Dmitriy Kovtun, Alexis Mayer Cirkel, Ms. Zuzana Murgasova, Mr. Dustin Smith, and Suchanan Tambunlertchai
Labor markets in the Western Balkan countries (Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro, and Serbia) are characterized by some of the highest unemployment and low employment rates in Europe. We analyze the poor labor market outcomes in these countries by comparison with the New Member States of the European Union and advanced European economies. Our findings suggest that long-lasting labor market weaknesses in the Western Balkans have structural roots: the institutional setup of the labor markets, labor cost factors, and especially the unfinished transition process. Finally, we offer policy recommendations for boosting job creation.
Kosovo is still in the process of building key social and economic institutions. Economic performance over the past decade has been robust, but growth has been tilted toward domestic demand, fuelled by transfers and non-debt creating capital inflows. The adoption of the euro provides a strong monetary anchor, but it increases the demands on macroeconomic management. Further progress in Kosovo’s banking system is impeded by limited legal capacity and incompletely defined property rights. The short-term macroeconomic outlook is benign, even though there are significant downside risks.
Threats to external stability in the pre-crisis period have now been reduced substantially and foreign non-debt creating flows have declined, sufficient to support external stability. The global economic downturn has raised challenges for evaluating the countries’ fiscal stance and fiscal policy focus should be lowering support to debt sustainability, private sector development, and the currency board stability. The two entity pension funds have been under increasing financial pressures. Putting the public pension systems on a sound footing will encompass a number of complementary steps.
This technical note provides criteria for evaluating government employment and compensation and options for reform. The note discusses various quantitative indicators that can be used for country analysis and provides an assessment of differences across regions and country groups. It addresses short- and medium-term options for reform and country experiences. Data tables, which can be useful for comparative analysis, are provided. The note underscores that technical analysis of employment and compensation issues must be accompanied by judgment to weigh the tradeoffs between competing objectives.
The composition of short-term and medium-term adjustment measures will facilitate sufficient short-term adjustment flexibility, and be consistent with medium-term fiscal sustainability. Improving debt resolution instruments will help the banks to regain confidence in lending. Meanwhile, there is a need to consider improvements in its liquidity framework. The main factors that shaped the economic growth model in Moldova in the last decade and the risks of the current growth model are outlined. Public policies can promote growth by identifying and addressing the most binding constraints to development.
This Selected Issues paper examines the risks and structural weaknesses in Bosnia and Herzegovina. The paper provides an estimate of the current account adjustment required to stabilize net foreign liabilities. It uses the external sustainability approach of the Consultative Group on Exchange Rate Issues (CGER) methodology for exchange rate assessment. The paper analyzes the impact of the newly introduced borrowing rules on the longer-term debt dynamics. An overview of salient facts about unemployment in Bosnia and Herzegovina is also presented.
This paper assesses the extent to which data unreliability could alter the assessment of the macroeconomic challenges ahead. The contributions of the indirect tax authority (ITA) in remedying the flaws are highlighted, and the architectural agenda is discussed. Fiscal sustainability and the government’s bold initiatives to secure it by restructuring the domestic claims have been assessed and key implementation issues in realizing the government’s plans noted. A survey of selected tax policy issues in Bosnia and Herzegovina is also included in the paper.
The Stand-By Arrangement with Bosnia and Herzegovina was approved on May 29, 1998. Bank regulation and supervision have been strengthened over the past year, although procedures continue to fall short of best practice in some areas. The authorities have reformed the sales tax regime to equalize tax rates in the two entities, broaden and unify the base, and simplify the tax system in a broadly revenue neutral manner. IMF staff urged the authorities to accelerate the implementation of modern treasuries.
The study focuses on corrective fiscal policies for 2000, the budgets for 2001, and the agenda for structural reform. An important issue discussed in revising the 2000 budgets was the expenditure policy required to contain spending commitments within available resources. The authorities have made some progress in the area of fiscal transparency. Despite high unemployment, major strides have been made in labor market reform, an area that has been difficult to tackle now. Progress in privatizing state-owned banks has been patchy.