Abstract
2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Republic of Kosovo
Fund Relations
(As of July 31, 2020)
Membership Status:
Joined: June 29, 2009; Article XIV.
| General Resources Account: | SDR Million | Percent Quota |
|---|---|---|
| Quota | 82.60 | 100.00 |
| Fund holdings of currency | 180.17 | 218.12 |
| Reserve Tranche Position | 20.07 | 24.29 |
| General Resources Account: | SDR Million | Percent Quota |
|---|---|---|
| Quota | 82.60 | 100.00 |
| Fund holdings of currency | 180.17 | 218.12 |
| Reserve Tranche Position | 20.07 | 24.29 |
| SDR Department: | SDR Million | Percent Allocation |
|---|---|---|
| Net cumulative allocation | 55.37 | 100.00 |
| Holdings | 50.08 | 90.45 |
| SDR Department: | SDR Million | Percent Allocation |
|---|---|---|
| Net cumulative allocation | 55.37 | 100.00 |
| Holdings | 50.08 | 90.45 |
| Outstanding Purchases and Loans: | SDR Million | Percent Quota |
|---|---|---|
| Stand-By Arrangements | 76.33 | 92.4 |
| Emergency Assistance 1 | 41.3 | 50.00 |
| Outstanding Purchases and Loans: | SDR Million | Percent Quota |
|---|---|---|
| Stand-By Arrangements | 76.33 | 92.4 |
| Emergency Assistance 1 | 41.3 | 50.00 |
Latest Financial Arrangements: Arrangements:
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| Stand-By | July 29, 2015 | August 4, 2017 | 147.50 | 135.40 |
| Stand-By | April 27, 2012 | December 26, 2013 | 90.97 | 78.22 |
| Stand-By | July 21, 2010 | January 20, 2012 | 92.66 | 18.76 |
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| Stand-By | July 29, 2015 | August 4, 2017 | 147.50 | 135.40 |
| Stand-By | April 27, 2012 | December 26, 2013 | 90.97 | 78.22 |
| Stand-By | July 21, 2010 | January 20, 2012 | 92.66 | 18.76 |
Outright Loans:
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| RFI | Apr 10, 2020 | Apr 15, 2020 | 41.30 | 41.30 |
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| RFI | Apr 10, 2020 | Apr 15, 2020 | 41.30 | 41.30 |
Overdue Obligations and Projected Payments to Fund 2
(SDR Million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2020 | 2021 | 2022 | 2023 | 2024 | |
| Principal | 23.31 | 43.11 | 9.90 | 10.33 | 20.65 |
| Charges/Interest | 0.65 | 0.87 | 0.50 | 0.43 | 0.24 |
| Total | 23.96 | 43.98 | 10.40 | 10.75 | 20.89 |
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2020 | 2021 | 2022 | 2023 | 2024 | |
| Principal | 23.31 | 43.11 | 9.90 | 10.33 | 20.65 |
| Charges/Interest | 0.65 | 0.87 | 0.50 | 0.43 | 0.24 |
| Total | 23.96 | 43.98 | 10.40 | 10.75 | 20.89 |
Implementation of HIPC Initiative: Not Applicable
Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable
Implementation of Catastrophe Containment and Relief (CCR): Not Applicable
As of February 4, 2015, the Post-Catastrophe Debt Relief Trust has been transformed to the Catastrophe Containment and Relief (CCR) Trust.
Safeguards Assessments
The update safeguards assessment, conducted in connection with the Rapid Financing Instrument approved in April 2020 [and a prospective Extended Fund Facility arrangement], found that the CBK continues to maintain broad operational controls and all recommendations from the previous safeguards assessment have been implemented. However, recent Board vacancies have resulted in the lack of a quorum and the absence of a functioning Board poses substantial governance and oversight risks for the central bank. The CBK Act protects the autonomy of the central bank, and the audit mechanisms and financial reporting practices continue to be aligned with international standards. The implementation of the risk management framework is advancing.
