IMF Mission Reaches Staff-Level Agreement on Fourth Review Under the SBA with KosovoPress Release No. 13/205
June 10, 2013
An International Monetary Fund (IMF) mission, led by Mr. Johannes Wiegand, held discussions with the Kosovar authorities during May 28-June 10, 2013, as part of the fourth review of the country’s economic performance under the Stand-By Arrangement (SBA). At the conclusion of the visit, Mr. Wiegand made the following statement:
“The mission reached staff-level agreement with the authorities on a package of policies that aims at completing the fourth review under the SBA. Consideration by the IMF’s Executive Board is tentatively scheduled for mid-July. The completion of this review will enable Kosovo to draw SDR 4.251 million (about €5 million). However, in line with their intent to treat the arrangement as precautionary in 2013, the Kosovar authorities plan not to draw this amount.
“Macroeconomic and financial policies remain broadly on track. All end-April quantitative performance criteria were met, as a modest shortfall in revenue collection was overcompensated by under-execution of capital spending. Measures to compensate for the revenue shortfall are being taken. All applicable structural benchmarks were also met. The 2013 budget targets remain achievable and appropriate, but require an effort to meet goals for tax and non-tax revenue collection, as well as continued spending discipline.
“Looking ahead, the authorities and the mission agreed on the broad parameters of the 2014 budget. The budget will be the first to be guided by the rules-based fiscal framework that is expected to be enacted by the assembly at the end of this month. Completion of the privatization of the telecommunications company (PTK), expected for the fall, would safeguard an adequate level of the government’s cash buffers.
“Kosovo’s economy has developed unevenly in the early months of 2013, with a recovery in the first quarter being followed by signs of a renewed slowdown more recently. Staff projects a modest recovery for this year. Inflation remains contained. The banking system continues to be stable and liquid.
“Risks ahead relate in particular to the uncertain external environment. Kosovo would be especially vulnerable to a possible deterioration in labor market conditions in Diaspora host countries. In this challenging environment, disciplined fiscal management, prudent financial supervision, and structural reforms to boost competitiveness remain critical for safeguarding macroeconomic stability and growth.”