Milojko Spajic; Dulajle, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons

January 18 (SeeNews) - Montenegro has completed a hedging transaction that will result in 4 million euro ($4.4 million) of savings later this month when it is due to pay the next installment on a loan extended by China's Exim Bank for the construction of the Bar-Boljare motorway, prime minister Milojko Spajic said.

"Hedging is an instrument that helped cut the interest rate from 2% to 0.98%," Spajic said in a video file posted on the YouTube channel of the Montenegrin government on Wednesday.

The loan installment is due to be paid on January 21, Spajic said, without disclosing its size.

The new hedging arrangement was agreed with four European and U.S. banks that offered the most acceptable terms, according to a statement published by the prime minister's office alongside his video speech.

In October 2014, Exim Bank signed an agreement to extend a $944 million (868 million euro) loan to Montenegro, with an interest rate of 2% and a six-year grace period, for the implementation of the Bar-Boljare project. The construction of the motorway started in May 2015, when China Road and Bridge Corporation (CRBC) launched works on the first priority section of the motorway - the 41-km Smokovac-Matesevo stretch.

In July 2022, Montenegro opened the Smokovac-Matesevo section. The 129-km motorway has three more projected sections - Matesevo-Andrijevica, Andrijevica-Boljare and Podgorica-Djurmani, which are yet to be built.

The Bar-Boljare motorway will link Montenegro's Adriatic port of Bar to the country's border with Serbia in the north. It is part of European transport Corridor XI, a ferry/motorway corridor linking Italy's Bari to Romania's Bucharest via the port of Bar and Serbia's Belgrade.