Exchange Arrangements
The de jure and de facto exchange rate arrangement is one of no separate legal tender. Since unilateral adoption of the euro, this currency is a legal tender in Kosovo and circulates freely. Kosovo is not part of the euro area and the CBK is not part of the European System of Central Banks. Kosovo is an Article VIII member and does not maintain exchange restrictions or multiple currency practices, except for restrictions maintained solely for reasons of international or national security, which have been notified to the Fund pursuant to Decision No. 144.
Previous Article IV Consultation
The last Article IV consultation was concluded on October 8th, 2020. Going forward, it is expected that Kosovo will be on a 12-month cycle.
FSAP and ROSC Participation
An FSAP mission was conducted during September 19–October 2, 2012. The FSSA included the ROSC for compliance with Basel Core Principles. Kosovo has not had a data or a fiscal transparency ROSC.
Technical Assistance
Since 1999, the Fund has provided technical assistance and policy advice to UNMIK and, since September 2008, to Kosovo. Technical assistance has centered on the Fund’s core competencies, notably in the areas of fiscal policy, the banking and payments systems, and macroeconomic statistics. Assistance has also contributed to developing key aspects of the legal and institutional framework needed for a market economy. More recently, TA has been provided on the following issues:
Statistics
Government Finance Statistics (November 2018; March, June and October 2019; February 2020)
Monetary and Financial Statistics (August 2019)
Fiscal Sector
Tax Administration – Compliance Risk Management (November 2018); Review Process of Tax Administration Reform (March 2019); Tax Administration Modernization (January 2020); Tax Debt Collection (May 2020); IT Reform Implementation (September 2020)
Public Financial Management – Medium-term expenditure framework and Fiscal Management (February 2019; September 2020); Budget Costing and Fiscal Risk Management (November 2019); Fiscal Risk Disclosure (October 2020);
Monetary and Financial Sectors
Financial Sector Stability Review (January, April and October 2019; July 2020)
Resident Representative
Ms. Eble from regional office for the West Balkans took up her post on June 14, 2019 and oversees Kosovo’s local office.
Relations to Other International Financial Institutions
European Investment Bank: http://www.eib.org/en/projects/pipelines/?d=&f=&st=&r=3&c=XK&se=
World Bank: https://www.worldbank.org/en/country/kosovo/overview
Statistical Issues
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision is adequate for surveillance. However, the statistical agencies still suffer from considerable shortages of financial and human resources. | |
| National Accounts: Through intensive TA from the European Commission (Twinning Project), improvements have been made to the national accounts, but significant weaknesses remain. Compilation methods used for annual national accounts (ANA) are broadly in line with the 2008 SNA/ESA2010. The quality and timeliness of annual nominal and real GDP data has been improved, and data on GDP by economic activity and by expenditure are now published simultaneously in an excel format on the web-site of the Kosovo Statistical Agency with a delay of 10 months. Although quarterly national accounts series provide a first estimate of the annual GDP by April every year, it would be advisable to further reduce the time lag in the dissemination of ANA. Quarterly GDP data can be inconsistent with annual data (upon publication), requiring significant revisions, and improvements in methodology are required. Kosovo needs to improve existing and develop additional high-frequency (monthly) indicators, with priority given to indicators relevant to Kosovo’s economy such as wholesale and retail trade data and services. | |
| Labor Markets: Reliable labor force data is challenging given the large share of the informal economy, although quarterly labor data began to be published in 2016. | |
| Consumer Price Index: A monthly Consumer Price Index (CPI) has been produced since 2002 and is published on a monthly basis (with a lag of 13 days). The index uses a Classification of Individual Consumption according to Purpose (COICOP)-compatible item classification with 352 elementary aggregates. A new index was introduced in December 2014, with new weights largely based on National Accounts data aimed at bringing the CPI in line with the European Harmonized Index of Consumer Prices (HICP). It targets all products and services purchased by all households (resident and non-resident) in Kosovo. HICP is now available from January 2010 onward. The HICP was rebased from 2002 to 2015 in January 2016. Both CPI and HICP are used to measure consumer inflation, the latter enabling comparisons between member states within the EU. Kosovo receives TA from Eurostat. | |
