SOURCE / ECONOMY
China’s 2% rate on Montenegro’s $944 million loan is ‘relatively low’: Chinese embassy refutes Western media hype about ‘debt trap'
Published: Apr 14, 2021 10:38 AM


Photo taken on Nov. 17, 2013 shows the Scutari Lake in Montenegro, Oct. 17, 2013. Scutari Lake, also called Lake Skadar, lied on the border of Montenegro with Albania, the largest lake in the Balkan Peninsula. It is named after the city of Shkodra in northern Albania. (Xinhua/Gong Bing)

Photo taken on Nov. 17, 2013 shows the Scutari Lake in Montenegro, Oct. 17, 2013. Scutari Lake, also called Lake Skadar, lied on the border of Montenegro with Albania, the largest lake in the Balkan Peninsula. It is named after the city of Shkodra in northern Albania. (Xinhua/Gong Bing)



Montenegro's $944 million debt from China to build a high-speed railway accounted for less than 25 percent of the country's entire debts, with only a 2 percent interest rate which is a relatively small proportion of Montenegro's total liabilities, the Chinese embassy in Montenegro noted on Tuesday in refuting some overseas media's hype about China setting a debt trap for the country.

The embassy also noted that China's investment does not pose a threat to overseas countries' safety or interfere with any country's internal politics. 

The clarification was rolled out after the EUobserver published an article saying that the EU would not help Montenegro pay off its loan from China to build what it described as "the world's most expensive roadworks," after some media reports said that Montenegro had asked the EU to step in when they found they were unable to pay off the debt. 

The article also cited an EU spokesperson as saying that the Chinese investment in Montenegro is "a point of concern" as there's a risk of macro-economic imbalances and debt dependency. 

The embassy nevertheless clarified that the terrain on which the highway is being built is highly challenging, which is the chief reason for its cost to be relatively high.

According to the embassy, China's investment does not pose any threats to overseas countries' safety, have any political conditions attached or exclude investment from any other countries. 

"The nature of such investment is win-win. If anyone wants to put a negative label on China's investment, it's not only unfair to China, but irrespective to western Balkan states," the embassy noted. 

Montenegro had signed a loan deal with the Export-Import Bank of China, under which the latter provided $944 million in loans to Montenegro with a 20-year repayment period and a six-year grace period. The first payment of the loan is due this July. 

The 180-kilometer Bar-Boljare motorway is the country's first highway, of which a 41-kilometer section was built by the Chinese Communications Construction Co and its subsidiary China Road and Bridge Corp at a price of 809 million euros ($1.067 billion).

Global Times


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