Front Matter

Front Matter

Author(s):
Rakia Moalla-Fetini, Shehadah Hussein, Heikki Hatanpaa, and Natasha Koliadina
Published Date:
July 2005
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    © 2005 International Monetary Fund

    All rights reserved.

    Production: IMF Multimedia Services Division

    Cover design: Massoud Etemadi

    Cataloging-in-Publication Data

    Kosovo : gearing policies toward growth and development / Rakia Moalla-Fetini … [et al.]

    — [Washington, D.C. : International Monetary Fund, 2005.]

    • p. cm.

    • Includes bibliographical references.

    • ISBN 1-58906-422-4

    1. Kosovo (Serbia) — Economic policy. 2. Kosovo (Serbia) — Economic conditions — Statistics. 3. Fiscal policy — Serbia — Kosovo. I. Moalla-Fetini, Rakia. II. International Monetary Fund

    HC407.Z7K64 2005

    Disclaimer : The views expressed in this work are those of the authors and do not necessarily represent those of the IMF or IMF policy.

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    Contents

    Preface

    Kosovo is a province of Serbia in Serbia and Montenegro with a population of some 1.9 million and an area of about 11 thousand square kilometers. Following the end of the war of March–June 1999, the United Nations (UN) Security Council, in Resolution 1244 (June 10, 1999), placed Kosovo under temporary UN administration, while reaffirming the sovereignty of the Federal Republic of Yugoslavia (FRY) over the territory.

    According to a new constitutional framework adopted May 15, 2001, responsibility for administering the territory is now shared between the UN Interim Administration Mission in Kosovo (UNMIK) and a Kosovar self-government, the Provisional Institutions of Self-Government (PISG), which took office in April 2002. While the final status of Kosovo is yet to be determined, the UN Security Council (UNSC) has indicated its support for a set of standards, whose achievement could pave the way toward discussions on Kosovo’s final status. A comprehensive review of progress toward these standards is expected in 2005.

    At the request of UNMIK, and later the PISG, and together with the rest of the international community, the International Monetary Fund (IMF) has been assisting institution building and the formulation and implementation of economic policy in Kosovo. This work has been closely coordinated with the World Bank and other multilateral and bilateral donors. Apart from technical assistance provided by the IMF’s Fiscal Affairs Department, Monetary and Financial Systems Department, and Statistics Department, the European Department has provided macroeconomic policy advice on an ongoing basis.

    This report builds on two previous similar reports, produced in 2001 and 2002—Kosovo: Macroeconomic Issues and Fiscal Sustainability, by Robert Corker, Dawn Rehm, and Kristina Kostial, and Kosovo: Institutions and Policies for Reconstruction and Growth, by Dimitri G. Demekas, Johannes Herderschee, and Davina F. Jacobs. It is principally based on the work performed during four staff visits spanning a 15-month period from January 2003 to March 2004. The staff teams were led by Rakia Moalla-Fetini and comprised Heikki Hatanpää, Anastassios Gagales, and David Moore (EUR), Kentaro Ogata and Brian Olden (FAD), and Zia Ebrahim-Zadeh and Natalia Koliadina (PDR), and were assisted by Shehadah Hussein, the head of the IMF liaison office in Pristina. We hope that the analysis and recommendations of this paper will contribute to informing the debate about economic policies, in particular, and about the broader issues that will shape Kosovo’s future.

    The authors would like to thank the following people for their detailed and insightful comments: Alessandro Leipold, David O. Orsmond, Karl Driessen, Anne-Marie Gulde-Wolf, Vassili Prokopenko (in particular for his help on the analysis of the health of the banking system), Tito Cordella, and other colleagues in the IMF and the World Bank. The authors are also grateful for editing by Thomas Walter, research assistance by Madhuri Edwards, and processing of text and tables by Ana Rosa Reyes Labarca. Sean M. Culhane of the IMF’s External Relations Department oversaw the production of the final publication.

    The views expressed are the sole responsibility of the authors and do not necessarily reflect those of the IMF or its Executive Directors.

    Acronyms and Abbreviations

    BPK

    Banking and Payments Authority of Kosovo

    CPI

    Consumer Price Index

    DDG

    Donor-designated grants

    EFC

    Economic and Fiscal Council

    EU

    European Union

    FDI

    Foreign direct investment

    FRY

    Federal Republic of Yugoslavia

    GNDI

    Gross national disposable income

    HBS

    Household Budget Survey

    IT

    Internet technology

    KEK

    Korporata Energjetike e Kosovës (Electricity monopoly)

    KFOR

    Kosovo Force

    KGB

    Kosovo General Budget

    KTA

    Kosovo Trust Agency

    LFS

    Labor Force Survey

    MFE

    Ministry of Finance and Economy

    NFA

    Net foreign assets

    NPL

    Nonperforming loans

    NPV

    Net present value

    PIP

    Public Investment Program (Donor funded)

    PISG

    Provisional Institutions of Self-Government

    POE

    Publicly owned enterprise

    SFRY

    Socialist Federal Republic of Yugoslavia

    SOE

    Socially owned enterprise

    SOK

    Statistical Office of Kosovo

    SRSG

    Special Representative of the Secretary-General

    TFP

    Total factor productivity

    TREPCA

    Mining conglomerate (lead and zinc mining and associated operations)

    UN

    United Nations

    UNMIK

    United Nations Interim Administration Mission in Kosovo

    UNSC

    United Nations Security Council

    VAT

    Value-added tax

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