IMF Concludes Review of Kosovo's Financial Facilities

• The Executive Board of the International Monetary Fund completed the Fourth and final review of Kosovo's Stand-By and Resilience and Sustainability Facility Arrangements. The completion of the review makes available SDR 13.352 million (€16.08 million) under the SBA and SDR 7.744 million (€9.32 million) under the RSF.
• The objectives of both programs have been successfully achieved. The economy has maintained healthy growth, inflation has notably decelerated, fiscal buffers have been rebuilt, and reforms have accelerated.
• Building on the progress made under the programs, the authorities should continue with prudent fiscal policies, strengthen the fiscal framework, and advance structural reforms in the fiscal and financial sectors.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded the Fourth and final review of Kosovo's Stand-By and Resilience and Sustainability Facility Arrangements. The authorities have consented to the publication of the staff report and associated documents. The completion of the review makes available SDR 13.352 million (€16.08 million) under the SBA and SDR 7.744 million (€9.32 million) under the RSF. This will bring the total disbursements under the RSF to SDR 61.95 million (€74.61 million). The SBA, which so far has been treated as precautionary by the authorities, amounts to SDR 80.122 million (€96.50 million).

Kosovo's economic performance continues to be strong. In 2024, growth was 4.4 percent, driven by household consumption, supported by strong private credit and rising wages. Inflation decelerated sharply, reaching an average of 1.6 percent in 2024 down from 4.9 percent in 2022. The external current account deficit widened to 9 percent of GDP, as increases in consumption and investment led to higher imports; growth of remittances slowed. In 2025, despite heightened external uncertainty from rising trade tensions, growth is expected to remain strong at 4 percent, with inflation stabilizing at 2¼ percent.

Program implementation under both arrangements has been strong. All quantitative performance criteria for end-December 2024 were met. All indicative targets for end-December 2024 and for end-March 2025 were also met. Two structural benchmarks for this review—implementation of a cash forecasting function within the Treasury and the development of a roadmap for adopting the Supervisory Review and Evaluation Process to assess bank risk profiles—were implemented. The remaining RSF reform measure to launch an auction for the construction and operation of the wind power plant has also been implemented.

Following the Executive Board's discussion, Bo Li, IMF Deputy Managing Director and Acting Chair, issued the following statement:

"The Kosovo authorities have successfully implemented a Stand-By Arrangement and an Arrangement under the Resilience and Sustainability Facility. The SBA supported the authorities' economic program to reduce inflation and sustain strong growth, while safeguarding the economy against adverse shocks. The RSF supported the authorities' ambitious climate reform agenda.

"Prudent fiscal policies under the SBA, anchored in the authorities' rules-based fiscal framework, helped deliver low deficits and debt. In 2025, fiscal policy will aim to sustain growth amid heightened uncertainty, strengthen buffers against future shocks and continue addressing large developmental needs. An ongoing review of the fiscal framework seeks to align it with EU norms while supporting Kosovo's developmental objectives and maintaining fiscal discipline.

"The structural fiscal agenda has considerably advanced under the SBA. Revenue mobilization has improved through broadening the tax base, leading to higher tax collection. Public financial management reforms have enhanced capacity to assess fiscal risks, improved the quality of fiscal reporting, and increased fiscal transparency. Strengthening the public investment management system will help to further boost execution rates of public investment.

"The Central Bank of Kosovo (CBK) has been driving forward critical reforms to enhance governance and institutional quality, develop the financial sector and strengthen resilience. The banking sector continues to expand rapidly providing vital support to economic activity while maintaining strong capitalization, liquidity, and profitability. The CBK is strengthening its ability to monitor risks related to rapid private sector credit growth.

"Reform measures implemented under the RSF have been instrumental in advancing the authorities' ambitious strategic energy goals, including expanding renewable generation capacity, reducing pollution, improving energy efficiency, and enhancing regional cooperation. The authorities remain committed to making continued and meaningful progress across all these areas."