- The IMF Executive Board completed on November 15, 2023, the first reviews of Kosovo's Stand-By Arrangement (SBA) and Resilience and Sustainability Facility (RSF) arrangement, making available SDR 20.031 million (about €24.8 million) and SDR 30.976 million (about €38.4 million), of budget support under each facility, respectively.
- The authorities are making very good progress in implementing their policy agenda under the Fund-supported arrangements. The SBA continues to provide a key policy anchor, and the RSF continues to support Kosovo's climate change mitigation and adaptation efforts including by catalyzing additional climate financing.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the first reviews of Kosovo's 24-month Stand-By Arrangement (SBA) and of Resilience and Sustainability Facility (RSF) Arrangement. Completion of these reviews makes available SDR 20.031 million (about €24.8 million) under the SBA and SDR 30.976 million (about €38.4 million) under the RSF arrangement.
Following the Executive Board's discussion, Mr. Okamura, Deputy Managing Director, and Acting Chair of the Board, issued the following statement:
Executive Board Assessment [1]
The Kosovo authorities have made significant progress in the implementation of their economic reform agenda. Growth has been strong despite global and regional headwinds and geopolitical tensions. Inflation is on a strong downward trend. Program performance under both the Stand-By Arrangement (SBA) and the Resilience and Sustainability Facility (RSF) has been strong.
Fiscal targets for June and September 2023 under the SBA were met comfortably, and all structural benchmarks have been implemented. The 2024 budget is in line with program targets and with Kosovo's rules-based fiscal framework. Reforms implemented in the context of the SBA have aimed to make the tax system more equitable, enhance tax compliance, improve fiscal risk assessment, and strengthen public investment management, fiscal transparency, and accountability.
The appointment of a new central bank governor in August has brought about renewed momentum for reform implementation. A new banking sector law is expected to be sent to the National Assembly early in 2024. The Central Bank of Kosovo is also working to strengthen its governance structures, with Fund support.
The RSF has been instrumental in supporting Kosovo's ambitious climate change mitigation and adaptation efforts. All RSF-supported reform measures have been implemented as expected. RSF reform measures will reduce emissions and improve air quality by increasing the share of renewables in the energy mix, improving energy efficiency, and strengthening the functioning and regional integration of Kosovo's energy system and energy markets. A new law on renewable energy sources has been sent to the National Assembly and will pave the way for the attraction of private financing for green energy. Ongoing efforts to assess the potential impact of the European Union's forthcoming carbon border adjustment mechanism (CBAM) are commendable. Implementation of C‑PIMA recommendations will facilitate, in time, public investment becoming more targeted, efficient, and climate resilient. The medium-term impact of these measures is expected to be positive and large, underscoring the benefits of RSF resources for Kosovo.
Kosovo: Selected Economic Indicators, 2019–24 |
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(Percent, unless otherwise indicated) |
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2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
|
Est. |
Proj. |
|||||
Real GDP growth 1/ |
4.8 |
-5.3 |
10.7 |
3.5 |
3.8 |
4.2 |
Contribution to growth (percentage points of GDP) |
||||||
Consumption |
5.8 |
2.3 |
7.7 |
3.3 |
4.4 |
3.3 |
Private |
4.6 |
2.0 |
6.5 |
3.5 |
2.6 |
2.7 |
Public |
1.2 |
0.3 |
1.2 |
-0.2 |
1.8 |
0.6 |
Investment |
-0.1 |
-2.3 |
3.6 |
-2.5 |
1.9 |
1.1 |
Net Exports |
-0.3 |
-5.3 |
-0.2 |
2.7 |
-2.5 |
-0.2 |
Exports |
2.2 |
-8.6 |
17.0 |
6.1 |
3.6 |
2.3 |
Imports |
-2.5 |
3.3 |
-17.2 |
-3.4 |
-6.1 |
-2.5 |
Real growth rate (percent) |
||||||
Consumption |
6.2 |
2.4 |
7.6 |
3.3 |
4.4 |
3.3 |
Private |
5.6 |
2.5 |
7.3 |
4.0 |
3.0 |
3.2 |
Public |
10.1 |
2.1 |
9.0 |
-1.5 |
14.2 |
3.9 |
Investment |
2.9 |
-7.6 |
13.0 |
-6.8 |
2.5 |
4.0 |
Exports |
7.6 |
-29.1 |
76.8 |
17.2 |