| Government Finance Statistics (GFS): Monthly reports on budget execution of the general government (central government and municipalities) on a cash basis are provided five weeks after the end of each month. GFS are broadly compiled following the GFSM 2001/GFSM 2014 framework, concepts, and definitions. However, Budget classification is not consistent with GFSM 2014 because: (i) data is on cash basis, not accrual; (ii) lending for policy purposes (similar to subsidies) is included after calculating the primary balance; (iii) capital transfers should be included in current expenditure instead of capital expenditure; (iv) memorandum of understanding (MOU) should be properly classified depending on their final purpose; (v) annual budget documents should specify both current and capital spending related to individual projects. While data is generally adequate, strengthening monitoring and disclosure of arrears will be important. | |
| Monetary and Financial Statistics: Monetary data are compiled broadly consistent with the IMF’s Monetary and Financial Statistics Manual and Compilation Guide 2016 (MFSMCG). The CBK reports monetary data monthly, using Standardized Report Forms for the central bank, other depository corporations, and other financial corporations, which are published in the International Financial Statistics. Due to difficulties with obtaining adequate source data needed for estimation of Euro currency in circulation, the CBK ceased compiling currency in circulation in 2006, underreporting broad money. | |
| Financial Sector Surveillance: The CBK reports Financial Soundness Indicators (FSIs) monthly according to the Compilation Guide on Financial Soundness Indicators. FSIs including all 12 core indicators and 7 encouraged indicators for deposit takers are available through IMF’s FSI webpage. | |
| External Sector Statistics: CBK provides to STA quarterly balance of payments and international investment position data following the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) staring with 2013: Q1 reference data. Authorities also participate in: a) the Coordinated Direct Investment Survey with inward and outward data starting with 2010; b) the Coordinated Portfolio Investment Survey with annual data starting from December 2010 and semiannual data starting from June 2013, including encouraged items (currency of denomination, sector of the holder, sector of the issuer, and cross-sector classification); and the Quarterly External Debt Statistics. Direction of trade data are available on a monthly basis. Overall, the accuracy, periodicity, and timeliness of external sector statistics have improved due to authorities’ efforts and with technical assistance from STA. The authorities are currently working towards reporting the international reserves and foreign currency liquidity template. | |
| II. Data Standards and Quality | |
| The country participates in the enhanced General Data Dissemination System (e-GDDS) and a National Summary Data Page regularly disseminates e-GDDS data to the public since May 11, 2017. | Kosovo has not had a Data ROSC. |
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision is adequate for surveillance. However, the statistical agencies still suffer from considerable shortages of financial and human resources. | |
| National Accounts: Through intensive TA from the European Commission (Twinning Project), improvements have been made to the national accounts, but significant weaknesses remain. Compilation methods used for annual national accounts (ANA) are broadly in line with the 2008 SNA/ESA2010. The quality and timeliness of annual nominal and real GDP data has been improved, and data on GDP by economic activity and by expenditure are now published simultaneously in an excel format on the web-site of the Kosovo Statistical Agency with a delay of 10 months. Although quarterly national accounts series provide a first estimate of the annual GDP by April every year, it would be advisable to further reduce the time lag in the dissemination of ANA. Quarterly GDP data can be inconsistent with annual data (upon publication), requiring significant revisions, and improvements in methodology are required. Kosovo needs to improve existing and develop additional high-frequency (monthly) indicators, with priority given to indicators relevant to Kosovo’s economy such as wholesale and retail trade data and services. | |
