement plan. It was also not specified how much money from the loan will be available to other institutions included in the project, including the Ministry of Internal Affairs, the Directorate for Forest Management and Hunting Areas, Monstat and the University of Montenegro.
The Ministry of Agriculture stated that in the next month they will organize targeted consultations and a presentation of the project to inform the public about the details, stating that the goal of that department and the World Bank is greater transparency, and that the presentation will also be attended by representatives of the Ministry of Internal Affairs, the Directorate for Emergency Situations, as well as the University of Montenegro, who participated in the creation of project activities.
According to government information, 4,95 million euros out of the total 18 million from this loan are planned to strengthen public policies and institutional capacities, modernize the measurement and traceability of forest resources, as well as support the operationalization of the state company. Around 9,5 million will be used to promote forest fire resistance and suppression, forest restoration and rehabilitation, while 1,8 million euros will be allocated to building “Smart Wood” capacities, improving certification and standardization of wood processing, as well as for project management, monitoring and communication.
The government document states that the loan and project will develop institutional capacities, sustainable forest management, improve wood processing activities and compliance with EU standards - at the Ministry of Agriculture, the Forest and Hunting Management Administration, and Monstat.
It is expected that the company "Crna Gora Šume" and the private forestry sector will also assist in this process.
"Modernization of equipment and capacity development will strengthen the ability of the Ministry of Internal Affairs to manage forest fires and other disaster risks. Scientific research institutions within the University of Montenegro will develop education programs and increase the competitiveness of enterprises in the forestry and wood industry sector through the project. Private forest owners will benefit from improved forest fire management mechanisms and will receive targeted technical assistance for the adoption of sustainable management practices, ensuring that they are fully included in the modernization of the sector and the development of market opportunities," the information states.
It is added that at the end of January, the IBRD sent Montenegro an invitation to conduct negotiations for this project, with the first ones scheduled for February 9. It is emphasized that the IBRD submitted a draft project appraisal document, a draft loan agreement and supporting documentation, which will be considered and agreed upon during the negotiations.
The team that will negotiate with the credit institution consists of the State Secretary of the Ministry of Financeand Milica Adzic as Head of Delegation, Director General of the Public Debt Directorate Andrijana Ulić Rajović and Head of the Directorate for Borrowing, Debt Management and International Relations Katarina Živković, as well as representatives of the Ministry of Agriculture - Acting Director General of the Directorate for Forestry, Hunting and Wood Industry Vlado Scepanovic and Head of the Directorate for the Wood Industry Goran Djalovic.
After the negotiations, the Ministry of Finance will inform the Government about the results of the negotiations and submit the final version of the Loan Agreement for consideration and approval.
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