9.0 |
5.5 |
Imports |
4.5 |
-6.0 |
31.4 |
4.9 |
9.2 |
3.6 |
Official unemployment (percent of workforce) |
25.7 |
26.0 |
21.3 |
… |
… |
… |
Price changes |
||||||
CPI, period average |
2.7 |
0.2 |
3.3 |
11.7 |
5.0 |
3.5 |
GDP deflator |
1.0 |
1.4 |
6.1 |
8.5 |
5.6 |
3.5 |
General government budget (percent of GDP) |
||||||
Revenues and grants |
27.0 |
25.6 |
27.8 |
28.0 |
28.7 |
28.1 |
Expenditures |
29.9 |
33.5 |
29.0 |
28.6 |
29.9 |
29.5 |
Of which: Wages and salaries |
8.7 |
9.8 |
8.4 |
7.3 |
7.8 |
7.7 |
Subsidies and transfers |
8.9 |
12.8 |
10.6 |
11.9 |
11.1 |
10.6 |
Capital expenditure |
7.6 |
5.6 |
5.3 |
4.7 |
6.0 |
6.1 |
Overall Balance (Fiscal rule) 2/ |
-0.8 |
-6.5 |
-0.9 |
-0.4 |
-0.7 |
-0.7 |
Overall balance |
-2.9 |
-7.8 |
-1.2 |
-0.6 |
-1.2 |
-1.4 |
Stock of freely available government bank balances |
5.1 |
3.4 |
3.8 |
3.2 |
3.1 |
3.4 |
Total public debt 3/ |
17.7 |
22.5 |
21.6 |
20.0 |
19.9 |
20.6 |
Balance of Payments (percent of GDP) |
||||||
Current account balance, incl. official transfers |
-5.7 |
-7.0 |
-8.7 |
-10.5 |
-8.1 |
-7.0 |
Of which: Official transfers 4/ |
3.4 |
4.1 |
2.9 |
3.3 |
3.6 |
3.1 |
Of which: Remittance inflows |
12.1 |
14.5 |
14.5 |
13.7 |
13.6 |
13.5 |
Financial account |
-2.3 |
-8.3 |
-4.6 |
-7.4 |
-5.8 |
-4.7 |
Of which: Direct investment, net |
-2.7 |
-4.2 |
-4.0 |
-6.7 |
-5.1 |
-4.9 |
Portfolio investment, net |
0.8 |
-1.2 |
3.5 |
1.5 |
0.1 |
1.1 |
Other investment, net |
-1.8 |
-3.5 |
-6.2 |
-2.9 |
-1.8 |
-2.3 |
Reserve change |
1.3 |
0.7 |
2.1 |
0.8 |
1.0 |
1.3 |
Errors and Omissions |
3.5 |
-1.6 |
3.4 |
2.7 |
1.6 |
1.6 |
Savings-investment balances (percent of GDP) |
||||||
National savings |
28.9 |
26.4 |
27.2 |
24.3 |
24.9 |
25.7 |
Public savings |
4.4 |
-2.8 |
3.9 |
3.9 |
4.0 |
4.6 |
Private savings |
24.5 |
29.3 |
23.3 |
20.4 |
20.9 |
21.1 |
Investment |
34.6 |
33.4 |
36.0 |
34.8 |
33.0 |
32.7 |
Public investment |
7.6 |
5.6 |
5.3 |
4.7 |
6.0 |
6.1 |
Private investment |
27.0 |
27.8 |
30.6 |
30.2 |
27.0 |
26.6 |
Current account, including. official transfers |
-5.7 |
-7.0 |
-8.7 |
-10.5 |
-8.1 |
-7.0 |
Financial Sector |
||||||
Non-performing loans (percent of total loans) |
1.9 |
2.5 |
2.1 |
2.0 |
… |
… |
Bank credit to the private sector (percent change) |
10.0 |
7.0 |
15.6 |
16.0 |
12.1 |
9.2 |
Deposits of the private sector (percent change) |
15.6 |
10.9 |
12.4 |
12.8 |
10.4 |
8.6 |
Regulatory capital to risk weighted assets |
15.9 |
16.5 |
16.1 |
14.8 |
… |
… |
Memorandum items: |
||||||
Foreign Reserves (millions of euros, IMF Definition) |
1,142 |
1,149 |
1,293 |
1,370 |
1,478 |
1,623 |
Foreign Reserves (% of ARA metric) |
126 |
120 |
107 |
96 |
95 |
95 |
GDP (millions of euros) |
7,056 |
6,772 |
7,958 |
8,936 |
9,794 |
10,563 |
GDP per capita (euros) |
3,959 |
3,766 |
4,499 |
5,049 |
5,531 |
5,963 |
Real GDP growth per capita |
5.6 |
-6.2 |
12.6 |
3.5 |
3.7 |
4.1 |
Output gap (% of GDP) |
1.2 |
-6.2 |
-0.5 |
-0.5 |
-0.5 |
-0.3 |
Population (million) |
1.8 |
1.8 |
1.8 |
1.8 |
1.8 |
1.8 |
Sources: Kosovo authorities; and IMF staff estimates and projections. |
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1/ While quarterly and annual national account data for 2022 report the same nominal GDP, the use of different deflators in the two sets of data result in different annual real growth rates (3.5 percent in quarterly data, 5.2 percent in annual data). Pending final 2022 data (expected for December 2023), the table reports real growth in quarterly data. |
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2/ The "fiscal rule" caps the overall fiscal deficit at 2 percent of GDP, excluding investment financed with privatization receipts and donor financing contracted after 2015, as well as PAK-related current expenditure; the IMF calculates expenditures from carried-forward own-source revenue (OSR) as the difference in the municipal OSR stock. |
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3/ It does not include contingent debt of former Yugoslavia. Beginning in 2020, it includes Euro 120 million of debt with KPST. |
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4/ Total foreign assistance excluding capital transfers. |
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[1] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summing up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
