The European Bank for Reconstruction and Development (EBRD) has approved a sovereign loan of €26m ($31m) for the reconstruction of a road section between northern municipalities Berane and Kolasin in Montenegro.

EBRD’s loan will be used for the reconstruction and upgrade of 13.9km of road between the two municipalities, as well as for the finalisation of a 2.8km-long tunnel.

The loan has been approved by EBRD as part of its efforts to enhance road connectivity and regional integration in Montenegro.

Upon completion, the project is expected to improve connectivity for the less-developed northern part of Montenegro.

It is also expected to reduce the travel time between Berane and Kolasin.

In addition, the sovereign loan will be used for the creation of a road asset management system, which will keep track of road data and help authorities in planning short and long-term road maintenance services.

This system will optimise road planning and resource allocation in the Montenegrin road sector.

An improved road and transport infrastructure is expected to attract new investments, as well as aid economic growth in the country.

Improved connectivity is also expected to promote local and regional tourism, which is said to be one of the key drivers of Montenegro’s economy.

Since 2006, EBRD has been investing in Montenegro to reform its road infrastructure.

Last December, EBRD provided a loan to the country to boost connectivity between Danilovgrad and Podgorica.

The €15m loan amount was allocated to rebuild and improve roads between the country’s two main cities.

This move is part of the €40m loan being given to the country’s transport administration, which is being used to fund the reconstruction of 216km of main roads.