| Labor Markets: Reliable labor force data is challenging given the large share of the informal economy, although quarterly labor data began to be published in 2016. | |
| Consumer Price Index: A monthly Consumer Price Index (CPI) has been produced since 2002 and is published on a monthly basis (with a lag of 13 days). The index uses a Classification of Individual Consumption according to Purpose (COICOP)-compatible item classification with 352 elementary aggregates. A new index was introduced in December 2014, with new weights largely based on National Accounts data aimed at bringing the CPI in line with the European Harmonized Index of Consumer Prices (HICP). It targets all products and services purchased by all households (resident and non-resident) in Kosovo. HICP is now available from January 2010 onward. The HICP was rebased from 2002 to 2015 in January 2016. Both CPI and HICP are used to measure consumer inflation, the latter enabling comparisons between member states within the EU. Kosovo receives TA from Eurostat. | |
| Government Finance Statistics (GFS): Monthly reports on budget execution of the general government (central government and municipalities) on a cash basis are provided five weeks after the end of each month. GFS are broadly compiled following the GFSM 2001/GFSM 2014 framework, concepts, and definitions. However, Budget classification is not consistent with GFSM 2014 because: (i) data is on cash basis, not accrual; (ii) lending for policy purposes (similar to subsidies) is included after calculating the primary balance; (iii) capital transfers should be included in current expenditure instead of capital expenditure; (iv) memorandum of understanding (MOU) should be properly classified depending on their final purpose; (v) annual budget documents should specify both current and capital spending related to individual projects. While data is generally adequate, strengthening monitoring and disclosure of arrears will be important. | |
| Monetary and Financial Statistics: Monetary data are compiled broadly consistent with the IMF’s Monetary and Financial Statistics Manual and Compilation Guide 2016 (MFSMCG). The CBK reports monetary data monthly, using Standardized Report Forms for the central bank, other depository corporations, and other financial corporations, which are published in the International Financial Statistics. Due to difficulties with obtaining adequate source data needed for estimation of Euro currency in circulation, the CBK ceased compiling currency in circulation in 2006, underreporting broad money. | |
| Financial Sector Surveillance: The CBK reports Financial Soundness Indicators (FSIs) monthly according to the Compilation Guide on Financial Soundness Indicators. FSIs including all 12 core indicators and 7 encouraged indicators for deposit takers are available through IMF’s FSI webpage. | |
| External Sector Statistics: CBK provides to STA quarterly balance of payments and international investment position data following the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) staring with 2013: Q1 reference data. Authorities also participate in: a) the Coordinated Direct Investment Survey with inward and outward data starting with 2010; b) the Coordinated Portfolio Investment Survey with annual data starting from December 2010 and semiannual data starting from June 2013, including encouraged items (currency of denomination, sector of the holder, sector of the issuer, and cross-sector classification); and the Quarterly External Debt Statistics. Direction of trade data are available on a monthly basis. Overall, the accuracy, periodicity, and timeliness of external sector statistics have improved due to authorities’ efforts and with technical assistance from STA. The authorities are currently working towards reporting the international reserves and foreign currency liquidity template. | |
| II. Data Standards and Quality | |
| The country participates in the enhanced General Data Dissemination System (e-GDDS) and a National Summary Data Page regularly disseminates e-GDDS data to the public since May 11, 2017. | Kosovo has not had a Data ROSC. |
Kosovo—Table of Common Indicators Required for Surveillance
(As of January 21, 2021)
CBK’s NFA and GIR data have been revised for the period 09/2015 – 07/2018 to exclude the CBK’s holdings of Kosovar government securities. CBK balance sheet and survey data have been revised for the period 09/2015 – 07/2018 to reclassify the CBK’s holdings of Kosovar government securities as claims on the central government.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary and extra budgetary funds) and local governments (municipalities).
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I), and not available (NA).
GNDI data not available.
