## IMF Executive Board Approves a New SDR 80.12 million Stand-By Arrangement and an SDR 61.95 million Resilience and Sustainability Facility Arrangement for Kosovo _IMF News, May 25, 2023_ ## Source details **Canonical URL:** [IMF Executive Board Approves a New SDR 80.12 million Stand-By Arrangement and an SDR 61.95 million Resilience and Sustainability Facility Arrangement for Kosovo](https://www.imf.org/en/news/articles/2023/05/25/pr23180-kosovo-imf-exec-board-sdr-80m-sba-sdr-61m-res-sfa) ## Other formats - [Markdown version](/en/news/articles/2023/05/25/pr23180-kosovo-imf-exec-board-sdr-80m-sba-sdr-61m-res-sfa/index.md) - [Structured JSON version](/en/news/articles/2023/05/25/pr23180-kosovo-imf-exec-board-sdr-80m-sba-sdr-61m-res-sfa/index.json) - [Bundle manifest](/en/news/articles/2023/05/25/pr23180-kosovo-imf-exec-board-sdr-80m-sba-sdr-61m-res-sfa/bundle-manifest.json) ## Bibliographic details - Published: May 25, 2023 --- ### Arrangement approvals and headline figures - The Executive Board approved a 24-month precautionary Stand-By Arrangement (SBA) of SDR 80.12 million. - The Executive Board approved an arrangement under the Resilience and Sustainability Facility (RSF) of SDR 61.95 million. - SDR 80.12 million is described as around €100 million and 97 percent of quota. - SDR 61.95 million is described as around €78 million and 75 percent of quota. - Kosovo is the first country in Europe to receive financing under the RSF. - Press Release No. 23/180; date: May 25, 2023. ### Purpose and expected role of the SBA and RSF - The SBA is expected to be precautionary and will provide liquidity in case downside risks materialize, including from Russia’s war in Ukraine. - The RSF will provide affordable financing to support Kosovo’s climate change mitigation and adaptation efforts, including through greener electricity production and more efficient energy use. - The RSF is expected to catalyze other climate financing and to help catalyze private investment in green energy. - The IMF-supported program under the precautionary SBA will mitigate the materialization of downside risks and support structural reforms to strengthen fiscal and financial governance and enhance growth. - The RSF arrangement will expand Kosovo’s fiscal space for climate change mitigation and adaptation efforts, exploit synergies with other official support, and help catalyze private investment in green energy. ### Economic context and recent developments - Kosovo experienced a strong recovery from the COVID-19 pandemic; growth moderated in 2022. - Inflation accelerated to double digit levels in 2022 due mainly to the increase in international commodity prices brought on by Russia’s war in Ukraine. - The negative terms-of-trade shock adversely impacted households’ disposable income and business profitability. - Low public investment absorption, and tighter financial conditions also contributed to weaker growth. - The authorities cushioned the shock while rebuilding fiscal and international reserve buffers. - The financial sector has weathered back-to-back shocks well and non-performing loans remain low. ### Structural challenges highlighted - Closing infrastructure and governance gaps. - Reducing Kosovo’s dependence on coal. - Promoting energy efficiency. - Reducing Kosovo’s reliance on diaspora flows. - Increasing public investment absorption and strengthening public investment management. - Enhancing financial sector governance, including strengthening central bank governance and bolstering the central bank’s capacity for financial sector surveillance. ### Policy recommendations and program conditionalities (as stated by IMF staff / Gita Gopinath) - Abide by the fiscal rule deficit ceiling to provide a moderate impulse to activity in 2023, helping the economy soft land and contributing to the anchoring of public debt in the medium term. - Strike a better balance in budgetary spending between social transfers and promoting economic transformation. - Reduce the size of blanket allocations. - Increase public investment absorption while strengthening public investment management. - Strengthen central bank governance and bolster the central bank’s capacity for financial sector surveillance. - Advance the structural reform agenda to increase medium-term growth prospects and reduce dependence on diaspora flows. - Reduce dependence on coal and increase energy efficiency to make growth greener. - Treat the SBA as precautionary given the absence of a balance of payments need in the baseline. ### Alignment with national strategies and additional notes - The RSF aligns closely with Kosovo’s new Energy Strategy for 2023–32, which was approved by Parliament earlier in 2023. - The RSF is expected to exploit synergies with other official support. *Press Release No. 23/180, IMF Press center (May 25, 2023).* --- ## References - [PRESS CENTER](http://presscenter.imf.org/) - [Republic of Kosovo and the IMF](http://www.imf.org/external/country/UVK/index.htm) - [IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/imf-world-bank-debt-sustainability-framework-for-low-income-countries) - [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr) - [Press Releases](https://www.imf.org/en/news/searchnews) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2023/05/25/pr23180-kosovo-imf-exec-board-sdr-80m-sba-sdr-61m-res-sfa_