From: Exit Staf
EU Won’t Help Montenegro Pay Back EUR 1 Billion Loan to China

The European Commission has stated it won’t help Montenegro repay its debts to China.

Spokeswoman Ana Pisonero said that the EU will not help any countries to repay third-party loans, adding that the EU will instead contribute to the country’s public debt sustainability by supporting sustainable investment.

Montenegro had previously asked the EU for assistance in replaying a $1 billion Chinese loan. The money was for a highway project that remains unfinished and is causing damage to the country’s economy.

In 2014, Montenegro signed an agreement with a Chinese bank to finance 85% of the road. This loan accounts for a quarter of the country’s debt and despite the fact the road is not yet built, the first repayment is due in July. If Montenegro doesn’t pay, the bank has the right to seize part of the country’s land as collateral. 

China has been accused of “debt-trap diplomacy” through its belt and road projects. Concerns were raised that the country was loaning large sums to developing and poorer countries, effectively holding them to ransom.

Spokesman Peter Stano also committed on the issue.

“We are doing a lot with Montenegro and other partners in the region to help them on their way to aligning with EU standards, reforms and everything else, and we continue to stand by, but we will not pay the loans they are receiving from third parties.”

He added:

“Speaking specifically of Montenegro and China, the EU is concerned about the socio-economic and financial effects of some of China’s investments, which could have repercussions on the country. There is a risk of macroeconomic imbalances and debt dependence. The motivation to take such steps, to take such loans should be checked with the Montenegrin authorities,” Stano added, recalling the EU’s economic and investment plan for the Western Balkans, which he said would mobilize up to EUR 9 billion for investments in transport, energy and digitalization, sustainable development and job creation.