IMF Executive Board Concludes 2026 Article IV Consultation with Kosovo
IMF News, April 1, 2026
Source details
- Canonical URL
- IMF Executive Board Concludes 2026 Article IV Consultation with Kosovo
Other formats
Bibliographic details
- Published: April 1, 2026
Key economic developments (recent performance)
- Real GDP growth slowed to 3.6 percent in 2025, down from 4.6 percent in 2024, reflecting weaker net exports and softer private demand, partly offset by stronger public consumption and investment.
- Headline inflation continued to rise, reaching 5¾ percent in January 2026, driven primarily by higher food prices.
- The current account deficit (CAD) widened to 9.2 percent of GDP in 2025, compared with 8.4 percent in 2024, largely due to higher imports of energy and food.
- In the formal sector:
- Real wage growth moderated to 9½ percent in 2025 (from 13 percent in 2024).
- Formal employment growth strengthened to 3¼ percent in 2025, up from 2 percent in 2024.
Outlook and risks
- Baseline projection (assuming renewed progress in political normalization):
- Real GDP growth projected to decelerate to 3.3 percent in 2026 but converge to an estimated potential rate of about 4 percent over the medium term.
- Inflation expected to accelerate to 5.9 percent in 2026 but gradually decline to the ECB’s 2 percent target by mid-2028 and stabilize around that level thereafter.
- The CAD is projected to widen in 2026, including due to the temporary shutdown of a coal-fired power plant for rehabilitation and filter installation, before narrowing over the medium term.
- A large structural trade deficit is expected to continue underpinning an elevated external imbalance.
- Risks (tilted to the downside):
- External risks: persistence or intensification of regional conflicts, global trade tensions, and fluctuating commodity prices.
- Domestic risks: political uncertainty, including uncertainties surrounding the election of the new president.
- Upside: timely implementation of the EU New Growth Plan could boost growth and employment.
Executive Board assessment and policy recommendations
- Directors welcomed Kosovo’s commitment to the EU Growth Plan and progress under recent Fund-supported programs.
- Fiscal policy:
- Fiscal framework has supported macroeconomic stability but needs recalibration given the widening fiscal deficit.
- Over the medium term, fiscal policy should balance macroeconomic stability with development goals, rebuild buffers, and adhere to a credible rules-based framework.
- Important measures: contain current spending, scale up high-quality public investment, and enhance revenue.
- Additional priorities: improve efficiency of social spending, enhance transparency, and strengthen public financial, investment, and fiscal risk management.
- Emphasis that the revised fiscal framework should align with these objectives.
- Financial sector:
- Banking sector remains sound, but need to continue strengthening regulation, supervision, systemic risk oversight, crisis management, and the financial safety net.
- Call for close monitoring of credit growth, lending standards, and real estate exposures.
- Recommendation to deploy targeted borrower‑based macroprudential measures should credit growth re-accelerate.
- Importance of further enhancing risk‑based supervision, strengthening systemic resilience, enhancing crisis preparedness, and safeguarding bank liquidity buffers.
- Further efforts to enhance the AML/CFT framework by aligning the legal framework with EU and FATF standards are important.
- Structural reforms:
- Comprehensive structural reforms are essential to strengthen competitiveness, support sustainable growth, and accelerate income convergence with the EU.
- Importance of implementing the EU Growth Plan Reform Agenda to close structural gaps and unlock external financing.
- Need for strong project selection and implementation.
- Reforms called for to reduce informality, address skills mismatches, better calibrate minimum wage policies, reduce unemployment, and raise labor participation, particularly for women.
- Emphasis on advancing energy reforms to expand generation capacity, improve efficiency, and align tariffs with market conditions.
- Fund role:
- Fund capacity development and strong coordination among development partners remain important to support objectives.
Selected economic indicators (2024–27)
- Output
- Real GDP growth (percent): 4.6 (2024), 3.6 (2025), 3.3 (2026), 3.8 (2027)
- Employment
- Unemployment rate (percent): 10.8 (2024), … (2025)
- Prices
- Consumer prices (period average, percent): 1.6 (2024), 3.9 (2025), 5.9 (2026)
- Consumer prices (eop): 1.1 (2024), 5.3 (2025), 5.8 (2026), 2.6 (2027)
- GDP deflator: 2.2 (2024), 2.8 (2025), 4.7 (2026), 4.9 (2027)
- General government finances (percent of GDP)
- Revenue and grants: 29.9 (2024), 30.4 (2025), 30.7 (2026)
- Expenditure: 30.2 (2024), 31.2 (2025), 32.3 (2026), 32.4 (2027)
- Overall balance: -0.3 (2024), -0.8 (2025), -1.6 (2026), -2.0 (2027)
- Total public debt: 17.9 (2024), 17.5 (2025), 18.7 (2026), 19.6 (2027)
- Stock of government bank balance: 4.0
- Money and credit
- Non-performing loans (percent of total loans): 1.9 (2024), 1.8 (2025)
- Credit to the private sector (eop): 18.3 (2024), 14.6 (2025), 12.8 (2026), 13.3 (2027)
- Effective bank lending rate: 6.8
- Balance of payments (percent of GDP)
- Current account balance: -8.4 (2024), -9.2 (2025), -10.5 (2026), -9.9 (2027)
- Remittance inflows: 13.1 (2024), 12.4 (2025), 12.2 (2026), 12.0 (2027)
- Net foreign direct investment: 5.5 (2024), 6.0 (2025), 6.4 (2026), 6.7 (2027)
- External debt: 40.7 (2024), 45.4 (2025), 47.7 (2026), 52.1 (2027)
IMF Executive Board Concludes 2026 Article IV Consultation with Kosovo — April 1, 2026