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Montenegro to Borrow 100 Million Euros From Credit Suisse Group

Published date: 20.07.2012 12:49 | Author: Ivona Mihajlović - administrator

Ispis Print

 July 19 (Bloomberg) -- Montenegro agreed to borrow 100 million euros ($123 million) from Credit Suisse Group AG, sixty percent of which will be backed by World Bank guarantees, the Balkan nation’s Finance Ministry said.

The seven-year loan rate was set at 3.5 percentage points above 12-month Euribor and Montenegro will also pay the Swiss bank a 1.5 million-euro fee, the ministry in Podgorica said in a statement today.

The latest of Western Balkan nations to have opened accession talks with the European Union in June is struggling to keep the economy afloat as the debt crisis in the euro area weighs on the smallest of six former Yugoslav republics, which unilaterally uses the euro as its currency.

The government, eager to keep public finances in check, sees this year’s public spending at 40 percent of economic output or 11 percentage points less than in 2009. The fiscal gap is targeted at 2.5 percent of gross domestic product this year, a 3.2 percentage point decrease over the same period.

“With today’s arrangement, we have secured around 85 percent of the funds” needed to finance budget spending, capital investments and debt repayments, the ministry said.

 The government will first repay 40 million euros of the loan not covered by World Bank guarantees, with repayments over five years “in identical or approximately identical instalments.” The remaining 60 million euros will be repaid at the end of the loan period.

By Gordana Filipovic