Kosovo—Table of Common Indicators Required for Surveillance
(As of January 21, 2021)
| Date of Latest Observation | Date Received/ Reported Online | Frequency of Data7 | Frequency of Reporting7 | Frequency of Publication7 | |
|---|---|---|---|---|---|
| Exchange Rates | N/A | N/A | D | D | D |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | Jul 31/2020 | Nov/2020 | M | M | M |
| Reserve/Base Money | Jul 31/2020 | Nov/2020 | M | M | M |
| Broad Money | Jul 31/2020 | Nov/2020 | M | M | M |
| Central Bank Balance Sheet1 | Jul 31/2020 | Nov/2020 | M | M | M |
| Consolidated Balance Sheet of the Banking System | Jul 31/2020 | Nov/2020 | M | M | M |
| Interest Rates2 | Jul 31/2020 | Nov/2020 | M | M | M |
| Consumer Price Index | Nov30/2020 | Dec/2020 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing3—General Government4 | Dec31/2020 | Dec/2020 | D | D | M |
| Revenue, Expenditure, Balance and Composition of Financing3—Central Government | Dec 31/2020 | Dec/2020 | D | D | M |
| Stocks of Central Government and Central Government-Guaranteed Debt5 | Oct 30/2020 | Dec/2020 | Q | Q | Q |
| External Current Account Balance | Sep 30/2020 | Nov/2020 | Q | Q | Q |
| Exports and Imports of Goods | Nov 30/2020 | Dec/2020 | M | M | M |
| GDP/GNP8 | Sept 30/2020 | Dec/2020 | Q | Q | Q |
| Gross External Debt | Sep 30/2020 | Nov/2020 | Q | Q | Q |
| International Investment Position6 | Sep 30/2020 | Nov/2020 | Q | Q | Q |
CBK’s NFA and GIR data have been revised for the period 09/2015 – 07/2018 to exclude the CBK’s holdings of Kosovar government securities. CBK balance sheet and survey data have been revised for the period 09/2015 – 07/2018 to reclassify the CBK’s holdings of Kosovar government securities as claims on the central government.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary and extra budgetary funds) and local governments (municipalities).
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I), and not available (NA).
GNDI data not available.
Kosovo—Table of Common Indicators Required for Surveillance
(As of January 21, 2021)
| Date of Latest Observation | Date Received/ Reported Online | Frequency of Data7 | Frequency of Reporting7 | Frequency of Publication7 | |
|---|---|---|---|---|---|
| Exchange Rates | N/A | N/A | D | D | D |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | Jul 31/2020 | Nov/2020 | M | M | M |
| Reserve/Base Money | Jul 31/2020 | Nov/2020 | M | M | M |
| Broad Money | Jul 31/2020 | Nov/2020 | M | M | M |
| Central Bank Balance Sheet1 | Jul 31/2020 | Nov/2020 | M | M | M |
| Consolidated Balance Sheet of the Banking System | Jul 31/2020 | Nov/2020 | M | M | M |
| Interest Rates2 | Jul 31/2020 | Nov/2020 | M | M | M |
| Consumer Price Index | Nov30/2020 | Dec/2020 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing3—General Government4 | Dec31/2020 | Dec/2020 | D | D | M |
| Revenue, Expenditure, Balance and Composition of Financing3—Central Government | Dec 31/2020 | Dec/2020 | D | D | M |
| Stocks of Central Government and Central Government-Guaranteed Debt5 | Oct 30/2020 | Dec/2020 | Q | Q | Q |
| External Current Account Balance | Sep 30/2020 | Nov/2020 | Q | Q | Q |
| Exports and Imports of Goods | Nov 30/2020 | Dec/2020 | M | M | M |
| GDP/GNP8 | Sept 30/2020 | Dec/2020 | Q | Q | Q |
| Gross External Debt | Sep 30/2020 | Nov/2020 | Q | Q | Q |
| International Investment Position6 | Sep 30/2020 | Nov/2020 | Q | Q | Q |
CBK’s NFA and GIR data have been revised for the period 09/2015 – 07/2018 to exclude the CBK’s holdings of Kosovar government securities. CBK balance sheet and survey data have been revised for the period 09/2015 – 07/2018 to reclassify the CBK’s holdings of Kosovar government securities as claims on the central government.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary and extra budgetary funds) and local governments (municipalities).
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I), and not available (NA).
GNDI data not available.