## IMF Staff Concludes Visit to Kosovo

_IMF News, June 19, 2019_

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## Bibliographic details
- Published: June 19, 2019

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### Mission overview
- Press Release No. 19/224
- Date: June 19, 2019
- IMF mission led by Stephanie Eble visited Pristina during June 12-18 to discuss recent economic developments and Kosovo’s economic outlook.
- End-of-Mission press releases convey preliminary findings after a visit. The views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
- IMF Communications Department — MEDIA RELATIONS — PRESS OFFICER: Gediminas Vilkas
  - Phone: +1 202 623-7100
  - Email: MEDIA@IMF.org

### Growth and labor market outlook
- Growth is projected to remain robust at around 4 percent this year.
- Key challenge: achieve higher private sector and export-led growth to reduce high unemployment and accelerate income convergence with the rest of Europe.
- Current tariff on imports from Serbia and Bosnia & Herzegovina has:
  - increased consumer prices, especially of food products, impacting lower income households,
  - weakened the external current account.

### Fiscal developments and risks
- Budget execution is broadly on track, with:
  - lower revenue collection and spending overruns in social benefit schemes expected to be offset by lower capital spending.
- Recent policy initiatives could increase current spending, hamper private sector development, and weaken the investment climate.
- Specific fiscal risks highlighted:
  - Large increase in wages as part of public administration reform, combined with an increase in employment, entails a large fiscal cost that—without measures to contain it—puts the fiscal rule at risk and undermines competitiveness.
  - Social benefits under discussion (examples given):
    - early retirement for the police,
    - overly generous parental leave benefits.
  - A proposed minimum wage hike that would go well beyond price, productivity, and wage developments carries significant fiscal costs.
- Government guarantees should be carefully reviewed so as not to put fiscal sustainability at risk.

### Structural challenges and reform priorities
- Policies should focus on closing sizable human and physical capital gaps by investing in:
  - education,
  - health,
  - infrastructure.
- Other recommended priorities:
  - Restructure public enterprises.
  - Enhance implementation of high-quality and donor-financed investments.
  - Accelerate education reforms.
  - Strengthen the rule of law and the business climate.
  - Advance long overdue war veteran reforms to free up space in the budget for pro-growth spending.
- Warning: Costly policy initiatives (wage increases, expanded social benefits, minimum wage hike) would also hamper private sector development by impeding efforts to reduce unemployment and informality.

### Key messages (IMF staff statement excerpts)
- “The key challenge for the Kosovo economy is to achieve higher private sector and export-led growth.”
- “While growth is projected to remain robust at around 4 percent this year, it is not enough to reduce unemployment and accelerate income convergence with the rest of Europe.”
- “Instead, the authorities need to move ahead with the restructuring of public enterprises; enhance the implementation of high-quality and donor-financed investments; accelerate education reforms; strengthen the rule of law and business climate; and advance long overdue war veteran reforms to free up space in the budget for pro-growth spending.”

*International Monetary Fund — IMF Staff statement on June 19, 2019*

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## Content in this bundle

- **Stafi i FMN-së përmbyll vizitën në Kosovë**
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## References

- [Bosnia and Herzegovina and the IMF](http://www.imf.org/external/country/BIH/index.htm)
- [Republic of Kosovo and the IMF](http://www.imf.org/external/country/UVK/index.htm)
- [Republic of Serbia and the IMF](http://www.imf.org/external/country/SRB/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/06/18/pr19224-kosovo-imf-staff-concludes-visit_