This selected issues paper on Kosovo was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time. It was completed on June 28, 2013. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Kosovo or the Executive Board of the IMF.
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Prepared By Nina Budina, Pamela Madrid Angers, Johannes Wiegand (all EUR), Ernesto Crivelli (FAD), Ghada Fayad (SPR), and Xingwei Hu (TGS). Huyen Le and Jack Scott (both EUR) assisted with the preparation of the document.
GROWTH AND KOSOVO’S EXTERNAL ENVIRONMENT
A. Recent Growth Performance in a Regional Context
B. Assessing Spillovers from External Shocks
C. Determinants of Remittances in the Western Balkans
TAX REVENUE STRUCTURE AND TRADE LIBERALIZATION
B. The Rationale Behind Kosovo’s Current Tax Structure
C. Revenue Replacement with Trade Liberalization: Empirical Analysis
D. Policy Options and Concluding Remarks
EUROIZATION, LIQUIDITY NEEDS, AND FOREIGN CURRENCY RESERVES
A. Foreign Currency Reserves in a Unilaterally Euroized Economy
B. How Large Should Kosovo’s Reserves Be?
C. Alternative Mechanisms for Funding Reserves
BENCHMARKING FINANCIAL DEVELOPMENT
B. Banking Sector Growth and Development
Appendix. Measuring and Benchmarking Financial Development