Transition through grit

Country-level evaluation: EBRD activities in Montenegro 2017-24

The IEvD Country-level Evaluations, a recent addition to IEvD’s portfolio of products since 2023, provide a new perspective on how the EBRD contributes to systemic change. This evaluation focused on Montenegro – with 623,000 residents, the smallest country in Western Balkans region and the smallest in which the EBRD invests. The temporal scope of the evaluation was 2017-24 period, and it examined EBRD’s projects’ financing, policy dialogue workstreams, and Technical Cooperation (TC) assignments. The central theme was to explore the evidence of the EBRD’s contribution towards systemic change.

Throughout the 2017-24 period, the EBRD’s investment volumes grew significantly reaching €104 million ABI in 2024, an equivalent of 1.4% of GDP. This came in tandem with the fast greening of the EBRD’s portfolio too. Majority of Bank’s investments were with state clients, but for a good reason – these targeted largely an enabling infrastructure and critical pieces of infrastructure like roads, railways and energy − essential for unlocking private sector development. EBRD’s financial additionality was often lower but generally offset by (very) strong non-financial additionality. The disbursement rate was relatively low, albeit the close involvement and grit of the local EBRD team in Podgorica and frequent use of Technical Cooperation grants helped to avoid even bigger delays. Overall, across three Priorities defined in the EBRD’s Montenegro Country Strategies, the Bank made the most significant contribution to Montenegro’s green transition, including of systemic change nature. Regarding two other Priorities – private sector competitiveness and regional integration and connectivity – the Bank made some headway, although there is no evidence of systemic change induced (yet).

The evaluation features three recommendations, summarised below:

1. Be more selective with the scope of priorities and objectives, including the choice of specific activities, and focus on (sub)sectors with potential for systemic change, in the next EBRD’s Montenegro Country Strategy 2026-30.

2. Take a more conscious and watchful approach to the adoption and implementation of corporate governance reforms at SOEs and institutional capacity building undertaken by the EBRD.

3. In light of limited progress in waste and water sanitation and no progress in municipal buildings decarbonisation over 2017-24, and critical role of the municipal sector going forward, re-consider the EBRD’s modalities of engagement with the municipalities.