Statement by the IMF Staff Representative on the Republic of Kosovo Executive Board Meeting, December 20, 2012
Author: International Monetary Fund. European Dept.
Publication Date:
28 Dec 2012
eISBN:
9781557752550
Language:
English
Keywords:
ISCR; CR; unfunded expenditure commitment; Republic of Kosovo executive board meeting; government; government bank balance; budget law; disbursement of SDR; Kosovo authorities; staff appraisal; IMF staff representative
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Kosovo’s economy is slowing, although it continues to display resilience overall. The banking sector remains well capitalized, liquid, and profitable, notwithstanding a recent increase in nonperforming loans. The main downside risk to the outlook remains a possible deterioration in labor market conditions. To safeguard primary fiscal balance target by year-end, the authorities have pre-identified spending cuts. The authorities are pursuing further initiatives to strengthen competitiveness, attract investment from abroad, and promote the development of a tradable sector.

Abstract

Kosovo’s economy is slowing, although it continues to display resilience overall. The banking sector remains well capitalized, liquid, and profitable, notwithstanding a recent increase in nonperforming loans. The main downside risk to the outlook remains a possible deterioration in labor market conditions. To safeguard primary fiscal balance target by year-end, the authorities have pre-identified spending cuts. The authorities are pursuing further initiatives to strengthen competitiveness, attract investment from abroad, and promote the development of a tradable sector.

The information below has become available following the issuance of the staff report (EBS/12/160). It does not alter the thrust of the staff appraisal.

1. On December 13, 2012, the Assembly passed the Law on the Budget of the Republic of Kosovo for 2013. Compared to the version the government submitted to the Assembly at end-October, there is a minimal shift from current to capital spending, and within capital expenditures a somewhat larger shift (0.25 percent of GDP) from highway to non-highway projects. The budget law is consistent with the government’s commitments in the Letter of Intent (LOI ¶9) and, more generally, the objectives of the program. The prior action for completion of this review has therefore been met.

2. In the same session, the Assembly also approved the following laws:

  • (i) The amended Deposit Insurance Law (DIL), in line with recommendations of the Financial Sector Stability Assessment and the authorities’ corresponding commitments in the Letter of Intent (LOI ¶17);

  • (ii) the Health Law (LOI ¶9c), and

  • (iii) the Law on Membership in the European Bank for Reconstruction and Development (EBRD), following the decision of the EBRD’s Board of Governors on November 19 to admit Kosovo as its 66th member (effective December 17).

Consolidated Government Budget, 2013

(Excluding donor designated grants; millions of euros)

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Sources: Kosovo authorities; and IMF staff estimates and projections.

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Cover IMF Staff Country Reports
Kosovo: Second Review Under the Stand-By Arrangement, Request for Rephasing of Purchases and Modification of a Performance Criterion
Author: International Monetary Fund. European Dept.
Volume/Issue:
Volume 2012: Issue 345
Publisher:
International Monetary Fund
ISBN:
9781557752550
ISSN:
1934-7685
Pages:
59
DOI:
https://doi.org/10.5089/9781557752550.002