IMF Staff Concludes Visit to Kosovo

IMF News, June 6, 2018

Source details

Press Release No. 18/219
Date: June 6, 2018
Mission period in Kosovo: May 30-June 5
Mission leader: Stephanie Eble
Note: End-of-Mission press releases convey preliminary findings after a visit. The views expressed are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

Economic performance continues to be solid, with growth in 2018 expected at about 4 percent.
Inflation remains subdued.
The external current account deficit has narrowed, in part due to statistical revisions.
The banking sector remains well capitalized, liquid and profitable.
The implementation of the 2018 budget is broadly on track: some revenue shortfalls and overruns in social spending due to non-implementation of benefit scheme reforms are expected to be offset by savings in other areas.

Fiscal risks have increased.
Recommended policy actions to limit fiscal risks and preserve a sustainable budget:
- Do not move ahead with the current draft law on compensation of teachers, due to its large direct and indirect fiscal costs that will burden the budget for many years and crowd out priority spending.
- Advance with overdue war veteran reforms.
- Do not introduce any new untargeted social benefit programs.
- Accelerate the restructuring of the public enterprise sector to restore its financial viability and reduce inefficiencies.
- Design the public administration reform within the limits of the wage bill rule.
- Carefully monitor and control the issuance of government guarantees that could significantly increase public debt.
Policies should focus on limiting fiscal risks to preserve a sustainable budget and protect productive spending, including capital investments in priority sectors.

Decisive implementation of structural reforms remains essential to achieve stronger and sustainable growth.
Structural reforms to support private sector development should be accelerated to:
- Achieve stronger and sustainable growth necessary to reduce the large income gap with the rest of Europe.
- Address high unemployment.
The mission reiterated the need to advance the implementation of education, governance, infrastructure, labor market, health and tax administration reforms.

Press Release No. 18/219 — IMF Staff Concludes Visit to Kosovo, June 6, 2018.