## Republic of Kosovo: Public Investment Management Assessment Update and Climate PIMA — High-Level Summary (December 2023)

## Source details

**Canonical URL:** [Republic of Kosovo: Public Investment Management Assessment Update and Climate PIMA — High-Level Summary (December 2023)](https://www.imf.org/-/media/files/publications/hls/2023/english/hlsea2023019.pdf)

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### Background
- Mission: IMF Fiscal Affairs Department (FAD) team conducted a combined Public Investment Management Assessment Update (PIMA) and Climate PIMA from May 17 to 30, 2023 at the request of the Ministry of Finance, Labor and Transfers (MoFLT) of Kosovo.
- Purpose: Apply the IMF PIMA framework, including the Climate-PIMA module, to assess strengths and weaknesses across planning, allocation, and implementation phases of public investment and the climate sensitivity of public investment management.
- Funding/Partners: Assessment undertaken with financial support of the European Union and the State Secretariat for Economic Affairs of Switzerland.
- Context: Improvements to public investment management support Kosovo’s goals for economic growth, wellbeing, transition to lower carbon intensity, and resilience to floods, droughts, and forest fires. Boosting public investment efficiency is a goal under the IMF Stand-by Arrangement and Resilience and Sustainability Facility Arrangement approved by the IMF Executive Board in May 2023.

### Summary of Findings
- Overall assessment:
  - Since the 2015 PIMA assessment, overall strength of Kosovo’s public investment management institutions has increased.
  - Design of institutions is stronger than their effectiveness in practice.
  - PIMA scores: stable in the planning phase; increased modestly in allocation and implementation phases.
- Notable improvements:
  - Enhanced budget reporting on projects.
  - Improvements in aspects of asset management.
  - Expanded scope of ex-post audit to include capital projects.
  - Kosovo’s EU accession process has contributed positively to reforms and implementation of many 2015 recommendations.
- Persistent gaps and causes:
  - In some areas the gap between design and effectiveness arises because recent reforms are not yet fully in place.
  - Some projects are immature when added to the budget, causing implementation delays.
  - Procurement process operation is a common source of delays; procurement reforms are planned.
  - Qualified staff are not always available to follow good project implementation arrangements.
  - Portfolio management across the entire project portfolio could be strengthened.
- Investment planning phase:
  - Reform priority: strengthen the appraisal process.
  - Current practice: some feasibility studies done to meet development partner requirements; no consistent requirement that appraisals be done and reviewed by national experts.
  - Selection criteria introduced in 2019 intended to ensure projects are ready at budgeting approval, but not consistently applied.
  - Need more guidance to sectors and municipalities on aligning public investments with national climate strategies and goals.
  - Public-private partnership (PPP) framework: robust.
- Investment allocation phase:
  - Comprehensive budget presentation and investment budgeting practices have improved.
  - Project selection is not based on a single prioritized pipeline of appraised projects covering all sectors and funding sources.
  - Scope to improve planning and management of maintenance expenditure.
- Investment implementation phase:
  - Marked divergence: design stronger than effectiveness.
  - Procurement process and immature projects at budget entry generate delays.
  - Some good implementation arrangements exist but lack of qualified staff hampers consistent application.
  - Portfolio management needs strengthening.
- Climate-PIMA findings:
  - Kosovo is at an early stage of incorporating climate aspects into public investment management.
  - Promising developments:
    - Coverage of climate in the recently finalized PPP assessment manual.
    - Performance audits of climate-relevant aspects including flood preparedness and environmental efficiency programmes.
    - A new national disaster risk management strategy is nearing completion.
  - Ongoing efforts to create a new strategic framework for climate with support of development partners; relevant for seeking EU Western Balkans Investment Framework funding.

### Key Recommendations
- Strengthen appraisal and review processes:
  - Establish consistent requirements for appraisals and national expert review across all major projects, irrespective of funding source.
  - MoFLT plans to establish a team to more actively manage donor-funded projects; recommendation is to adopt a comprehensive approach covering all major projects.
- Reinforce project selection and pipeline management:
  - Create and use a single prioritized pipeline of appraised projects covering all sectors and funding sources to inform selection.
  - Apply the 2019 selection criteria consistently in practice.
- Improve project information systems and monitoring:
  - Improve the quality of information in the PIP system.
  - Expand project monitoring and portfolio management across the full project portfolio.
- Advance procurement reforms:
  - Progress planned procurement reforms to address common sources of delays in implementation.
- Strengthen maintenance planning and management:
  - Improve planning and resourcing for maintenance expenditure to preserve asset serviceability and value.
- Build climate sensitivity into public investment management:
  - Embed a climate perspective in appraisal and selection of capital projects.
  - Assess macro-fiscal risks from climate change to public assets.
  - Finalize and implement frameworks for national disaster risk management.
- Leadership and implementation:
  - Dedicated effort and leadership from MoFLT and the Ministry for Environment, Spatial Planning and Infrastructure will be needed to support implementation of recommendations.

*Source: High-Level Summary Technical Assistance Report — Republic of Kosovo: Public Investment Management Assessment Update and Climate PIMA (December 2023).*

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_Source: https://www.imf.org/-/media/files/publications/hls/2023/english/hlsea2023019.pdf_